Allegations of fraud deepen Compton’s financial troubles

The Compton mayor’s allegations of fraud at City Hall have at least temporarily killed the cash-strapped city’s ability to get a line of credit to pay bills and prompted the resignation this week of the interim city manager.

The city, which owes millions of dollars to the Los Angeles County Sheriff’s Department, among other debts, had been trying to get a line of credit to help deal with a $41-million deficit.

Mayor Eric Perrodin had sent a letter to State Controller John Chiang in December, asking him to do a forensic audit of the city and suggesting that the general fund deficit was caused by “possible fraud, waste and abuse.”

Chiang, whose staff carried out audits in Bell and Montebello and recently launched one in Hercules in Northern California, has not decided whether to go into Compton, controller’s spokesman Jacob Roper said.

At recent council meetings, Perrodin has suggested that the council should pass an ordinance requiring all elected officials in the city to take lie detector tests. He said he knew of “some things that are illegal” going on in the city.

In a telephone interview, Perrodin declined to elaborate on his allegations of fraud at City Hall, other than to say that he felt there had been “improprieties” having to do with accounting.

“This has been going on for quite some time,” he said. “It could be it’s part of the Compton culture. I’m not saying it’s anybody’s fault. It could just be part of the institution.”

Interim City Manager Lamont Ewell, who submitted his resignation this week, had been brought in to help with the city’s financial turnaround. After Perrodin demanded the audit, Ewell suspended the city’s attempts to get a line of credit.

Ewell said discussions with the banks could be held up for months while the city’s independent audit firm, which is preparing its annual report on the city’s finances, looks into allegations of fraud.

He submitted his resignation to the council Wednesday, saying that there is not much more he can do for the city in the meantime.

“I don’t think it’s appropriate for me to sit on the city’s payroll knowing that they are still struggling, when this can take its course for weeks if not months,” Ewell said in a telephone interview.

City officials had called the line of credit a critical piece of Compton’s recovery plan.

The city consistently has run months behind on its payments on the sheriff’s contract and amassed $369,000 in late fees last year. In December, the county threatened to seize part of the city’s property taxes to pay down $7 million the city owed, although it backed off after the city made a partial payment.

The city still owes $5.7 million to the Sheriff’s Department, including $2.8 million in past due billings, sheriff’s officials said.

Ewell has been critical of the city’s lack of controls and overspending but said he does not believe criminal acts led to the city’s deficit.

He said the city has made strides in turning around its fiscal crisis, including developing a plan to repay the $41 million the city’s general fund has borrowed from other city funds and securing concessions from the city’s unions to save about $1 million a year without more layoffs.

Critics of Perrodin said they believed the mayor’s letter to the controller was disingenuous and intended to block the interim city manager’s ability to move forward with financial reforms. Perrodin lost his council majority in June’s election. The new council majority fired previous City Manager Willie Norfleet and brought in Ewell over Perrodin’s objections.

“Now that the mayor has lost the support of the community, he would rather the council be divested of its ability to implement reforms than to allow the city to govern without him,” Councilwoman Janna Zurita said. “Any claimed mismanagement or misconduct occurred under the mayor’s own watch, and his efforts to portray himself as a reformer are fanciful.”

Perrodin said the letter to the controller was not politically motivated and that he didn’t believe the city would have gotten a line of credit anyway, in light of its financial issues.

abby.sewell@latimes.com