SLUSH FUND: Central Basin Directors Violated Open Meeting Laws

PROTESTERS ALSO STAGE DEMONSTRATION AGAINST DIRECTOR JAMES ROYBAL OVER HIS PARTICIPATION IN THE CONTROVERSIAL “TEACHERS JAIL” AT THE LOS ANGELES UNIFIED SCHOOL DISTRICT.

By Randy Economy and Brian Hews

A report released on Monday said that former elected directors at the embroiled Central Basin Municipal Water District violated California’s Open Meeting Law back in 2010 when it created a secret slush fund of $2.75 million that was kept out of the public glare until Hews Media Group-Community Newspaper revealed the details of the situation several months ago.

But the report also seemed to exonerate the Directors by saying, “we believe, that a reviewing agency would not take any action because: (1) it was within the CBMWD’s legal authority to create its own groundwater storage plan; (2) the Directors reasonably relied on their General Counsel’s legal advice that they were permitted to discuss and cast this vote in a Closed Session; (3) any possible damages to the public or government are negligible; (4) any statutory remedial action is time-barred under California law; (5) the Directors have voluntarily cooperated to help resolve this matter; (6) two of the Directors present on June 28, 2010 are no longer members of the CBMWD’s Board, and (7) the record can be made clear by CBMWD re-processing any relevant documents or actions as if they had been undertaken in its ordinary course of business.”

The report did not exonerate the law firm of Sedgwick, Buchalter and attorney Doug Wance.

On Monday, Chairman Phil Hawkins and three other elected directors of the agency were officially notified by lawyers with Arent Fox that a complete report into the controversial fund will be completed within the next 30 days.

Arent Fox Attorney Craig Engle said that their nine-plus month investigation outlines in great detail on how former Central Basin Attorney Doug Wance of the law firm of Sedgwick, Buchalter and former General Manager Art Aguilar worked together to create the secret fund back on June 28, 2010.

HMG-CN has confirmed that members of the Federal Bureau of Investigation and the United States Attorney’s Office are currently looking into the details of the fund in a massive criminal probe that has already resulted in multiple criminal felony accounts against current California State Senator Ronald Calderon and his brother former Assemblyman Thomas Calderon. 

Sources familiar with the slush fund confirm to HMG-CN that Ronald Calderon was one of the benefactors who landed untold thousands of dollars from the account.

Engle told current Central Basin Attorney Rick Olivares of the law firm of Olivarez Madruga, P.C.  in a written reports that, “we have reason to believe California law would hold that a governmental agency’s discussion and approval to authorize and appropriate funds over several years to plan a future development project cannot be held in a Closed Session under the litigation exception to the Brown Act when those plans and the project will create future facts and circumstances that will not reasonably prejudice the agency’s position in any litigation.”

Engle also said that his report will show that although “the discussion and vote by the CBMWD Directors on June 28, 2010 was recorded to provide resources and enter into an agreement as necessary for ongoing litigation, the discussion and vote were used to finance many non-litigation expenses, avoid criticism, and create an Environmental Impact Report (“EIR”).”

“We have reason to believe a reviewing governmental authority would conclude that CBMWD Directors’ discussion and vote on June 28, 2010 should have been conducted in a Public Session,” Engle told the directors on Monday.

The report slammed Sedgwick, Buhalter and Wance by saying, “we have reason to believe the government would review whether [Sedgwick, Buchalter] was acting consistent with any relevant Administrative Code when it: (a) collaborated  with vendors and agency staff  to cause an agency to incorrectly discuss a matter and cast a vote in a Closed Session; (b) created an agenda item and reported out a vote that did not reasonably represent the complete purpose of a discussion in a Closed Session; (c) created a fund that caused an agency to disburse money outside its ordinary course of business; and (d) actively managed the selection of vendors, drafted contracts and processed payments to and from the fund.”

Also during the meeting, around two-dozen protesters held placards and signs urging that Director James Roybal resign his seat since he is currently enrolled in the controversial “Teachers Jail” program at the Los Angeles Unified School District where he has been a high school teacher for several decades.

Roybal did not attend Monday’s meeting.  It is believed that he was indeed attending a required session of “Teachers Jail.”  The protesters had gathered in front of the location where Roybal attends the highly controversial program. (Additional Details to Follow).