Federal officials charged a VA doctor and the owner of a Sacramento shoe store with fraud Friday, saying they attempted to cheat the Department of Veterans Affairs in a scheme involving the delivery of nearly $1.7 million worth of orthopedic and therapeutic shoes for veterans.
Anthony Lazzarino, 66, former chief of podiatry in the VA’s Northern California health care system, and Peter Wong, 58, founder of Sunrise Shoes in Sacramento, were charged in the scheme. Neither has been arrested but both are to appear Tuesday in U.S. District Court for arraignment.
A grand jury indictment said the two men teamed up to bill the VA for nearly $1.7 million worth of specialized shoes, some of them costing as much as $1,682 a pair, during a six-year period starting in 2009. In fact, the veterans only received “off-the-shelf” products from Sunrise Shoes.
The grand jury added that Lazzarino made sure veterans were steered to Sunrise by handing them the store’s business card and making disparaging comments about other vendors.
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In a separate scheme, the grand jury said the two men defrauded the VA on therapeutic shoe-supply contracts totaling $59 million by lying about where the shoes were manufactured. The VA intended to buy only shoes made in the United States under the Buy American Act. Working with Lazzarino, Wong attempted to supply shoes that were made in China but were passed off as having been made in America, according to the grand jury.
One of Sunrise’s employees, Jai Aing Chen, already pleaded guilty Dec. 6 to helping mislead the agency about the Chinese shoes.
According to Chen’s plea agreement, Sunrise wound up winning only $196,000 worth of the Buy American business over six years, and the total value of the shoes supplied under the contract was $9,200.
Chen, who admitted to one count of conspiracy, is to be sentenced March 14.
Malcolm Segal, Lazzarino’s attorney, said “these charges are unfounded, and he is confident he will be vindicated at trial.” He added that Lazzarino still works for the VA.
Officials with the department weren’t immediately available for comment.
Wong’s lawyer, Thomas Johnson, said, “we’re disappointed in the decision to indict. We didn’t think it was warranted, and we look forward to a full litigation of this matter in court.”
Sunrise Shoes, 3127 Fite Circle, has been open since 1986.