The Los Angeles County District Attorney’s Office launched simultaneous raids on at least half a dozen homes and offices this week as part of a corruption probe into a failed solar project that cost the City of Industry $20 million and left taxpayers with nothing to show for it.
The district attorney’s Bureau of Investigation served search warrants across Southern California on Wednesday morning, Aug. 12, with investigators hitting homes in Whittier, Cerritos, La Jolla and at least one office in Los Angeles. The figures swept up in the raids include former state Sen. Frank Hill, businessman William Barkett and Industry’s former city manager, Paul Philips, among others.
The Cordoba Corp., a major development firm that oversaw the proposed project for Industry, also was raided, according to the District Attorney’s Office.
“Our office declines to further comment because of an ongoing investigation,” said Greg Risling, a spokesman for the district attorney.
Solar farm project
All of the parties targeted in the probe played roles in the proposed development of a 450-megawatt solar farm on Tres Hermanos Ranch, roughly 2,500 acres of land, owned by Industry, straddling Diamond Bar and Chino Hills. The controversial project drew flack from the two bordering cities and sparked an all-out war over the future of one of the largest — and most valuable — swaths of open space left in Los Angeles, San Bernardino and Orange counties.
A Southern California News Group investigation in 2017 found numerous erroneous and questionable billings submitted to the city by San Gabriel Valley Water and Power, a company set up by Barkett and Hill. The spending included more than $100,000 in invoices on the letterhead of a law firm that had shut down a year before the work occurred.
Even more money went to an array of consultants and lawyers put on retainer by Barkett, a developer who owed more than $50 million for other failed projects at the time. Many of the invoices appeared identical, with only dates and dollar figures changing month to month.
Ledgers provided in a public records request showed funds going toward Barkett’s debts, though a project manager denied those were public dollars, saying the company’s ledgers co-mingled funds from various deals and did not present a full picture of SGVWP’s accounting.
The cap on reimbursements for SGVWP’s work was initially set at $5 million in 2016, then jumped to $11.5 million and then to $20 million in less than two years. Industry, under Philips’ leadership, didn’t require the company to turn over records showing its investors or the members of the company prior to disbursing the payments.
Hill a major influence
Hill, a former state senator previously convicted on corruption charges in the 1990s, wielded extensive influence behind the scenes in Industry after he helped a new majority secure seats on the City Council during a tumultuous election in 2015. Court filings indicate the Whittier Republican, who by his own admission brought the solar project to Industry, owned a stake in San Gabriel Valley Water and Power through another company, Mojave Green Power LLC.
At the same time, he collected monthly payments indirectly from Industry as a consultant for the Cordoba Corp., a contractor hired by the city to oversee its investment in the proposal.
In 2017, Susan Paragas, then Industry’s finance director, initially expressed concerns about the vague invoices submitted by SGVWP, but she later said she stopped scrutinizing when she was told the city’s payments to the company had been restructured as a loan. However, a clause in the contract negotiated on behalf of the city by attorney Anthony Bouza, required SGVWP to pay back the funds only if the project was completed. Construction never even began.
$20 million spent for naught
By 2018, Industry had paid at least $20 million toward the proposal without a single shovel touching dirt. The council backed out of a secretly negotiated contract with Barkett’s company, which it had approved unanimously nearly two years earlier, and then sold the land to a joint conservation authority governed by Diamond Bar, Chino Hills and Industry. Council members fired Philips, Bouza and cut off Hill. They demanded the Cordoba Corp. stop working with Hill and, though the company agreed, the City Council didn’t believe them and ended the city’s contract with the firm.
SGVWP argued its contract for the solar project gave the company the right to develop on Tres Hermanos regardless of Industry’s change of heart. Hill and Barkett tried to stop the sale, both in court and behind the scenes. The two men attempted to get Commerce to buy the property out from under Industry and later showed up in Vernon to pitch a different solar farm on land that city owned in the Mojave.
Bouza, who represented Industry in the negotiations with Barkett, was hired by Commerce to assist their plan to take over the property.
Industry sues in 2019
Industry sued SGVWP, Barkett, Hill and others in 2019, alleging the company siphoned off the $20 million and, though it billed for thousands of hours of work, it would not provide evidence backing up the invoices. The company argued it didn’t have to turn over the records and the matter is still pending in court.
At the same time, Barkett’s longtime personal attorney, David Gilmore, launched a separate lawsuit on behalf of a group called the “Concerned Citizens of the City of Industry” that accused the council of corruption and asked a judge to turn the city over to a receiver who had supported the solar project previously. Gilmore has denied Barkett’s involvement, but emails sent to the State Controller’s Office showed one of Barkett’s companies was originally the only member of the so-called citizens group.
Industry’s city attorney, Jamie Casso, declined to comment on the district attorney’s investigation. Hill and Barkett could not be reached for comment personally or through their legal representatives. Hill is represented by Tony Rackauckas, Orange County’s former district attorney, in the civil case filed by Industry.
He isn’t the only person involved with a former district attorney on his side. Philips is represented by Steve Cooley, who served as Los Angeles County’s district attorney before Jackie Lacey.
Raid in Cerritos
The raid at Philips’ home in Cerritos began before 7 a.m. Wednesday. A neighbor described seeing dozens of masked agents arriving in unmarked vehicles and then swarming the home. Investigators stayed well into the afternoon and, at one point, could be seen searching through the trunk of a vehicle in Philips’ garage. The District Attorney’s Office confiscated Philips’ computer and his cellphone, according to Cooley.
Philips, who is now the city manager in Bell, was interviewed by the District Attorney’s Office about the investigation roughly six months ago. Cooley said he would have turned over his electronics without a raid had he been asked, Cooley said. Simultaneous raids on multiple suspects at once in public corruption cases are “very common,” Cooley said.
“They could have a legitimate investigation, but sometimes, they’ve got the wrong guy,” Cooley said about Philips. “He was improperly lumped in with others who at one point or another were with the City of Industry.”
Cooley said Philips is a respected city manager with a long career, having previously worked in Maywood, Lawndale and other cities. The former district attorney had not seen the search warrant affidavit because investigators have 10 days from serving it to file it with the courts.
“He may or may not be a witness to certain activities, but there is no way he should be treated as a suspect at all,” he said.
Cooley and Philips met when Cooley represented a real estate company trying to buy Tres Hermanos ranch. Their offer was rejected because Industry wanted to move ahead with the solar project instead. Cooley later helped Philips collect severance from the city following his termination.
Source: Orange County Register