A Parting Shot in South Gate

South Gate political leaders thrown out of office in a recall election last month drained the city’s reserve in a weeklong, $2.1-million spending spree that didn’t stop until hours before the new council was sworn in.

Starting on the day they were overwhelmingly rejected by voters in the Jan. 28 recall election, former Mayor Xochilt Ruvalcaba and Treasurer Albert Robles signed the checks, with most of the money earmarked for attorneys the ousted officials had hired.

The 11th-hour spending all but depleted a reserve that months earlier had stood at $8 million, and triggered a state audit request Thursday. The information has emerged as the new City Council works to reconstruct the lame-duck officials’ final acts in office.

“It was a feeding frenzy of attorneys is what it was,” said Mayor Hector De La Torre. “We’re a government entity that’s been bled dry by these lawyers.”

The revelations form a closing chapter to the former leaders’ turbulent two-year reign. During that time, the southeast Los Angeles County city endured corruption investigations, civic unrest and unruly council meetings that were topped off this month when Ruvalcaba slugged a council member in front of hundreds of residents.

The spending culminated Feb. 4, called “crazy Tuesday” by Assistant Finance Director Yimu Chen, who said he was forced to dip into the reserves as Robles, City Manager Jesus Marez and several attorneys stood over him.

“I was basically under duress to sign the checks,” Chen said.

The next day, incoming Vice Mayor Henry Gonzalez ordered stop payments on $500,000, but he said the payment of millions of dollars to attorneys has left the city on the verge of bankruptcy.

This week, city officials, citing the budget crunch, announced the layoffs of 60 employees and said there would be more to come.

Auditors from the state controller’s office, at the request of the new administration, met Thursday with city officials to consider launching an audit.

The FBI, the district attorney’s office and the State Bar of California have launched numerous corruption probes in the city.

Gonzalez said he was worried that some lawyers inflated their fees or did work that was not properly authorized. Finance Director Ken Louie said many of the last-minute payments were not budgeted, and were paid out of reserves set aside for municipal emergencies.

Marez, who has been placed on administrative leave by the new council, declined to comment aside from saying that everything he did was legal and “done without haste.”

Ruvalcaba refused to comment. Robles did not return calls.

Although outgoing public officials often make commitments to bind their successors, such as contracts and new hires, political observers said the final actions in South Gate appeared to be government malfeasance.

“In some ways we still don’t know the myriad of ways that they really defrauded the public,” said Jaime Regalado, executive director of the Edmund G. “Pat” Brown Institute of Public Affairs at Cal State Los Angeles. “It’s hard to believe anybody could be so brazen.”

A Landslide Loss

The recall targets launched the spending as voters were going to the polls Jan. 28. Residents that day voted by nearly an 8-1 ratio to oust Ruvalcaba, Robles and their two council allies.

Marez, a Robles ally, kept staff members at City Hall until 9:30 p.m. to spend more than $1 million, according to Louie, the finance director.

All of the checks were so-called prepays, which are typically used for emergencies. Unlike other checks, which must be approved by the City Council before being issued, prepays required only the signatures of Ruvalcaba, Robles and Louie. Chen also could sign the checks.

The spending continued until Feb. 3, when Louie said he refused Marez’s order to issue an additional $750,000 because the reserves were empty.

The next day, however, Marez gave the same order, saying the payments could go out because $1.5 million had been deposited in the treasury that morning, according to a memorandum.

The money came from federal funds that had been granted by the City Council in January to George Garrido, a businessman with links to Robles. Garrido had been lent the money so he could buy from the city an 11-acre site. That morning, Garrido’s title company wired the funds back to the city.

With only hours left before the new council members would be sworn in, Chen said, Marez, Robles and several lawyers gathered in his office.

He said they provided him with the documentation required to issue the payments. Because the city had the funds, and the former officials were still in power, he approved the expenditures. “I had no choice but to process them,” said Chen, who describes his role as a ministerial one. “I don’t make decisions. I carry out missions.”

The stop-payment order came the next day, but several checks had already been cashed by law firms, including the ones of then-City Atty. Salvador Alva; Thomas M. Brown, Robles’ criminal defense lawyer; Glen Jonas, the criminal defense attorney of a Robles ally; and George Newhouse, also a criminal defense lawyer.

Among the biggest beneficiaries was Alva, who, among other things, crafted contracts, negotiated deals and served as advisor to the City Council. He was paid $269,000 in the final week.

The remaining funds went to outside lawyers who worked on everything from criminal cases to labor issues.

Newhouse said his bill was for work he had completed in January -- work he said the City Council had authorized. He was unaware of the circumstances of his payment, and said he “felt badly” about the city’s fiscal crisis.

“I did the work and I rendered the bill and asked them for it to be paid as soon as possible,” Newhouse said of his $52,000 invoice, which was one of the smaller bills. “A lawyer, if asked to perform services, is entitled to be paid.”

Louie said that after the new leaders were sworn in, Marez continued pressuring him to reverse the stop-payments on another $500,000 that had not been cashed. Louie refused.

The legal fees have long been a sore subject.

Though most municipal attorneys earn about $180 per hour, South Gate’s lawyers billed much more. Alva, for instance, made $325 per hour.

Cristeta Klaparda, a disbarred lawyer with embezzlement convictions, earned $200 hourly as a litigation specialist.

Alva, who oversaw the legal fees budget, has defended his high compensation. At a community forum sponsored by public radio station KPCC-FM (89.3), he said the city’s political turmoil contributed to an “extremely stressful” working environment.

“I believe, because of the pressure we’re under, I earn every dime of that money,” said Alva, whose contract has been suspended.

With authorization from Alva and the previous City Council, outside attorneys billed for a variety of legal issues, ranging from business negotiations to personnel matters to criminal defense work for Robles and several of his allies.

Protection for Allies

The lawyers also crafted protections for allies of the ousted administration.

For instance, if the new leaders wanted to fire Marez and other department heads, they would have to pay them 18-month severance packages that would cost the city more than $2.5 million.

The city’s battles with attorneys aren’t over. The downtown Los Angeles law firm of Albright Yee & Schmit has filed suit demanding payment of $373,000 that was stopped. Earlier in the final week of the former administration, the firm was paid $312,000 on another invoice.

Robles’ criminal defense lawyer, Brown of Sheppard Mullin Richter & Hampton, this week filed a suit claiming the city owes his firm $495,000 more for defending Robles in his criminal threats trial.

Robles was charged with threatening to kill four people in a case that was eventually dismissed. Midway through the case, a judge ordered a temporary stop to Robles’ city-funded defense. The city had paid $546,000 at that point.

The judge said that Robles’ talk of raping and killing people had nothing to do with his official duties, and that a taxpayer-funded defense was improper.

Brown, in the lawsuit, said the firm now intends to press its claim to recover the expenses. His firm, he said, took the Robles case with the former council’s approval, and he said the costs are “reasonable.”

Others disagree. All told, the city has paid Brown’s firm about $1.2 million to defend Robles in various criminal matters.

“It’s ridiculous,” said De La Torre, the mayor. “There is nothing reasonable about trying to walk out the door with taxpayer money when there’s no money left.”