City Crooks of Vernon ripping off taxpayers

Vernon officials enjoyed first-class travel, luxury hotels and limo service -- all at city expense


September 8, 2010

Top administrators in the city of Vernon, already among the highest-paid local officials in the state, racked up hundreds of thousands of dollars on first-class flights, rooms at luxury hotels like the Ritz-Carlton and limousine service paid for by the city, records reviewed by The Times show.

The records, which date back to 2005, detail lavish travel expenses billed to the city by its top executives, including former city administrators Donal O’Callaghan and Eric T. Fresch. Some of the trips occurred as recently as this year, when the city laid off employees and stripped the life and health insurance benefits of city workers’ spouses and children because of budget problems.

Details of the travel expenses come amid growing scrutiny of the largely industrial city of 95 residents, where top city attorneys and administrators received high salaries, most notably Fresch, who in 2008 earned more than $1.6 million.

In one short trip in February 2007, O’Callaghan, Fresch and a financial advisor flew first class to New York for a combined cost of more than $12,700. O’Callaghan and the financial advisor, Craig Underwood, each stayed only one night at the Ritz-Carlton, paying a nightly rate of more than $800.

Fresch, who stayed four nights, spent more than $7,600 at the Ritz-Carlton. The hefty bill included services from Paris Limo totaling $2,251 for four separate days. The city also reimbursed Fresch for $485 he spent dining at the Four Seasons New York.

The records show that Fresch routinely commuted from the San Francisco Bay Area, where he lives, to L.A. first class for more than $931 per round trip. In a few instances, he spent more than $1,100 for the relatively short air commute. He also incurred a bill of $350 for the United Red Carpet Airport Club, according to one city invoice.

When asked to explain the expenses, Vernon Interim City Administrator Mark Whitworth issued a statement to The Times saying he has directed his staff to review whether a new expense and reimbursement policy is needed to “govern staff travel.”

As for Fresch’s travel expenses, Whitworth added: “Mr. Fresch maintains his residence in Northern California, and the city was aware of this and agreed to reimburse his travel.”

In a city where the few voters have depended on City Hall for their employment and housing and where the many business have supported local government, the travel expenses have nonetheless provoked anger.

“For a city employee to be traveling at that high standard of luxury on taxpayer dollars is highly offensive,” said Steve Freed, president of the Vernon Property Assn. “Many of the property and business owners in the city of Vernon are outraged that our hard-earned tax dollars are being used to support public officials traveling in such a luxurious manner.”

--Sam Allen and Hector Becerra

Forced Deportation is not the anwser!

Thousands protest deportations of Gypsy immigrants in France


Authorities say 77,000 protesters hit the streets in 130 towns across France in opposition to Sarkozy's program to dismantle illegal Roma camps.


By Devorah Lauter, Los Angeles Times

8:26 PM PDT, September 4, 2010

Reporting from Paris

With the fast beat of Gypsy music rousing the crowd over loudspeakers, thousands marched in Paris and other cities Saturday to protest the French government's deportations of Roma immigrants in the name of crime prevention.

Police said 77,000 protesters, led by left-leaning political parties and human rights organizations, hit the streets in 130 towns across France in opposition to President Nicolas Sarkozy's program to dismantle illegal Roma camps. As part of his new security policy, nearly 1,000 Roma have been sent back to Bulgaria and Romania since the end of July.

In Paris, Jeannine Otte wore the first article of the French Constitution plastered across her body: "France assures equality under the law to all its citizens, without distinction of origin."

"The president violated this article by saying that not all French people should be punished equally for the same crime," Otte said. "It's a very heavy message to send to society, and especially to poor youth."

Otte works with minority youths in France's suburbs, where many come from immigrant families. Despite being born in France, many complain of being viewed as un-French.

"It's always the same people who are stigmatized," said Souad Djouahra, a French woman of Algerian origin. "He is saying that immigration is linked to crime, but there are immigrants who work, and are educated, like me. We feel so French.... They don't like us, and to them we'll never be French."

Although Sarkozy's programs have drawn the ire of the U.N. and the European Commission, as well as leading clergymen and bipartisan politicians, the majority of French appear divided over the issue.

On the sidelines of Saturday's protest, Barua Riton stood guard at his souvenir shop, where the Eiffel Tower could be found plastered on almost every object for sale.

A recent immigrant from Bangladesh who is applying for French citizenship, he says he understands why Sarkozy wants to be firm against Roma.

"I see them come to steal from my shop! And pickpocket tourists," he said in broken English. "They don't pay tax. They work illegally. That's why [they] create some problems. I pay tax. I am obedient to government."

Lauter is a special correspondent.

Copyright © 2010, Los Angeles Times

Ralph Nader: ‘For Whom The Bell Tolls’


August 22nd, 2010

Posted by Ralph Nader at Nader.org:

Bell, California, a working-class town of some 38,000 ten miles outside of Los Angeles, is a unique place. Its local government has proven to be citizen-proof, media proof, city-council proof and even leak-proof from inside its self-enriching top officialdom.

Get this: Bell city manager. Robert Rizzo resigned a month ago after a Los Angeles Times exposé revealed that he was being paid $800,000 a year, plus 28 weeks of vacation and sick time worth $386,000. He was also expecting to make $600,000 a year in guaranteed pension payouts. Mr. Rizzo also borrowed $160,000 from the city.

Mr. Rizzo had clever political protection. The Police Chief was getting $457,000 a year and members of the City Council of this small city were making, for very part time work, about $100,000 each per year.

Mr. Rizzo’s assistant manager was making a $376,288 base salary a year with a total compensation package substantially larger.

The average per capita income in Bell is $25,000 a year. More than a quarter of its population lives below the poverty line.

Expressions of shock and dismay erupted from the expected quarters—state legislators, other city officials of much larger cities, and the president of the League of California Cities, Robin Lowe. He said: “the reported abuses are an embarrassment to the thousands of hard-working men and women in city government,” and offered the League’s assistance to the Los Angeles County District Attorney and the California State Attorney General in their investigations.

The League should start by explaining to the two prosecutors why it did not know about the staggering pay scale of its member town, especially since there is a state Open Meetings and Public Records Act for ready utilization.

Bell Mayor Oscar Hernandez unpersuasively tried to make the best of the multiple pay bonanzas. He told the Los Angeles Times that: “Our streets are cleaner, we have lovely parks, better lighting throughout the area, our community is better. These things just don’t happen, they happen because he had a vision and made it happen.”

Let’s pause momentarily to observe the variety and depth of abdication by the governmental and civic culture in beleaguered Bell. The city has fallen behind on its bond payments, and acknowledged it overcharged its residents’ property taxes by $3 million to pay for those exorbitant pensions.

At least a dozen employees in City Hall had to know of these excesses and chose not to talk or leak the news over the years. The nearby newspapers, TV and radio stations did not dig it out. The city council knew but was compromised by its own huge payments. Still, political gossip is supposed to be irresistible. None of the citizens, including the usual town gadflies or skeptics, bothered to find out. All that was needed to bring this to light was one or two people blowing the whistle. After all, this information is not opinion. It’s arithmetic—crisp numbers that invite everyone’s howl.

The greater Los Angeles area is the very definition of sprawl: a lack of community that promotes more citizen slackers. It is inconceivable that such outrageously bold and self enriching formal compensation could escape the notice of citizens of a New England town—even one without a town meeting type of government. Ask them in Lowell, Mass., Torrington, Conn., Newport, R.I., Portsmouth, N.H., Burlington, Vt. and Bangor, Maine. I’ll bet their reply would be a version of: “Are you kidding?”

Californian largesse also resides in Vernon, California (pop. 91) an industrial-commercial center of 5.1 square miles of territory and nearby to Bell. It is now revealed by the Los Angeles Times, whose reporters have found a new exciting town-by-town beat, that the city administrator, Eric T. Fresch, was paid $1.65 million in total compensation in 2008. Last year was a bummer; Mr. Fresch, who calls himself an experienced finance attorney, received nearly $1.2 million.

Granted, Vernon’s businesses have over 50,000 workers and the town owns its electric utility. But getting paid four times the salary of the President of the United States, who has considerably greater supervisory responsibilities, seems to be an over-reach.

Last year, the Vernon city administrator, Donal O’Callaghan, was paid nearly $785,000, but that included being the director of the municipally-owned utility. Still, together they were just one full-time job. He also had help. The city attorney, Jeffrey A. Harrison, earned $800,000 last year, down from $1.04 million in 2008, while the City Treasurer/Finance Director, Roirdan Burnett had to make do with $570,000.

The former city administrator, Bruce Malkenhorst Sr., made $600,000 in 2005 and is awaiting trial on public corruption charges. He still draws a $500,000 a year pension.

All this information about salaries and benefits is public information, but no one in the public was interested enough to find out why nobody was minding the store.

The saving grace in Bell is that, once they found out, some folks were outraged, rushed in protest to the crowded city council meeting and, around town, handed out 10,000 leaflets to engage more residents.

This local movement calls itself BASTA (Bell Association To Stop The Abuse), which means “enough” in Spanish. They strive to arouse the citizenry about where their tax dollars are going, and recall the Council members, if necessary to clean house. They have had enough, finally, at last!

The BASTA organizers must believe there is a limit to the anomie caused by the disintegration of a community’s standards of conduct and norms.

Another crooked city administrator stealing taxpayers' dollars!

Vernon city attorneys get same pension deal as police and firefighters


The 'safety employee' formula could boost a former city attorney's benefit by 11%, a pension expert says. The formula is usually reserved for public safety workers whose jobs put them in harm's way.

By Sam Allen and Kim Christensen, Los Angeles Times

September 2, 2010

Vernon's top city attorneys, already among the highest-paid public employees in the state, have received an unusual pension deal under which they would get the same enhanced benefits as police officers and firefighters.

Typically, the people who receive the higher pensions given to "safety employees" are workers whose jobs put them in harm's way. Attorneys in the Los Angeles County district attorney's office, who prosecute major crimes, receive no such pensions. It is rare for city attorneys to get such a benefit, pension experts said.

Among the beneficiaries is Eric T. Fresch, Vernon's former city administrator and city attorney, who was paid $1.65 million by the well-heeled industrial city in 2008 (although only about $340,000 of that sum was counted toward retirement benefits). Fresch now works for Vernon as a $525-an-hour legal consultant.

His classification as a safety employee could raise his annual retirement payout by about 11%, said Marcia Fritz, a pension expert who reviewed Vernon's retirement formulas.

A Vernon official said Fresch was unavailable for comment.

Both the Vernon City Council and CalPERS, the state's public employee pension fund, approved the unusual pension arrangement in 2004, according to documents reviewed by The Times.

Disclosure of the attorneys' generous pensions comes amid growing scrutiny of retirement benefits for highly paid city officials, such as former Bell City Manager Robert Rizzo. Rizzo's contract with the small, working-class city called for him to receive more than $1.5 million in annual compensation. Even after he stepped down, experts told The Times he would probably receive $600,000 a year in retirement pay.

Vernon's pension arrangement covers the positions of city attorney, deputy city attorney and assistant city attorney.

After The Times inquired about the pensions, city officials said they planned to investigate the matter.

In seeking to justify the changes, Vernon officials cited a government code section that allows "local prosecutors" to receive the enhanced benefits. But there is no indication that any of Vernon's city attorneys worked primarily as prosecutors — as required by the government code that spells out CalPERS "safety member" eligibility.

Former Vernon Police Chief Sol Benudiz told The Times he could not recall a single instance when Vernon's city attorneys appeared in criminal court. He said those cases were always handled by the Los Angeles County district attorney's office.

In L.A. County, the Assn. of Deputy District Attorneys for years has tried in vain to gain the "public safety" classification for its members, said Hyatt Seligman, the group's current president.

"That has been a highly sought after goal for all deputy district attorneys, I would say, for at least 10 or 20 years," said Seligman, a county prosecutor for more than three decades.

Seligman said he knew of no county prosecutors in California who are classified as public safety employees, much less city attorneys who mostly handle civil litigation and minor criminal cases.

"Our argument for trying to get it has been that, traditionally, deputy district attorneys have faced actual threats both in and out of the courts," he said. "I don't know why a city attorney would argue that they're entitled to it."

Because of the nature of their jobs, safety employees receive more generous benefit packages and can retire at an earlier age. Specific formulas vary by agency, but in Vernon, safety employees receive a "3% at 50" formula. That means that employees can retire at age 50 and receive as an annual pension 3% of their highest yearly earnings, multiplied by their years of service.

When the attorneys were reclassified in 2004, non-safety workers in Vernon received 2% at 55. Since then, the city has boosted the rate for "miscellaneous employees" to 2.7% at 55.

CalPERS spokesman Brad Pacheco said there was no way to tell if any attorneys working for other cities were classified as safety employees. Generally, he said, those who receive such pensions work in dangerous jobs or "a high-stress-level job that requires a certain amount of physical fitness."

Pacheco added that Fresch and any other Vernon attorneys who earned more than $245,000 would be included in a CalPERS review launched in response to the Bell scandal.

"That review is already underway," Pacheco said. "We are taking a closer look at this individual and all others who earn over $245,000."

Vernon Interim City Administrator Mark Whitworth said in a written statement that the unusual pension benefits are under review.

"I have asked our staff to look into this issue," he said.

Whitworth noted, however, that any extra pension cost would be footed by Vernon.

"Not a penny of state funds, nor funds from other local governments, are used to fund the CalPERS pension program for city employees," he said.

In an interview with The Times last month, Fresch described himself as an experienced finance lawyer who had represented Vernon in numerous matters related to its utilities business.

Vernon officials declined to comment on whether Fresch or the others had prosecuted criminal cases. Even if they had, however, designating city attorneys as safety employees would be highly unusual, officials in other jurisdictions said this week.

Representatives of district attorneys in Los Angeles, Orange and Riverside counties said that none of their prosecutors are public safety employees.

Besides Fresch, Deputy City Atty. and City Clerk Willard Yamaguchi, and former City Atty. Jeffrey Harrison also were classified as safety employees, Vernon officials said. Only Vernon's staff attorneys — not those working for outside firms that provide legal services under contract — would be eligible for the enhanced benefits.

It is unclear exactly how much they will receive once they retire, because Vernon officials said they could not immediately provide the attorneys' total years of service credit.

Fresch first began working for the city in 1986, but it is unclear whether he joined CalPERS before 2004, when he became city attorney.

In 2009, Fresch moved back to "Special Counsel," but his employment agreement at the time stipulated that he would still "be entitled to all of the benefits available generally to City employees, including … participation in CalPERS."

sam.allen@latimes.com
kim.christensen@latimes.com

Copyright © 2010, Los Angeles Times


Anonymous says:
What the new media has failed to uncover yet is Curtis and Pat Fresch, brothers of former City of Vernon Administrator Eric T. Fresch were given contracts with the City of Vernon. On 1/2/2009 resolution 9807 gives Curtis Fresch a three year contract with automatic renewal for $218,400 per year, this also included full health benefits. Curtis Fresch in the year 2009 billed the City of Vernon approximately $25,500 per month. Curtis Fresch was rented a City of Vernon owned house for approximately $325 per month.

A large number of friends and family of Councilman Richard Maisano, Councilman Daniel Newmire and Curtis Fresch have been given low rent city housing, moving out most of the City of Vernon employees. So you will never hear any Vernon resident complaining about the criminally high wages of Eric Fresch, Donal O'Callaghan, Jeff Harrison, or Rory Burnett. If they did they would be evicted immediately.

Former City of Vernon City Administrator Donal O'Callaghan, after his appointment to city administrator, signed a city contract with his wife (resolution 9820) using her maiden name, Kimberly McBride which concealed her relationship with Donal O'Callaghan. Donal O'Callaghan has also setup a company called TARA Energy Inc. This is a company that was setup by the law firm Latham & Watkins.

This company is ran by Donal O’Callaghan's wife Kimberly McBride and bills the City of Vernon $30,000 per month, adding to his already high salary. Yet he fired 30 city employees and reduced the salaries of existing employees so he could maintain his and Vernon's top officials lucrative paychecks.

He deserves the harshest and more!

Man accused of fraud may get life in prison under California's three-strikes law


The stiff penalty is rarely used against white-collar criminals. Timothy Barnett is charged with 23 felonies for allegedly tricking five people into unknowingly granting him title to their homes.

By Stuart Pfeifer, Los Angeles Times

6:19 PM PDT, September 1, 2010

Timothy Barnett during a preliminary hearing in May. He is charged with 23 felonies, including theft from the elderly, identity theft and real estate fraud. (Lawrence K. Ho, Los Angeles Times

Timothy Barnett spent nearly five years in state prison for a 1990s foreclosure rescue scam in which he conned homeowners out of tens of thousands of dollars. Now, prosecutors say, he has been at it again, targeting residents in the same South Los Angeles neighborhood he fleeced before.



But this time, the state is unleashing one of its more powerful weapons against him. The Los Angeles County district attorney's office has charged Barnett under California's much-debated three-strikes law. Usually aimed at offenders with a history of violent crime, it is rarely used for white-collar offenses such as fraud.



Arrested in April, the 47-year-old Barnett is charged with 23 felonies — including theft from the elderly, identity theft and real estate fraud — for allegedly tricking five people into unknowingly granting him title to their homes. He has pleaded not guilty.



Some experts said the case would be one of the first times a person charged with a white-collar crime was prosecuted under the state's three-strikes law. If convicted, Barnett could face life in prison.



"I've never heard of such a case," said Stan Goldman, a Loyola Law School professor and outspoken three-strikes opponent. "This law was intended to deal with serious and violent felons and lock them up forever. If this guy's guilty, he's a pretty despicable and dangerous character. But he hasn't killed anybody."



Barnett received his first two strikes — both for residential burglary — in 1997. Burglary is one of the dozens of serious or violent crimes that are considered strikes under state law.



In that case, Barnett was accused of talking his way into people's homes, offering to refinance their mortgages, and diverting property or loan proceeds to himself.



Prosecutors had charged him with burglary because he met with his victims in their homes. Under California law, a person can be convicted of residential burglary for entering someone's house with the intent to commit a felony, even if he or she enters with the homeowner's permission.



The three-strikes law, passed by California voters in 1994, has been controversial because it allows any felony to serve as the third strike. So each of the 23 charges that Barnett faces could trigger a sentence of 25 years to life in prison.



Los Angeles County Deputy Dist. Atty. Max Huntsman, who supervises the office's real estate fraud section, said the three-strikes penalty was appropriate for Barnett because of his criminal past.



"Mr. Barnett, if he did the things he's charged with, is a horrible danger to the community," Huntsman said in an interview. "He has an ability to make people trust him and he uses it to steal their biggest asset, their home, and that's horrible."



He acknowledged that Barnett could be the only person in California to face the three-strikes penalty for fraud-related residential burglaries.



Mike Reynolds, a retired Fresno photographer who helped write the three-strikes initiative after his daughter, Kimber, was murdered in 1992, continues to monitor the law's implementation and said he was not aware of any other case in which it was invoked against an offender accused of white-collar crimes.



Michael A. Ramos, president of the California District Attorneys Assn., also could not recall a similar case in which a defendant accused of white-collar crimes faced a life term under the three-strikes law.



Barnett's attorney, Winston Kevin McKesson, said his client did nothing wrong. Instead, his Buena Park real estate investment company, called Trusperity, sought to help people in financial distress, McKesson said.



Barnett told clients — orally and in signed contracts — that he would buy their homes, pay off their delinquent mortgages and allow them to lease back their homes at payments they could afford, McKesson said.



"His whole thing is he told the truth; he's at peace," McKesson said. "He gave them a chance to live in their homes three more years. He satisfied his end of the bargain; they didn't satisfy theirs.... These people knew what they signed and at the last minute they came in and said they didn't know."



McKesson said he thought prosecutors crossed the line in seeking a life sentence.



"The three-strikes law was intended to punish violent and serious criminals, robbers and rapists and murderers," the lawyer said. "It did not intend for this hybrid form of burglary to qualify for a third strike."



Prosecutors said Barnett started his second series of thefts in 2005, three years after his parole.



He is charged with tricking victims — who said they thought they were refinancing their delinquent mortgages — into selling him their homes for a fraction of their value. By the time prosecutors began looking at Barnett again, he had bought a $3.1-million home in Orange County and three Mercedes-Benz vehicles.



As in his first case, prosecutors said, Barnett targeted older African Americans, mostly in South Los Angeles. They said he used his Christian faith — praying with victims and passing out business cards that described him as a "visionary" — to win their trust. Barnett told victims that he learned about their financial troubles from public records.



Billie Iverson, 67, said she was facing foreclosure in 2005 when Barnett arrived at her doorstep with a plan to save her Compton home.



The man told Iverson that he would pay off her first and second mortgage and let her keep her house on Chester Avenue without having to make another mortgage payment, Iverson said.



Well-groomed and snappily dressed, Barnett prayed with her as they discussed her financial rescue, Iverson recalled. Then she signed stacks of papers that a Barnett employee delivered.



"He told me that he was a devout Christian and that is what he do in the community: help people, not use them or take advantage of them," Iverson said, while testifying at Barnett's preliminary hearing. "And I took him at his word."



A few months later, Iverson received a disturbing letter in the mail. It said someone else owned her home. And her frustration only grew, she said, the more she learned. A concerned family member did some research on the Internet and learned that Barnett had gone to prison in the 1990s for running a massive foreclosure rescue scam.



Eddie F. Baker Jr. said he was home alone in 2005 when Barnett rang the doorbell at his house on West 80th Street. Barnett said he had a plan to help Baker avoid foreclosure.



"He was telling me that he was a member of the church and that he was a man of God and I was a man of God. So we kind of had a relationship. I trusted him," the 72-year-old Baker said during testimony at Barnett's preliminary hearing.



"He told me he could help me get my life in order. I could pay all my bills and get my house back and get an A-1 credit rating," Baker said.



He said he thought he was refinancing his mortgage at a lower rate, getting a fresh start. Instead, he was granting title of the house he'd owned since 1969 to Barnett. He didn't realize anything was wrong until a man showed up at his doorstep one day and told Baker that he owned the house.



"I told him, 'This is my house. Man, you better get away from this house. I've had this house since 1969,'" Baker said.



In addition to the five cases that are the subject of the criminal case, several others are described in civil lawsuits filed against Barnett. Each describes scenarios similar to those described by Baker and Iverson. Baker and Iverson have each filed lawsuits — against Barnett, banks and others — in attempts to get their homes back and recover their losses.



"He'd look for homes that had a lot of equity and people that were vulnerable," said Patrick Dunlevy of the Los Angeles-based Public Counsel Law Center, which has filed lawsuits on behalf of several people who said they had lost their homes to Barnett. "He would bill himself as a Christian, say he was doing God's work. That resonated very well with the people he was approaching.... It was all a con, just a way to get them to trust him."



Barnett, jailed since April in lieu of $2.2-million bail, has pleaded not guilty to all charges. He is next scheduled to appear in court Sept. 10 for a pretrial hearing. No trial date has been set.



stuart.pfeifer@latimes.com

Copyright © 2010, Los Angeles Times


Copyright © 2010, Los Angeles Times

More scams discovered in the City of Bell!

Bell's Rizzo gave $400,000 in city loans to two businesses without council approval

One of the loans, $300,000 given to a local Chevrolet dealer in 2008, is the subject of a court fight because the dealer went out of business within a year of getting the loan, having repaid nothing.

By Jeff Gottlieb, Richard Winton and Ruben Vives, Los Angeles Times, September 1, 2010

Then- Bell City Manager Robert Rizzo gave city loans of nearly $400,000 to two businesses without public discussion, approval from the City Council or collateral to back the loans, according to documents reviewed by The Times.

One of the loans, $300,000 given to a local Chevrolet dealer in 2008, is the subject of a court fight because the dealer went out of business within a year of receiving the loan, having repaid nothing.

Although other cities sometimes lend money to local businesses for economic development, Rizzo granted the loans in a highly unusual way, with no statement of economic benefit to the city — a step that is commonplace in municipal loans.

The second loan was given to the Steelworkers Old Timers Foundation in 2005, a senior citizens group run by George Cole, who was on the Bell City Council then. It is unclear whether the $72,000 loan was repaid. After saying that he would discuss the loan, Cole did not return calls seeking comment.

Several experts said the secret loans violated basic tenets of municipal government and appeared to violate Bell's charter, which requires that all contracts be approved by the City Council.

"This is a complete breakdown of checks and balances," said veteran municipal lawyer Michael G. Colantuano. "It's plainly illegal."

The loan to the Chevrolet dealership marked the second time its owner, Randy C. Sopp, had received money from Bell. The city granted Sopp a $500,000 loan when he moved his dealership into Bell in 1990, according to court records. It is unclear whether Sopp paid any of that loan back. In 2006, the city agreed to "forgive the outstanding loan," the court documents show, and the dealership said it would try to stay in Bell.

The loans offer new evidence of the sway Rizzo held over the small, working-class city. Rizzo stepped down this summer following 17 years as Bell's city manager after The Times revealed that he was making an annual salary of $787,637, a figure that rose to more than $1.5 million when additional benefits were included.

The Times has previously reported that Bell gave employees and two councilmen loans totaling nearly $1.5 million, a program that public finance experts said was unheard of. City officials have not found evidence that the council approved the loans. That loan program also appears to have been run by Rizzo, who himself received $160,000 in loans.

James Spertus, Rizzo's attorney, said his client was authorized to make loans under a resolution the council passed in early 2006 that allowed Rizzo "to manage the affairs of the city without council approval."

Jamie Casso, Bell's interim city attorney, said that he could find no such resolution in the city's records and that giving the city administrator such sweeping powers would have violated the City Charter.

Some cities, he said, pass ordinances that allow the city manager to sign off on routine expenses, "but a loan of almost any kind to almost anyone of city money is so extraordinary that I can't understand why it was not taken to the council."

Sopp's attorneys either declined comment or did not return calls. Sopp did not return calls nor respond to a message left at his Palos Verdes Estates home.

A review by The Times found no mention in council or redevelopment agency minutes or agendas of the May 2008 loan to Sopp.

Council members Teresa Jacobo and George Mirabel and then-council member Cole said in interviews that they didn't remember approving the loan to Sopp.

Records show that when the loan was due for repayment, Rizzo extended it for seven months without going to the council or informing the public.

Shortly before Rizzo stepped down, the city negotiated a settlement with Sopp that would have ended the lawsuit over the loan. Details of the settlement were not disclosed. But Bell's new city management team put the settlement on hold, saying that they had questions about the loan.

"I haven't seen anything that indicates the council voted on this transaction or on the settlement that involves this transaction," Casso said. "My client would have to approve it in open session. That hasn't happened."

Giving a loan to a car dealer is not unusual for cities, particularly during the recession. Both Victorville and Norco, for example, have approved aid to dealers in recent years.

The deal between Bell and Sopp Chevrolet was quite different, though: There was no public notice or discussion; Bell gave the loan not to a business or corporation but directly to Sopp, identified in loan documents as "business owner"; the dealership is not mentioned in the two-page promissory note that was signed May 28, 2008; and the loan was extended until June 30, 2009.

The loan documents did not give the city the right to look at the dealership's financial records, and a document attached to the loan shows that its sales tax revenues had dropped 20% in the last year.

According to the lawsuit Bell later filed against Sopp, the loan was provided after Sopp approached Rizzo, telling him the dealership was in jeopardy of failing.

Little is known about the loan to the Steelworkers Old Timers Foundation. Documents don't explain the reason for the loan or why it would be in the city's interest.

In addition to the loan, Bell also gave a city contract worth $38,000 a month to the group to provide Dial-A-Ride services for senior citizens. Cole said last month that the group has held the Dial-A-Ride contract for 15 years and considered the price the city was paying to be fair.

The documents say the loan, which had 4% interest, would be repaid by the city reducing its monthly payment for the Dial-A-Ride service.

Casso said he has been unable to find council approval of the Old Timers Foundation loan in a preliminary look through Bell's files. Times reporters also reviewed agendas and minutes and were unable to find any public notice of the loan.

Casso also said he's found no analysis by the city of potential conflicts of interest given Cole's dual roles as head of the foundation and a City Council member.

"We believe there should have been," he said.

jeff.gottlieb@latimes.com

richard.winton@latimes.com

ruben.vives@latimes.com

Copyright © 2010, Los Angeles Times

Even the School Principal is scamming LA taxpayers

L.A. Unified moves to close charter school over alleged misuse of $2.7 million

An audit finds that the founding principal at NEW Academy Canoga Park allegedly misused or misappropriated money, depositing funds into an Ameritrade account and claiming payments to a nonexistent company.

By Howard Blume, Los Angeles Times

August 31, 2010

Los Angeles schools Supt. Ramon C. Cortines has moved to shut down a San Fernando Valley charter school over the alleged theft or misuse of as much as $2.7 million by the school's founding principal.

The problems at NEW Academy Canoga Park turned up in an audit released Monday by the inspector general's office of the Los Angeles Unified School District.

More than "$2 million of misappropriated and unaccounted public funds is egregious," Cortines wrote in a letter to the board of the school. "Students have been inexcusably deprived of funds that were designated solely to further their education."

As a charter school, NEW Academy is governed by its own board of directors, independent of L.A. Unified, which authorized the school. Los Angeles has more charters, public schools that are independently run, than any school district in the nation.

Virtually no local charter schools have been forcibly shut down by the district, although several have closed after officials failed to renew an expiring charter agreement, which typically lasts three to five years.

The elementary school of about 500 students faces a charter revocation hearing. The chairwoman of the school's board contends that NEW Academy should survive because students are thriving.

Although the school's scores are still in the lowest 30% of schools statewide, according to last year's data, its students' gains on standardized tests have been among the region's strongest each of the last three years.

"It is clear that our school has been a victim of fraud," board chair Maggie Cervantes said in a statement. "The school is taking aggressive and necessary steps to recover its assets and work to successfully resolve this issue. These steps have included terminating the employment of the former principal of the school."

The former principal, Edward Fiszer, could not be reached for comment. Although not identified by name in the published audit, Fiszer was the target of the inquiry, officials confirmed.

NEW Academy Canoga Park opened in 2005 as an unusual example of public-private collaboration using school bonds and other funding sources to combine a new school with low-income housing.

The school's visible face, Fiszer, the author of three education and motivational books, was once honored as a "Champion of Children" in a City Hall ceremony.

Among the auditors' findings is that Fiszer allegedly withdrew cashier's checks totaling nearly $1.1 million from school accounts between July 1, 2007, and Sept. 30, 2009.

"The former principal claimed that funds deposited into his personal Ameritrade account were not withdrawn, but were deposited and repeatedly lost," the auditors wrote, apparently as a result of unsuccessful investments.

One cost questioned by auditors was $62,247 paid to a company called Burgundy Bunny for science enrichment for fourth- and fifth-graders over a six-week period. "We performed an Internet search to verify the validity of the vendor," auditors wrote. "We noted that the address and phone number were invalid. The address shows as a vacant lot. In addition, the business entity name does not exist."

Auditors also allege that the principal paid a former teacher — who at some point married the principal — $129,450 for services as a grant writer, although a company was already being paid for grant writing.

The audit included a harsh assessment of the oversight by the charter's governing board and the outside company that provided accounting services.

Handling the audit became complicated because the school system's interim inspector general is a member of the board of directors of the charter's founding organization. Jess Womack is board secretary of New Economics for Women, whose acronym, NEW, is part of the school's name. Womack, a retired L.A. Unified attorney, recently rejoined the school system as inspector general. Womack recused himself from dealing with this audit, district officials confirmed.

The charter has a board of directors separate from New Economics, but there's overlap: Cervantes is executive director of New Economics and Loyola Marymount University Assistant Dean Marta Sanchez serves on both boards. A second NEW Academy operates near downtown.

The Los Angeles County district attorney's office said it hasn't yet received the audit for review for potential prosecution.

The school becomes the second San Fernando Valley charter school facing allegations of impropriety. The founders of Ivy Academia face felony charges related to co-mingling private and public accounts. They have denied wrongdoing.

howard.blume@latimes.com

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