On Thursday State Controller John Chiang released the results of an audit that found the city of Bell unlawfully spent at least $710,000 in state and federal funds without valid contracts in place, or made payments for services outside of the scope of an existing contract.
In addition, none of the contracts for goods or services examined were awarded through competitive bids, Chiang's office reported.
Bell's dealings, which came to light in recent months, have resulted in greater scrutiny of local governments across the state, including new wage and salary reporting guidelines Chiang instituted.
Chiang said the audit of Bell shows that former Chief Administrative Officer Robert Rizzo's contracting and purchasing practices continue to expose the city to further financial liability.
“The fact that the former chief administrative officer was able to pick vendors and award contracts at will using state and federal funds raises serious questions about conflicts of interest, favoritism and other improprieties – at the expense of all taxpayers, not just local residents,” Chiang said.
The audit into the spending of state and federal funds brings the total amount of questionable spending by the city of Bell to more than $6 million.
Based on the findings, Rizzo is alleged to have violated provisions of the city charter that require city council approval for purchases of more than $50,000, and a competitive bidding process for contracts of more than $25,000.
An earlier audit by the controller noted that Rizzo also is alleged to have paid $222,000 to Urban & Associates Inc., owned by the current interim chief administrative officer, Pedro Carrillo. In this report, the auditors note that city staff and Carrillo still have not provided the controller’s auditors with a copy of any contract identifying the scope of services performed by the company.
The state and federal spending audit questioned $199,528 incurred for purchasing equipment from Great Western Park and Playground. The expenditures were not used for the purchase of equipment as required, but rather for site work, surfacing and installation of outdoor fitness equipment and shade covering at Debs Park.
In addition, city staff could not provide any documentation showing the services from Great Western were acquired through competitive bids.
Another $185,000 in state park grants intended for professional services, engineering and construction management services at Bell Community Health and Wellness Center were paid to MBH Architects and SMS Architects. Both companies listed the same individual as the signatory principal.
The original contract with MBH allegedly was approved by Rizzo but not the city council, Chiang's office reported. After the contract was terminated by Rizzo, payments were made to SMS without city council approval. The payments allegedly violated the city’s contracting and competitive bid requirements.
More than $50,000 in Los Angeles County Parks and Recreation and federal Community Development Grants were paid to Medina Construction for public works and general maintenance services, including repairs of residential homes, the audit found. However, those services were not authorized by the contract, and there was no documentation showing the City Council approved those services.
Almost $100,000 was paid to D& J Engineering, whose owner, Dennis Tarango, formerly served as the city’s director of planning services, the audit found.
The payments were made through the California Integrated Waste Management Board’s Used Oil Recycling grant, but one contract was for engineering services related to the development of traffic improvements projects and the other, which expired in 1997, was for preparing and administering benefits assessment, according to the audit.
No documentation could be found showing that the city council had approved either contract, nor was there any documentation showing the contracts had been awarded through competitive bids, officials reported.
Almost another $100,000 in federal funds administered through Los Angeles County was paid for graffiti removal services even after a contract with Graffiti Protective Coatings Inc. had expired, the audit found. No documentation could be found showing that the contract was approved by the city council, or that it was competitively bid.
Finally, more than $74,000 was used to purchase computer servers from Relia-Tech. The city had no documentation of a purchase order or approval from the Bell City Council, and the only document provided was a contract with Relia-Tech for maintenance of servers, not equipment purchase or installation.
The controller recommended that the city work with the following entities to recoup misspent funds:
The California Department of Parks and Recreation to resolve the $199,528 in questioned costs related to Great Western Park and Playground;
The California Department of Parks and Recreation to resolve the $180,368 related to MBH Architects and SMS Architects;
The Los Angeles County Department of Parks and Recreation to resolve the $37,164 related to Debs Park, and the $19,690 in federal Community Development Block Grants related to residential home repairs;
The California Integrated Waste Management Board to resolve the $99,882 in oil recycling grant monies paid to D&J Engineering;
Los Angeles County regarding the $99,542 in questioned Community Development Block Grants funds spent on graffiti removal services after the contract expired;
The U.S. Department of Justice regarding the $74,285 in COPS Technology Grant funds used to purchase computer servers, parts and labor without a valid purchase authorization.
A copy of the audit can be found on the controller’s Web site at www.sco.ca.gov.
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