The former chief city administrator of industry allegedly approved about $8.5 million in payments to a developer, now accused of fraud, without proper city council approval, according to court testimony in a criminal case in Classes.
The Los Angeles County District Attorney’s Office charged former city manager Paul J. Philips with a single count of embezzlement of public funds in September. Although there is no evidence that Philips received any of the $20 million that sank from city coffers, the prosecution argued that Philips, through his leadership role, enabled – intentionally or through negligence – to a promoter proposing a solar farm to obtain the funds. by fraudulent means, including by means of falsified documents.
Under state law, a city official charged with protecting municipal funds can be charged with embezzlement if he disburses funds “without authority of law” for the use of another, even if the official does not benefit directly.
A preliminary hearing has been ongoing since February to determine whether Philips should stand trial on the charge.
City attorney interrogated
In recent testimony, Philips attorney Joe Weimortz asked City Attorney Jamie Casso whether Philips had ever “acted outside or beyond his authority.” Casso had refused to answer a similar series of quick questions asserting attorney-client and in-camera privileges, and Weimortz, who intentionally triggers such answers to build a future argument that Philips’ right to a fair trial is being violated. , apparently did not expect a real answer.
“Yes,” Casso said.
Casso explained that publicly available documents show that while the city had paid $20 million to the solar developer, San Gabriel Valley Water and Power, only about $11.5 million of the total was on the “claims register,” a form of accounting that allows the City Council to approve bulk payment requests at council meetings.
An analysis of records from 2016 to 2018 indicated that $8.5 million in wire transfers sent to the developer were never presented to city council. Records show a payment gap of almost a year, from August 2016 to July 2017, during a period when work on the solar proposal was well advanced.
“He was the individual — the city manager — responsible for those records,” Casso said. “Somebody approved them, and it wasn’t the city council that approved them.”
Casso testified that he was not aware of any other instances where expenses were not recorded during Philips’ tenure as city manager. The city, he said, only became aware of the missing payments after the solar project was shut down.
Casso, however, cited attorney-client, work product and Brown Act privileges when asked additional questions about whether there was evidence that would exculpate Philips. Weimortz suggested that he would argue, at some point in the hearing, that the case should be dismissed because Industrie’s refusal, as a victim, to voluntarily waive these privileges placed “the rights and freedom” from Philips in play.
Steve Cooley, a former LA County district attorney serving as co-counsel for Philips, called the missing payments “non-issue”. The city council had approved a lease agreement and a series of amendments that capped the project at $20 million. The total amount paid was common knowledge at the time. Lawyers for Philips have previously argued that Philips was the final signing in a lengthy approvals process that included approvals from the finance department.
“The city’s annual independent audit never identified it as relevant,” Cooley said. “This question put forward by the prosecution smacks of a red herring.”
Contradicting city, state laws
The missing payments appeared to contradict state and city laws. A city attorney consulted for the story said it would be unusual for the payments to never appear on the claim register and that the city manager would need written permission from the city council to issue payments otherwise. A city council cannot approve such payment requests behind closed doors, he said.
The municipal industry code states that any request for payment must be presented to the municipal council for approval or rejection at the next regular meeting and must include a “certification by the city manager, or his designate, that the requests are accurate , fair and correct. » The city treasurer is required to certify that there are sufficient funds to cover the payment.
State law states that “Resolutions or orders for the payment of money shall not be passed or made except at a regular meeting or at a special meeting for which notice of such special meeting shall specify the business to be transacted. “. Any money order requires “a recorded majority vote of all members of council.
The hearing will continue in July
Due to scheduling issues, Philips’ preliminary hearing is expected to continue through July, but the prosecution said it was nearing the end of its witness list. During the hearing, the district attorney’s office alleged that Philips ignored red flags regarding developer billing and recommended the initial hiring of Anthony Bouza, an attorney who represented industry interests in the solar project while simultaneously being owed $1.5 million by the developer, Guillaume Barket.
Barkett is accused of using nearly $9 million of city funds for personal items, including a 2 million dollar wedding for his daughter on the Côte d’Azur.
Philips “controlled the flow of information, he controlled the staff and he controlled the money,” said Ana Lopez, one of the assistant prosecutors handling the case.
If tried and convicted, Philips could spend up to four years in prison and would be disqualified from holding office in the state. The other three defendants – Barkett, Bouza and former state senator Frank Hill, who is accused of using his influence to play both sides of the deal – have not started their preliminary hearings and are not expected to not appear in court again until July 14.