The Los Angeles County District Attorney’s Office has filed corruption charges against a former state senator, a former City of Industry top administrator and a San Diego-based developer following a probe into a failed solar project that resulted in the alleged theft of up to $20 million in taxpayer funds.
The project’s lead developer, William Barkett of La Jolla, was arrested Wednesday, Sept. 1, on charges of embezzlement, grand theft, money laundering and misappropriation of public funds and held on $1 million bail, according to the San Diego County Sheriff’s Department.
Industry city officials say they advanced $20 million to Barkett’s company, San Gabriel Valley Water and Power, to build a proposed 450-megawatt solar project in the hills straddling the border of Diamond Bar and Chino Hills, but that the developer allegedly was unable to account for the money once the project was canceled years later. The ambitious proposal for near-pristine acreage known locally as Tres Hermanos never broke ground,
Former senator charged
Prosecutors also charged former state Sen. Frank Hill and attorney Anthony Bouza, who negotiated the solar project on Industry’s behalf, with multiple counts of conflict of interest, according to the Los Angeles County Superior Court. Additionally, Bouza and former City Manager Paul Philips, now the top administrator in Bell, each face one count of misappropriation of public funds, court records show.
Bouza was arrested on the same day as Barkett and posted $45,000 bond, according to Los Angeles County’s inmate information center. It is unclear if Hill was arrested because he is not listed in the county’s database.
An attorney for Philips said his client is scheduled to surrender to authorities on Tuesday, Sept. 7.
The District Attorney’s Office, which first raided the homes and offices of Philips, Hill and Barkett in August 2020, did not immediately respond to a request for comment. A copy of the criminal complaint against the men was not available Thursday afternoon.
Links undisclosed
The conflict-of-interest charges likely revolve around Hill and Bouza’s efforts to play both sides in the solar deal, with documents revealing that both men maintained financial ties to Barkett while also being paid to represent the city’s interests, according to prior investigations by the Southern California News Group.
Hill had a stake in San Gabriel Valley Water and Power through a second company, while Bouza — who drafted the contract between Barkett and Industry — allegedly never disclosed to the city that the developer owed him $1.5 million. One of the terms Bouza negotiated required Barkett’s company to pay back the city’s loans only when the project broke ground. Bouza, at the time, described it as a calculated risk that would ultimately reward the city with a $4 million annual return over the life of the 65-year lease.
Instead, Industry never saw a penny and, years later now, is still fighting to claw back any leftover funds it can from San Gabriel Valley Water and Power.
Hill, the driving force behind the solar proposal, was previously convicted on corruption charges in 1994 while serving as a state senator. His role in helping a new majority win a 2015 election in Industry gave him tremendous influence over the fledgling council. The newly elected officials backed the solar project without question for years, until the council members and Hill had a falling out over a housing development that council members allege was a scheme to give Hill control over a new voting bloc that could easily determine the outcome of any future election.
Philips served as city manager from the inception of the Tres Hermanos plan until it was canceled. He was fired in the aftermath as City Council members began to question what had happened to the city’s investment. He has denied having any ties to Barkett beyond their interactions in an official capacity.
‘Gross error and injustice’
In an interview, Philips’ attorney, former L.A. County District Attorney Steve Cooley, said county prosecutors had made a “gross error and injustice” in charging Philips alongside the others. He declined to comment specifically as he had not yet seen the charging documents.
“I know a lot about this case and I know that Mr. Philips is innocent and wrongly charged,” Cooley said. “We will prove it.”
Attorney Peter Sunukjian, who represents Barkett in a separate civil case filed by Industry, declined to comment. Tony Rackauckas, the former Orange County district attorney who represents Hill in the same civil case, did not return a request for comment.
‘Vindication’ for Industry
In a statement, Industry Mayor Cory Moss described the charges as “vindication” for her city.
“For years, the City has alleged that SGVWP and related parties submitted false and fraudulent invoices to the city for work that was never performed,” Moss stated. “It is my hope that the matter moves swiftly and that those who are responsible for this misuse of taxpayer funds are brought to justice.”
Industry sued San Gabriel Valley Water and Power over the missing funds in 2019, alleging the developers had lined their pockets with the public money. The case is still pending, with much of the delay coming from San Gabriel Valley Water and Power’s reluctance to turn over records.
Industry’s leadership hopes the criminal charges will lend support to the civil lawsuit rather than create additional delays.
“While the city will continue to pursue its false claims lawsuit, these charges demonstrate that there is merit to the city’s claims,” Councilwoman Cathy Marcucci said.
The misuse of taxpayer money by San Gabriel Valley Water and Power was “beyond egregious,” she said.
Solar project launched in 2015
Industry began working on the solar project in secret in late 2015 with the first lease signed the following year in a closed session meeting supposedly related to potential litigation. The public didn’t learn about its existence until a year later when the Southern California News Group obtained documents detailing the plans. The 2,450 acres of ranch land were originally purchased by Industry in the 1970s, but the city never used it for anything other than as a retreat for city officials and as grazing pastures for their livestock. Though owned by Industry for decades, the land is located fully within the borders of Chino Hills and Diamond Bar, miles away from Industry’s city limits.
The idea of an outside city erecting solar panels on the unspoiled land at the intersections of Los Angeles, Orange and San Bernardino counties drew immediate outrage, controversy and a slew of lawsuits from Diamond Bar and Chino Hills. An investigation by this news group later found irregularities in Barkett’s invoices and ledgers, including payments to a shuttered law firm owed money by Barkett and to other companies he controlled.
Industry’s then-city controller raised questions about the vague and sometimes incomplete invoices, but was later told that she didn’t need to scrutinize the funds as much because the city had restructured the deal as a “loan” instead and would get all of its money back.
Invoices allegedly falsified
Industry now alleges Barkett submitted falsified invoices in some cases, overbilling the city by as much as $1 million, according to court filings. Emails showed one of the subcontractors complained when a screenshot of an altered invoice appeared in a San Gabriel Valley Tribune article. The company had billed SGVWP roughly $166,828, but when the invoice was later submitted to the city, it had been changed to $300,000.
Barkett, a major political donor with sway at the state level, had more than $50 million in judgments against him at the time. His sister-in-law alleged he promised her that the solar project would allow him to pay back $3.5 million in loans to her family. He even wrote her a $75,000 check from San Gabriel Valley Water and Power’s account as a sign of goodwill, according to a lawsuit.
Despite having spent $9 million already, Philips, and a city spokesperson at the time, told a reporter they did not know who the investors or members of San Gabriel Valley Water and Power were, but that they would request more information once the proposal was further along. SGVWP had submitted invoices documenting thousands of hours of work, much of which is now in question.
Through the civil case, Industry’s attorneys would later learn that Hill, who brought the proposal to the city and worked on it on Industry’s behalf through the Cordoba Corp., also was one of the solar company’s owners.
Project collapses
By 2018, the same council that had unanimously approved the leases years earlier decided to back out of its contracts with SGVWP over concerns about the spending and Hill’s influence. After Industry refused to pay Barkett’s invoices any longer, he reportedly hounded the city controller and Philips to send more money.
The City Council eventually fired Philips, Bouza, and the Cordoba Corp. in 2018 before selling Tres Hermanos to a joint conservation authority governed by Diamond Bar, Chino Hills and Industry. A covenant placed on the land limits any future usage to “open space, public use or preservation.”
Bouza, Hill and Barkett did not give up on the idea, though. They persuaded the southeast Los Angeles city of Commerce to try to buy the land, but the effort was unsuccessful. The three men later turned up in Vernon to pitch that city’s council on a different solar project. Two council members were later recalled for supporting the idea.
Source: Orange County Register
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