Former city council candidate Salvador Franco charged with fraud

Salvador Franco in 2012. Photo courtesy Downey Beat.

DOWNEY – Salvador Franco, a candidate for Downey City Council in 2012, pleaded no contest last week for his role in an alleged vocational training fraud scheme.

Franco, 42, was charged with one felony count of conspiring to commit a crime, 18 felony counts of making a fraudulent statement to obtain or deny compensation, and 18 felony counts of fraudulent claims.

On May 24, Franco and his co-defendant, 45-year-old Mirella Flores of Paramount, accepted a court offer and pled no contest to all counts.

Franco and Flores were immediately sentenced to three years of formal probation and ordered to pay $88,000 in restitution to insurers and $62,000 in investigative costs to the California Department of Insurance.

The defendants were also sentenced to 90 days in Orange County Jail, however, this was stayed pending the completion of 275 hours of community service by Franco and 250 hours by Flores.

Between 2015 and 2017, Franco and Flores participated in an alleged Supplemental Job Displacement Voucher fraud scheme involving the Technical School, Inc., doing business as Technical College, Inc., and Graduates Do Succeed Institute, doing business as GDS Institute.

Franco was a 20 percent owner and a Director of Technical College as well as its Chief Financial Officer. He was also the Chief Financial Officer of GDS Institute. Flores was an employee for both schools.

The defendants conspired and offered to provide workers’ compensation claimants with either at-home or off-site training for a few hours a week along with work related materials such as a computer. In exchange, claimants were expected to sign over their Supplement Job Displacement Vouchers that were valued between $4,000 and $10,000.

Other students were offered a monetary payment in exchange for signing over their vouchers and not attending any training.

The enrollment materials allegedly sent to insurers for payment on the vouchers, however, vastly misrepresented the training that the claimants were going to receive, prosecutors said. Instead of listing the at-home training, the provision of supplies, or the kickbacks to the students, defendants described the training as being several hundred hours in length, requiring full-time (40 hours per week) attendance at one of the schools’ campuses.

Compwest Insurance Company was alerted to the alleged fraudulent scheme by a student living in Orange County who did not receive the promised in-home training from Technical College. Compwest then notified both OCDA and the California Department of Insurance, who agreed to jointly investigate the complaint.

Shortly thereafter, the Los Angeles District Attorney’s Office joined the investigation.

Franco ran for Downey City Council in 2012 and was endorsed by then-Councilman Luis Marquez and the Downey Firefighters Association.

“I own and operate vocational training schools that train students in nursing, light auto mechanics, solar technologies, and computer technology,” Franco said in campaign mailers at the time. “Along with my wife, also a business owner, we jointly employ over 30 people.”

Alex Saab would go on to win that election.

Franco’s political experience goes back to 2001, when he was elected to the Bell Gardens City Council. He lost his re-election bid in 2005, however, and was later fined $12,500 for failing to file several campaign finance statements for the 2005 election.