D.A. in­ves­ti­gates Ver­non con­tract

The probe fo­cuses on a 2009 deal with an en­ergy firm owned by a city of­fi­cial’s wife.

Los Angeles Times - - Latextra - Hector Be­cerra, Sam Allen and Kim Chris­tensen

The Los An­ge­les County district at­tor­ney’s of­fice has launched an in­quiry into a con­tract cre­ated last year be­tween the city of Ver­non and an en­ergy firm owned by the wife of the then-city ad­min­is­tra­tor, mark­ing the sec­ond out­side in­ves­ti­ga­tion into po­ten­tial wrong­do­ing in the in­dus­trial city.

The probe comes af­ter The Times re­ported last month that through the first half of this year Donal O’Cal­laghan re­ceived $243,898 in con­sult­ing pay­ments through Tara En­ergy Inc., a com­pany headed by his wife, Kimberly McBride. This was in ad­di­tion to O’Cal­laghan’s yearly salary of $380,000.

Af­ter the con­tract was re­ported, Ver­non placed O’Cal­laghan on leave to in­ves­ti­gate the mat­ter. David De­mer­jian, the head of the district at­tor­ney of­fice’s Pub­lic In­tegrity Di­vi­sion, said pros­e­cu­tors were try­ing to de­ter­mine whether the con­tract rep­re­sented a con­flict of in­ter­est.

“It would be a con­flict for him to make any of­fi­cial de­ci­sion or en­ter into any con­tract in which he had a fi­nan­cial ben­e­fit,” De­mer­jian said. “We’re also look­ing at whether he en­tered into any con­tract that fi­nan­cially ben­e­fited his wife.”

Mark Werks­man, an at­tor­ney rep­re­sent­ing O’Cal­laghan, said his client had done noth­ing wrong and that his to­tal com­pen­sa­tion was “well within the salary range that one would ex­pect for some­one re­quired to man­age a util­ity.”

“His pay was ab­so­lutely ap­pro­pri­ate and rea­son-


able,” Werks­man said. “Donal served the city of Ver­non well.… It’s hard to imag­ine that the district at­tor­ney would pur­sue crim­i­nal charges in a sit­u­a­tion where a city of­fi­cial did so much of such great value for the com­mu­nity that he served.”

Ear­lier this month, the state at­tor­ney gen­eral’s of­fice an­nounced that it was is­su­ing sub­poe­nas in Ver­non af­ter a se­ries of sto­ries in The Times about high salaries and pen­sions and lav­ish travel by top Ver­non of­fi­cials, in­clud­ing long­time of­fi­cial Eric T. Fresch, who earned more than $1.6 mil­lion in 2008.

Like other top Ver­non of­fi­cials, O’Cal­laghan billed the city for ex­tra hours worked each month. The for­mer city ad­min­is­tra­tor billed $300 an hour for time worked in ex­cess of 160 hours a month — an ar­range­ment equiv­a­lent to over­time that is un­usual for salaried work­ers and all but un­heard of in the pub­lic sec­tor. The city has since scrapped the twotier salary struc­ture that al­lowed top of­fi­cials to bill for “ex­tra” hours.

O’Cal­laghan stepped down from the po­si­tions of city ad­min­is­tra­tor and di­rec­tor of Light and Power in late July to be­come head of cap­i­tal projects for the mu­nic­i­pal power plant. Two weeks ago, Ver­non’s City Coun­cil ap­pointed Fire Chief Mark Whit­worth as the per­ma­nent city ad­min­is­tra­tor for the town of about 90 res­i­dents.

Though Ver­non has a long his­tory of be­ing in­ves­ti­gated by county pros­e­cu­tors, there have been rel­a­tively few con­vic­tions. But last year the district at­tor­ney’s of­fice got voter fraud con­vic­tions against long­time Mayor Leo­nis Mal­burg and his wife for ly­ing about liv­ing in Ver­non while ac­tu­ally liv­ing in a man­sion in Han­cock Park.

The city owns vir­tu­ally all of the homes in Ver­non, and al­most ev­ery­one who lives there ei­ther de­pends on the city for his job or has fam­ily or other con­nec­tions in City Hall.

Max Hunts­man, a pros­e­cu­tor for the district at­tor­ney’s of­fice, said that in the past the city ar­gued that it needed to give the few, heav­ily sub­si­dized hous­ing units to city em­ploy­ees, in­clud­ing util­ity work­ers and fire­fight­ers, in case of an emer­gency.

The Times has re­ported that in the last two years, most of those em­ploy­ees have been re­placed by other peo­ple, in­clud­ing relatives and friends of depart­ment heads and coun­cil mem­bers.

In a pre­vi­ous in­ter­view, Whit­worth said he could not talk at length about the city’s hous­ing ar­range­ment be­cause he is new to the po­si­tion.

His nephew, a col­lege stu­dent, got one of the city­owned hous­ing units, as did work­ers at a car­wash run by a city coun­cil­man.

Hunts­man said the ar­range­ment was trou­bling.

“Their stated pur­pose used to be to have city em­ploy­ees close by in case of an emer­gency, but it hasn’t worked out that way,” he said. “It ap­pears they get a ben­e­fit in terms of con­trol­ling the elec­torate so the same peo­ple in power can stay in power. They’re giv­ing hous­ing to peo­ple they do not need to have on a moment’s no­tice.”

Hunts­man said the city’s award­ing of heav­ily sub­si­dized hous­ing could be ar­gued to be a gift of pub­lic funds with no pub­lic ben­e­fit, es­pe­cially given who lives in Ver­non now. But he added that it was not an easy case to make in court and that the district at­tor­ney’s of­fice is not in­ves­ti­gat­ing Ver­non’s hous­ing sit­u­a­tion.

“It’s one of those cases where if you put it to­gether and won, ev­ery­one would say, ‘Well, of course!’ ” Hunts­man said. “But it’s a tough case.”

De­mer­jian said his of­fice was just start­ing to look into the deal in­volv­ing O’Cal­laghan and his wife’s con­sult­ing firm.

Ver­non City Atty. Lau­rence Wiener has said that he will in­ves­ti­gate a three­month stint in early 2009 when Kimberly McBride got about $13,000 on a city con­tract as a $40-an-hour book­keeper at the Light and Power Depart­ment, which was then over­seen by her hus­band.

Early this year, O’Cal­laghan said the his­tor­i­cally well-off city had to cut the health and life in­surance of em­ploy­ees’ spouses and chil­dren be­cause of the strug­gling econ­omy’s ef­fect on city rev­enue.

But even as he over­saw the cuts, O’Cal­laghan was one of sev­eral of­fi­cials in Ver­non tak­ing trips first-class across the coun­try and around the world and stay­ing at lux­ury re­sorts.

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