GOVERNMENT CONFLICTS, CORRUPTION AND INDICTMENTS

- CALIFORNIA -

Date	Individual / State Agency	Who, What, Where?
06/01/04	Oakland	Oakland School District Fails to Comply In a June 2004 audit of the Oakland Unified School District, auditors could not determine if in 2002-2003 the district had appropriately spent millions of dollars and properly complied with the rules and regulations from both the state and federal government. The district is in jeopardy of repaying $163 million.
01/09/05	Kevin Shelley / Secretary of State	Secretary of State Wastes Millions of Taxpayer’s Money Kevin Shelley has spent millions of dollars of federal election money to overhaul the voting process within the state. Similar investigations over fund-raising abuses or political favoritism are also being levied at Don Perata, the top Democrat in the state, and Mayor James K. Hahn.
01/24/05	Senator Dom Perata	Senator Perata under Investigation The grand jury is investigating the activities of Senator Don Perata and Oakland lobbyist Lily Hu for alleged wrongdoings.
02/09/05	Los Angeles Mayor James K. Hahn	48 Violations of Campaign Finance Laws Mark Alan Abrams, a Westside developer, was fined $270,000 by the Los Angeles Ethics Commission for his attempt to launder $90,000 in political contributions to benefit Mayor James K. Hahn’s mayoral campaign.
02/16/05	West Basin Municipal Water District	President of Municipal Water District Sentenced for Corruption The president of the West Basin Municipal Water District board, R. Keith McDonald, has been sentenced to 41 months in jail for bribery and fraud for accepting $30,000 in bribes in exchange for the award of a multi-million dollar pipeline contract. McDonald is the 12^th person convicted in a federal investigation in the city of Carson.
02/16/05	State Assembly	Democratic Lawmakers Get Free Trip to Pro Bowl The leader of the State Assembly and four other Democratic lawmakers were given free trips to the Pro Bowl in Hawaii by mortgage lender Ameriquest.
02/28/05	Los Angeles Mayor	Corruption Flourished at Los Angeles Mayor’s Office County prosecutors are investigating allegations that supporters of Mayor James Hahn extorted money from contractors who wanted to do business with the city. The investigation was precipitated by an audit by the City Controller who accused the Mayor’s office of shoddy records and meddling by political appointees giving the appearance of conflicts of interest and abuse. The audit criticized the sneaky manner in which the harbor department awarded leases and other inconsistencies.
03/12/05	FBI	Health Plans Defrauded of $1 Billion Twelve California Blue Cross and Blue Shield plans, working with the F.B.I., have broken up an elaborate insurance scheme in which over $1 billion in fraudulent billing claims were filed. Patients were recruited to falsify unnecessary surgical and diagnostic procedures, wherein the patients received from $200 to $2,000 each.
04/07/05	Vernon	District Attorney Probes Misuse of Funds The District Attorney’s office served search warrants to officials at Vernon City Hall as part of an investigation of misuse of funds. The City Administrator, Bruce V. Malkenhorst, has received $600,000 in annual salary, bonuses and payments for unused vacations. The city has leased expensive SUVs, including a $50,000 Cadillac Escalade. Since 1999, the city paid more than $120,000 for limousine services.
04/25/05	San Diego Mayor	San Diego Mayor Resigns Pending Federal Probe The San Diego Mayor, Dick Murphy, announced his resignation at the point of a widening federal investigation into the $1.4 billion deficit in the city’s pension fund. The Securities and Exchange Commission (SEC), federal prosecutors and the FBI are all investigating the city’s finances, which may involve securities fraud and other corruption.
05/12/05	Border Patrol/ U.S. Army	Law Enforcement and U. S. Army Soldiers Arrested in Border Sting According to the Los Angeles Times, 16 law enforcement officers and U. S. Army soldiers have been busted for smuggling cocaine from Mexico. One federal inspector waved trucks he believed were carrying drugs across the border from Mexico to the U.S., according to the FBI. In another case, a group of the defendants wearing Army uniforms used Army National Guard Humvees to transport 132 pounds of cocaine from a desert landing strip to a resort hotel in Phoenix. Justice Department officials describe the case as a "widespread bribery and extortion conspiracy." The defendants pleaded guilty to transporting 1,232 pounds of cocaine and accepting $222,000 in cash for their activities.
06/03/05	Department of Water and Power/ Port of Los Angeles	Los Angeles Has “Pay to Play” Scandal Douglas R. Bowie, a Los Angeles public relations consultant, was indicted by a federal grand jury on charges that he directed a criminal conspiracy to bilk government out of hundreds of thousands of dollars. Bowie, the general manager of a major firm’s Los Angeles office ordered subordinates to inflate their billing hours for the Department of Water and Power and the Port of Los Angles. Bowie was indicted along with John Stodder, Jr., for allegedly stealing between $250,000 and $325,000. The indictments came about from a probe into city contracting launched amid accusations that some contracts are awarded to those who “Pay to Play” in response to campaign contributions or political fundraising. Apparently the mechanics of the fraud were no open secret with documented e-mails and numerous employees testifying that directions to “pad” the government accounts were discussed at end-of-the month exercises called “writing up” hours.
07/21/05	Los Angeles and Orange Counties	LA Doctor Defrauds Medicare According to the Los Angeles Times, Dr. G. Steven Kooshian, who operates AIDS clinics in Los Angeles and Orange counties, was indicted by a federal grand jury on charges he “watered down” doses of expensive AIDS drugs to patients and billed for the full amount ($1.2 million) even after patients had left his practice. He was charged with healthcare fraud, conspiracy, and making false statements to insurance companies. In 1991, he was arrested for prescribing anabolic steroids to individuals who were not his patients. He wound up paying a $20,000 fine but kept his medical license by placing him on probation.
07/23/05	San Diego Mayor	San Diego Portends Future for American Cities San Diego Mayor Dick Murphy had resigned amidst a major scandal over at least a $1.4 billion shortage in the $3.6 billion pension fund. Three days after his resignation, Michael Zucchet, his anointed heir was charged with taking bribes from a strip-club member. The FBI and Securities and Exchange Commission (SEC) are investigating potential fraud and public corruption. The nine-member council that rules the roost only has six members. Perhaps they can’t find three wise men out of the entire population. San Diego had a reputation of fiscal conservatism and responsible government for many years due primarily to voter’s vigilance of the purse strings. It was touted as the model for other American cities until, that is, politicians kept increasing unreasonable pension benefits to city workers to buy votes and loyalty without making the corresponding contributions to the pension fund. Carl DeMaio of the Performance Institute said, “It’s a financial crisis in the midst of a circus-like atmosphere. City government is in complete paralysis.” San Diego, the nation’s seventh largest city, is unable to borrow any money due to their pathetic credit rating so there is the potential that the city may eventually declare bankruptcy. If you live on the east coast, don’t be mislead by this farce “way out west.” The situation in most states is more severe. City and state governments throughout the country, especially on the east coast, have elected to forego contributions to pension funds, deciding to bury their heads in the sand over the looming crisis of pension shortfalls in the not too distant future. Let us not forget that no one is watching the store. We as voters have to rely on the honesty and fiscal knowledge of our elected representatives. My God, that’s a terrifying proposition. Unless the exponential growth of government and the giveaway programs to city and state employees is ended, we will all face the reality of our local governments declaring bankruptcy.
07/30/05	Southgate	South Gate Treasurer Convicted of Bribery Former Southgate Treasurer Albert Robles was convicted of accepting $1.8 million in bribes from bidders on municipal contracts. In 2003, voters recalled and threw him out of office after the city lost $12 million as a direct result of corruption. Robles could face up to 510 years in jail. The same court also convicted Robles’ henchman George Garrido, who was received $437,500 in payoffs from the recipient of the city's $48-million garbage-hauling contract. South Gate is now $150 million in debt so the city council passed a budget that curtails recreation programs and reduces every department except the police.
09/01/05	Southgate	Ousted South Gate Treasurer Has Chutzpah Former Southgate Treasurer Albert Robles claims he was handed a raw deal by being fired from his job. Now we should mention that there are a few mitigating circumstances that tend to support his firing. Let’s take them in order. One, voters recalled him from office. Secondly, he was convicted of bribery in a corruption case that cost taxpayers $12 million. And thirdly, he faces trial on charges of fraud and improper use of public money. According to the Los Angeles Times, Robles said he decided to pursue the claim even though a federal jury 10 days ago convicted him of public corruption. Officials in Southgate greeted his latest move with a mixture of disgust and astonishment. Councilman Henry C. Gonzalez said, “I just laughed and chuckled to myself. I said, boy, he doesn’t give up.” This case is even more ludicrous then New Jersey politicians receiving their full pensions after numerous convictions.
02/01/06	San Diego	Five Officials Indicted in San Diego Pension Scandal According to the New York Times, a federal grand jury issued fraud and conspiracy indictments against five current and former officials of San Diego’s pension system. This case was the opening salvo that demonstrated the massive problems with government’s under funding of pension plans across the nation. In 2002, the 13-member San Diego City Employee’s Retirement System enacted a plan to significantly increase city employee’s pension benefits while failing to provide sufficient monies to keep the pension fund solvent. The indictments charge that the five defendants had conspired to hide the details of the proposal from other members of the pension board while enriching themselves by covering up the financial danger to the pension system. Three of the indicted members are already under indictment on state conflict-of-interest charges. The three members are Ronald Saathoff, president of the San Diego firefighter’s union, Cathy Lexin, San Diego’s human resources director, and Teresa Webster, San Diego’s assistant auditor and comptroller. As a result of the 2002 vote, Mr. Saathoff’s pension benefits were to rise by more than $25,000 per year. The benefits of the other defendants would also have been enhanced. We should all ask the question, “where were the auditors while all of this was going on?” But, alas, the assistant auditor was one of the ringleaders. That decision created a deficit of at least $1.4 billion and pushed the city to the verge of bankruptcy, and led to the resignation of Mayor Dick Murphy. Because of the deficit, the city is unable to borrow in the capital markets, perhaps a silver lining in a nefarious affair. Michael Aquirre, the San Diego city attorney, said, “The result was the largest financial catastrophe in the history of San Diego.” In addition to the pension debacle, the city has been rocked by a political corruption case involving three City Council members, and the recent resignation of Representative Randy “Duke” Cunningham, when he pleaded guilty to bribery charges.
04/01/06	Lynwood	Former Lynwood Mayor Gets 16 Year Sentence Former Lynwood Mayor Paul H. Richards II was sentenced to nearly 16 years behind bars for steering city contracts to a front corporation he secretly owned. Although he only netted $500,000, he could have stolen $6 million based on the contracts. Richards was convicted on 35 counts of extortion, fraud, money laundering and making false statements to investigators. Sounds like a typical politician. Along with Richards, his sister, Paula Harris, was sentenced to 6 years in prison, while longtime friend, Bevan Thomas, was sentenced to 10 years for accepting bribes. According to the Los Angeles Times, The Lynwood case was just one in a series of state and federal investigations targeting public corruption in cities in southeast Los Angeles, including South Gate, Compton and Carson. To-date, 17 public officials have been convicted.
04/01/06		Sports Group Seduces State Senator Anschutz Entertainment Group. One of the largest sports and entertainment properties, paid $20,000 in fees to Senator Kevin Murray for “consulting services” at just about the same time the good senator was pushing legislation aimed at providing public assistance in financing new sports venues. The legislation, which fortunately has not been passed by an Assembly committee, would authorize the state’s development bank to sell bonds and otherwise participate in the financing and management of stadiums and concert halls. Murray’s piece of the legislation proposes that private developers of a stadium could get tax breaks on sponsorship and licensing fees. He said the changes could save a developer up to $100 million on a $300 million venture. Two questions must be asked: 1) Why does government have a “development bank?” That is not government’s business. 2) Why is government involved in any way with professional sports venues? That is the sole dictum of private enterprise.
06/01/06	Los Angeles	Power Broker Guilty of Overbilling City According to the Los Angeles Times, former political power broker Douglas Dowie was convicted of 15 counts of conspiracy and fraud in a scheme to overbill Los Angeles for public relations consulting services. The federal jury also found his co-conspirator John Stodder, Jr. guilty of 12 similar charges. Dowie and Stodder overbilled Los Angeles taxpayers for services to the Department of Water and Power, the port and the airport. The scandal grew as allegations grew of “pay to play” exchanges of political contributions for lucrative city contracts, a practice that is widespread in government across the country. Each count of conspiracy can be punished by five years in prison, and the wire fraud convictions can be punishable by a maximum of 20 years per count.
08/01/06	Vernon	Town Has First “Free” Vote in 26 Years Vernon, an industrial city with 91 residents, has been run by one family for an eternity. A number of new residents moved into the town and registered to vote. One of these residents, Donald Huff, with two of his housemates, decided to run for the City Council. According to Mr. Huff, city officials shut off their electricity and hired “armed thugs” to tail them. Soon thereafter, the newcomers had been evicted because the city had declared their house a fire hazard. Mr. Huff, who is now living in his SUV and sleeps on friend’s couches, vowed, “I’m not going away. They think they can chase me out of town, but they won’t. The mayor doesn’t own this town.” But in actuality, he owns most of it. In April, the town held it’s first honestly contested election and local leaders, would-be council members and state officials have been battling ever since. Vernon officials have refused to count the ballots because Vernon City Clerk Bruce Malkenhorst, Jr., whose father retired in 2004 as City Administrator with salary and benefits of $600,000 a year, has filed litigation against the three city council candidates claiming they have no right to run for office or to even vote in Vernon. Two judges have ruled against the town. One judge ruled that Vernon is run like a “fiefdom.” Professor Richard L. Hasen, an election law expert at Loyola Law School, said he had “never heard of situation anywhere where votes have been cast and then a clerk makes a decision mot to count the votes. Vernon’s like the Wild West. The idea that they can just lock up the ballots – not only does that violate election laws, but it’s outrageous.” The most likely outcome is the state will take over the electioneering process in Vernon.
08/01/06	Senate	Democrat Receives Huge Donation After Killing Bill A slew of flood-protection bills, including one strongly opposed by California builders, got beached the other day by state Senate President Pro Tem Don Perata -- and 48 hours later, the same builders pumped $500,000 into a campaign committee with ties to the Oakland Democrat. Perata said he had tabled the bills after Gov. Arnold Schwarzenegger served up some last-minute amendments that, in his opinion, would have weakened the proposed new rules about building subdivisions in floodplains. There was no quid pro quo, he said, in the builders' subsequent donation to Rebuilding California, a Perata-backed campaign committee working to pass the multibillion-dollar infrastructure bond package on the state ballot this fall. Maybe, but the timing sure had the halls buzzing. As for that timely donation, California Building Industry Association spokesman John Frith said there was no connection to what was happening in the Legislature. He noted that on the same day it donated to the Perata-backed committee, the association pumped $500,000 into another bond drive, the Let's Rebuild California campaign, which has nothing to do with Perata. Nonetheless, faster than you could say "oops," Perata changed his tune late last week and called for a "flood summit" today with the bills' authors to see if the package can be brought back to life in the waning days of the session. ---------------------------------------------------------------------------------------------------------------------------------------- In another instance of political chicanery, Democrat Assembly Leader Fabian Nunez's wife received $125,000 from a government agency to organize a series of "international conferences on asthma and port emissions control technologies."  Apparently, the South Coast Air Quality Management District is using tax dollars to influence legislation--was this part of their lobbing effort--more importantly, this is what they were doing:  This agency was promoting a bill, using tax dollars, to get the Legislature to give them the right to raise fee's (taxes) on the same people who were mandated to give them money, in order to "give" even more money.  Tax dollars used by government to get more tax dollars--that is obscene! Does anybody outside of government really believe the donations to Perata and the contract to the wife of Nunez are happenstance?  Do you believe that all of a sudden the donations occurred, and a $125,000 contract just happens--to put on a simple conference--using tax dollars?