Third Defendant Convicted in California Arson Fraud Scheme

A federal judge on Thursday sentenced the last of three defendants involved in an arson fraud scheme, which led to seven Sacramento fires, to four years, nine months in prison.

U.S. District Judge Morrison C. England Jr. also ordered 76-year-old Saber A. Shehadeh to pay $1,031,081.66 in restitution. Prosecutors had sought a 71-month sentence, saying that Shehadeh and his co-conspirators had profited handsomely from $1.4 million in insurance payments from State Farm Insurance Co.

“Shehadeh was an important part of a serious, carefully planned scheme that took place over an extended period of time, and capitalized on a fire that put the lives of his own tenants in danger, while repeatedly seeking to deceive State Farm,” U.S. Attorney McGregor W. Scott’s office said in a sentencing memorandum.

In 2009, Shehadeh’s corner grocery in downtown Sacramento wasn’t doing well. He had been convicted of food stamp fraud the year before and his Tru Value Market had been suspended from the federal program. That placed his license to sell alcohol in jeopardy, federal prosecutors said in court papers. Shehadeh bounced mortgage checks and frequently overdrew his bank account.

Then on Dec. 27, 2009, Tru Value Market was damaged in a fire. The historical building that housed the market and a building next door — also owned by Shehadeh — were destroyed by a second fire nine months later.

The $1.03 million payment from State Farm Insurance Co. was enough to pay off the $384,000 mortgage on the building with several hundred thousand left over to invest in new businesses and share with family members, prosecutors say.

One of those family members was cousin Jamal Shehadeh, the convicted ringleader of the arson fraud scheme. According to court papers, Jamal admitting to planning the Tru Value Market fire with Saber Shehadeh and a disbarred attorney, Brian Stone. Jamal Shehadeh was paid “at least $122,000” for his troubles, prosecutors say.

Jamal Shehadeh also was accused of participating in a scheme to set fire to five other Sacramento buildings. After the buildings burned, he ordered repairs to be done by construction companies in which he had a silent interest, prosecutors say. Court papers say the scheme, in total, netted $1.4 million in insurance payments.

Prosecutors say Saber Shehadeh became a silent partner in the “supposed construction company” that was used to submit inflated invoices for post-fire cleanup to State Farm. He made a series of false statements to State Farm about the status of his market prior to the fires, and submitted fraudulent documents and made false statements about the debris removal performed after the second fire, the U.S. Attorney’s Office said.

Jamal Shehadeh pleaded guilty to two arson charges in February 2018 and was sentenced to 30 years in prison. A jury convicted Stone, the disbarred attorney who assisted in the fraud scheme, to 13 counts of mail and wire fraud in April 2018. He was sentenced to six years in prison.