Mayor says Sean Loloee, indicted Sacramento city councilman, should resign over fed charges

Nearly two weeks after a federal grand jury indicted Sean Loloee in connection with his capital region grocery chain, Sacramento Mayor Darrell Steinberg has called on the embattled, and defiant, councilman to resign from his post.

“Councilmember Loloee should put the city first,” Steinberg said in a statement to reporters. “We have too much important work to do on behalf of the people of Sacramento for more distraction and controversy.”

Thursday’s announcement came, Steinberg said, after urging the North Sacramento councilman to “do the right thing” behind closed doors about his next steps following his appearance Dec. 15 in Sacramento federal court. Steinberg and the rest of the city council have few avenues to remove Loloee from his elected post.

“I have been engaged for several weeks in conversation with Councilmember Loloee regarding the federal indictment and its impact on his continued service as a city council member. I have asked him repeatedly to resign and have not made my request public to give him the space to do the right thing.

“This morning, he informed me he would not resign. Today, I am publicly calling on Councilmember Loloee to resign immediately.”

On Dec. 15, a federal grand jury handed up a 25-count indictment against Loloee that included conspiracy to defraud the U.S. Department of Labor, possession of false immigration papers, obstruction of agency proceedings, falsifying records and wire fraud.

Loloee and Viva stores’ general manager, Karla Montoya, pleaded not guilty to the charges. The two are due back in court Feb. 12.

If convicted of the most serious charges, Loloee could face up to 20 years in prison.

Loloee: ‘Misrepresentation of who I am’

Loloee remained strident Thursday in responding to Steinberg’s statement, saying he would not resign.

“When I ran for office in 2019, I did so to help bring about positive change in my community,” Loloee said. “No one expected me to win, and no one expected me to defeat the incumbent. However, with the support of the residents throughout the district, I became the first Iranian American to be elected to the City Council.”

Describing politics as “a rough business” that “lends itself to unfair and savage attacks,” Loloee cited many successes as reasons for him to stay in office, including advocating for his district to receive $10 million in redevelopment funds and “attracting over $400 million in private investment” for housing on Del Paso Boulevard, among others.

“Unfortunately, those who opposed my campaign and disagreed with some of my views on how Sacramento can improve never stopped their attacks after the votes were tallied.

“Instead, their harassment and attacks turned more vicious, directed not only at me, but my family, my friends, and even Viva store associates,” he said. “But the loss is not about me alone. Real people lose when the criminal justice system is wielded to meet political ends. Real people lose their vote and are disenfranchised when petty political grievances morph into false allegations and court cases follow.”

“The recent challenges that have played out in the media are a misrepresentation of who I am and how I run my business and I vehemently deny any charges. I look forward to my day in court, where the truth can be heard. The very essence of our democracy lies in the principles of due process and the presumption of innocence until proven guilty. We must protect these principles from undue influence by politics and media.”

Loloee already has said he does not intend to run for re-election next year.

Steinberg: Where Loloee lives makes him unqualified

Steinberg noted that while Loloee has “the right to due process in a court of law,” the 25 counts of fraud and obstruction that were levied against the owner of Viva Supermarkets were “incompatible with his continued service in public office.”

That mirrored his previous statements this month when Steinberg called the charges “very troubling.” He has been working to persuade Loloee to leave since but couldn’t make good on his forecast that the situation would “be resolved within the next 24 hours.”

Loloee has been under investigation by federal agents and was sued by the U.S. Department of Labor in April 2022 over allegations that he threatened to report workers at his Viva Supermarket chain over their immigration status.

He also has been accused in court documents of destroying evidence related to his businesses during the investigation. A civil case, filed by federal labor officials in 2022, remains in the mix.

The issue of Loloee’s residency, as detailed in a Sacramento Bee investigation last year, apparently weighed heavily on Steinberg’s decision.

The U.S. Department of Justice earlier this month confirmed a Sacramento Bee June 2022 report that found Loloee does not live in the North Sacramento district he represents, but in his wife’s $1.4 million Granite Bay house. The Bee determined Loloee was also virtually sworn into office at the Granite Bay house.

“As part of the pending criminal action, U.S. Magistrate Judge Deborah Barnes issued an order to Councilmember Loloee on Dec. 15, 2023, directing that as a condition of his release from custody, he must reside at his Granite Bay residence, and may not be absent from that resident for more than 24 hours without prior approval from the court,” Steinberg wrote.

The mayor cited Section 27 of the city’s charter, which “states that a council member ‘must continue to reside’ in their council district as a qualification for holding office.”

“Given the court directive that he remain in Granite Bay, I have asked the City Attorney to immediately provide the city council with an opinion on whether Mr. Loloee remains legally qualified to hold office in the city of Sacramento.”

This has been noted as the most likely avenue that the council could take to remove Loloee ahead of the end of his term in December 2024.

Steinberg to strip Loloee of roles

Mary Lynne Vellinga, a spokeswoman for Steinberg’s office, said the mayor would be taking other action, including removing Loloee from all boards and commissions he sits on. Those include the Sacramento Regional Transit District Board and the council’s Personnel and Public Employees Committee, among others.

Council members, most of whom have stayed quiet about the matter, joined Steinberg in the calls for Loloee to step down Thursday afternoon.

“I’m joining Mayor Steinberg in calling for the immediate resignation of (Loloee),” Councilwoman Caity Maple, who represents Oak Park, said in a social media post minutes after the mayor’s statement. “The charges levied against him are both well-founded and serious, and the people of District 2 deserve better. Our city deserves better.”

Mai Vang, who represents Meadowview and other parts of south Sacramento, said the day he was charged that the 2nd District “deserves better.”

“The indictment of (Loloee) on numerous serious charges goes against the ethical standards expected of public officials,” Vang said on Dec. 15. “These disappointing allegations, compromise his ability to effectively represent our city.”

South Natomas’ councilwoman, Karina Talamantes, called the impasse “a distraction” and joined Steinberg and others in urging Loloee to quit.

Daniel Savala, executive director for the Del Paso Boulevard Partnership, on the day of Loloee’s indictment, said he should resign and called the allegations “disturbing.”

Last month, the Democratic Party of Sacramento County issued a call for Loloee to resign following raids on his grocery stores and homes in October. Fabrizio Sasso, executive director of the Central Labor Council also called for Loloee to resign at that time.

Loloee and his business dealings have been under scrutiny since 2009 over allegations involving violations of child labor and overtime laws.

He also is the subject of an investigation by the state’s Fair Political Practices Commission and has been dogged by questions about whether he lived in his Nogales Street home in the city’s 2nd District or in Granite Bay.

A three-month investigation concluded in October 2022 that Loloee lives in his district home.

Loloee won his council seat in November 2020, defeating incumbent Allen Warren by a margin of about 55% to 44%.

Will stalemate play out in council meeting?

State law provides a way for city councils to remove a member in cases where the officeholder does not live in the district he or she is elected to represent, according to Fred Woocher, a Los Angeles-based election law attorney.

If Alcala Wood agrees with the assessment of Woocher and other legal experts that the council can remove Loloee over his residency, the mayor might place an item to do so on an upcoming council agenda.

The next city council meeting is Jan. 9, and Loloee indicated he would remain on the council by then.

“I am optimistic about the continued growth and success of District 2 and the City of Sacramento and intend to be fully engaged as I continue to complete my term on the Sacramento City Council.”

The Bee’s Sam Stanton and Ishani Desai contributed to this story.