A $590,000 settlement by the Costa Mesa Sanitary District to end a whistleblower lawsuit has opened a window on allegations of overbilling and racism in the agency.
The settlement was finalized in February with former Finance Manager Steve Hodges, who alleged retaliation after he accused a veteran district engineer of overbilling for inspections.
The litigation also unearthed evidence that a high-ranking administrator verbally disparaged Mexican employees and often used the “N-word.”
The tiny sanitary district, formed in 1944, oversees trash pickup and sewer lines for a population of 118,000 in Costa Mesa and small portions of Newport Beach and unincorporated Orange County.
In 2018, Hodges reported to his bosses that engineering contractor Robin Hamers allegedly had overbilled the district by as much as $200,000 over a five-year period. Hodges claimed Hamers’ firm had been charging the district for more than 24 hours a day to, among other things, inspect sewer systems. There are 2,080 work hours in a year, but Hamers billed for an average of 2,122 a year, according to an auditing report. One year he billed for 2,468 hours.
In an interview in 2018, Hamers explained that many of the inspections were done at night and that he and his inspector work seven days a week.
An investigation was performed for the district by accounting firm Crowe LLP and the law firm of Best, Best & Krieger.
Meanwhile, Hodges was placed on paid leave for an unrelated personnel matter, according to the district. Hodges said he was subsequently fired as an at-will employee.
Probe finds no crime
The investigation concluded there was insufficient evidence that a crime was committed by Hamers and his firm. The investigation also concluded that work billed by Hamers’ company had indeed been done, although the billing was “high and unrestricted.”
Hamers, who had been with Costa Mesa Sanitary District since 1981 and was once its general manager, continued to work for the agency until his sudden death in 2020.
District General Manager Scott Carroll stressed that the settlement was paid to Hodges by the district’s insurer. While the settlement was agreed upon by the district board, it was not announced to the public. Carroll said that since the settlement was made by the insurance carrier, it did not have to be announced legally until an inquiry was made by the public.
‘Horrible waste of money’
Bob Ooten, president of the district’s elected board of directors, said he was pleased the litigation had been resolved.
But Ooten added, “It’s just a horrible waste of money to pay out that kind of settlement to an employee I thought was properly disciplined. … This was not a good thing.”
Hodges said money was not the issue.
“No amount of money can make up for what the district has put my family and me through. The extent they went to defend their egregious actions is indicative of just how much there is to hide,” he said. “It is important for me that my daughters see who their Dad is and to always do the right thing no matter what the cost.”
In another job, Hodges reported to his bosses that an elected official, among other things, allegedly tried to use his position to sway the hiring of vendors.
During the Costa Mesa case, employees at the district testified in two declarations in February 2021 that Steve Cano, supervisor of the wastewater facility, routinely used the N-word and degraded Mexicans while on the job.
Maintenance worker David Griffin testified in a declaration that Cano made racist comments in 2018 while employees were watching the television show “COPS” in the breakroom.
“Cano walked in and made a comment that all the people being arrested on that show are always (N-word) and that people in jail were all (N-word),” Griffin said. “I was shocked and extremely offended by Mr. Cano’s racist comments.”
In his sworn declaration, Griffin said Cano again used the N-word while discussing a transient near the maintenance yard.
Griffin testified that his uncle is Black.
“The hostile work environment caused by Mr. Cano’s harassment, intimidating behavior and racist comments continues to cause me significant stress. I often do not want to go to work, because I feel unsafe working under Mr. Cano,” Griffin testified.
Maintenance worker Joel Ortiz also gave a declaration, accusing Cano of marking his job promotion by publicly presenting him with a handmade card that said “Congratulations Mexican Grade 2.” Ortiz also testified that he sat on a job interview panel with Cano, who told the group that he would never hire Mexicans or Blacks.
Agency did nothing
Like Griffin, Ortiz said he relayed his concerns about Cano to district executives. But, they testified, nothing was done.
“Mr. Cano has treated me in a demeaning and disrespectful manner throughout the time I have reported to him at the district,” Ortiz said.
Carroll responded that action was, in fact, taken, but he can’t disclose any details because it is a personnel issue.
Ooten said Cano was sent to “some sort of employee training” and Carroll reported to the board that Cano successfully completed the program.
Ooten added that the district is hiring a management consultant to assess employee satisfaction and other issues among Cano’s staff.
When contacted, Cano said he wanted to check with his boss before commenting. He did not call back.
Source: Orange County Register