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A family conflict of interest on a college campus

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A company co-owned by the vice president of a Los Angeles community college collected more than $500,000 for working on a public construction program that she oversaw on her campus, records and interviews show.

The company, M. Delvin & Associates, was paid to provide building inspectors for projects at Mission College in Sylmar, beginning in 2009.

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At the time, Karen Hoefel, who owns the company with her husband, Michael Delvin, was the college's vice president of administrative services. In that role, she supervised more than $400 million in construction and renovation projects at Mission. The campus overhaul was part of a $5.7-billion rebuilding program in the Los Angeles Community College District.

Hoefel was collecting salaries from both the college and M. Delvin & Associates, records show. Her annual pay at Mission was $153,000. In a financial disclosure filed with the district, she reported earning between $10,001 and $100,000 from M. Delvin & Associates in 2009.

She resigned from her college position last year after The Times asked questions about her company's involvement in the construction program. Companies working on campus projects had hired M. Delvin & Associates as a subcontractor.

Before she stepped down, Hoefel, 60, said in an interview that she had nothing to do with the hiring of the firm and that she did not profit from its work at Mission.

"I am not receiving money directly from anybody who's working on this campus," she said.

Michael Delvin, 57, did not respond to requests for comment.

State law generally forbids government officials to oversee contract work in which they or their immediate family members have a financial stake.

At Mission, Hoefel was responsible for campus facilities and business operations. Records show she monitored the work of contractors that had turned much of the campus into a construction site — and she was entrusted with protecting Mission's interests as the projects unfolded.

She exerted direct authority over contractors that hired M. Delvin & Associates, records show.

In February 2009, Hoefel approved and sent to the district's trustees a $2.8-million contract extension for one of those companies, Gateway Science & Engineering. In March 2010, she approved a $2-million increase in a contract for another, Masters Contracting Corp.

The episode fits a pattern of questionable oversight of the nine-campus construction program, financed by bonds that taxpayers will be repaying, with interest, for the next 40 years. A Times investigation has found that the college district wasted tens of millions of dollars through poor planning, shoddy workmanship and bungled or abandoned projects.

District officials said Hoefel left her college position in June 2010 after she was given a choice between resigning or having her company kicked out of the construction program.

E-mails, invoices and other documents obtained under the California Public Records Act provide a detailed picture of how M. Delvin & Associates started making money from the program and what district officials knew and did about it.

The records show that Larry Eisenberg, chief of the construction program, was put on notice more than a year before Hoefel's forced departure that her firm was working at Mission College.

Nick Quintanilla, who was coordinating construction projects at Mission, informed Eisenberg in a May 2009 e-mail that the company was working on the campus.

"I didn't get a response, so I assumed it was all right," Quintanilla said in an interview.

Eisenberg told The Times that when he found out Hoefel and Michael Delvin were married, he suggested that the firm "should probably focus on our other colleges to avoid any impression of conflict, although none existed."

Yet M. Delvin & Associates continued to be paid for inspection work at Mission until at least January 2010, records show.

District spokesman Coby King said that Hoefel had no "oversight role regarding Delvin's work" because the inspections the company performed were part of a district-wide initiative. Nevertheless, because Hoefel benefited financially from the contract, there was "an inappropriate conflict of interest," King said. "In lieu of the termination of the firm, she chose to resign."

M. Delvin & Associates is still supplying inspectors for college construction projects, King said. In all, the firm had collected more than $2.5 million through the program as of November, he said.

Career in education

Hoefel joined Mission College after working five years as headmaster of a private school. Previously, she had held a variety of positions at Cal State Northridge, eventually becoming its finance director. She was fired from that job in 1997 on grounds that she lost $2.3million in college funds through risky investments in mortgage-backed securities.

Hoefel said at the time that she had kept her superiors informed of the investments and that, over her objections, they ordered the securities sold at a loss to raise cash.

The official who approved Hoefel's hiring at Mission, Deputy Chancellor Adriana Barrera, said she had not known about the firing, although it was the subject of news reports.

Hoefel and her husband launched their Burbank-based firm in 2000. Hoefel is listed in state records as corporate treasurer and chief financial officer. Delvin, a civil engineer, is chief executive officer.

The company's single-page website says it works in real estate development, construction evaluation and structural engineering but does not list any clients or projects.

It was Eisenberg who opened the door to the firm's most important contract on the college construction program, working as a subcontractor for Inici Group Inc. of Portland, Ore.

Eisenberg, a former facilities chief for Washington County, Ore., had worked with Inici's owner, Karl Schulz, in that job, and in early 2009 he arranged for the company to work on the college building program.

At Eisenberg's recommendation, Inici was awarded a no-bid contract to perform "whole-building commissioning," a system of inspecting new buildings in their entirety to verify construction quality.

The district was already paying inspectors and architects to ensure that buildings were properly constructed. Eisenberg maintained that another layer of inspection was needed because earlier quality-control efforts had fallen short. Among the most notorious examples was a $48-million health and science complex at Valley College, which opened with numerous defects and safety hazards.

In February 2009, the district invited small contractors to a gathering at the Biltmore Hotel in downtown Los Angeles to meet Eisenberg and other officials. Michael Delvin and Eisenberg struck up a conversation. "Maybe you could help us," Eisenberg recalled telling him.

Eisenberg said he later urged Schulz to hire Delvin as a subcontractor.

At the time, Eisenberg said, he did not know Delvin and Hoefel were married. He said Hoefel had no role in the firm's hiring.

The whole-building inspections began in May 2009 on a pilot basis at Mission College alone, with Delvin supplying all the staff — as many as five people at a time, invoices show.

The first to call attention to a potential conflict was Nick Quintanilla. Each of the district's nine colleges employs a firm to manage construction projects day to day. At Mission, that firm was Gateway Science & Engineering, and Quintanilla was its top manager.

Just as the M. Delvin & Associates employees were starting work at the campus, Quintanilla sent an e-mail to Judith Valles, then president of the college, with a copy to Eisenberg.

Quintanilla wrote that Inici Group had "teamed up" with the Delvin firm and added, "Mike Delvin is of course Karen Hoefel's husband."

He said he saw "no conflict of interest in this arrangement but will defer to your judgment and instructions."

Valles responded, "Nick: Thanks for the update and clarification. I have a great deal of confidence in your judgment and integrity."

In an interview, Valles, now retired, said she did not recall the e-mail exchange and denied that she had ever gone along with the firm's presence at Mission. To the contrary, she said, she had grown concerned when she noticed Michael Delvin on campus and had asked Quintanilla about it.

Valles said that when Quintanilla confirmed that Delvin was working at the college, she responded: "That's not right."

"Next I knew, he was gone," she said of Delvin.

Asked to reconcile this account with her e-mail exchange with Quintanilla, Valles said: "Well, listen, I don't wish to pursue this conversation anymore."

Schulz, the owner of Inici, also insisted in an interview that Michael Delvin had "never worked" at Mission College. Asked why not, he said: "Because his wife works there, so that's not appropriate."

District records, however, indicate that Michael Delvin was personally involved in his company's work at Mission.

For instance, invoices show that the district was billed, at a rate of $225 an hour, for time Delvin spent on "Mission College project coordination and management" on May 26, 2009, and for "Meeting at Mission Campus w/ Project Team, tour campus buildings, discuss issues" on Oct. 8, 2009.

The firm collected at least $522,000 in district bond money from Inici for its work at Mission in 2009, records show.

A top fundraiser

After Inici, the campus contractor that paid the most money to M. Delvin & Associates was Gateway. The firm's owner, Art Gastelum, has been a top campaign fundraiser for the college district's elected trustees.

Gateway holds a contract for up to $10 million for construction management services at campuses throughout the district.

In March 2009, a Gateway official signed a work order authorizing payments to M. Delvin & Associates as a subcontractor for providing a construction manager for West L.A. College.

Over the next eight months, Gateway paid the Delvin firm $118,000 for the manager's services.

Meanwhile, at Mission College, Gateway's Quintanilla tried to line up additional work for M. Delvin & Associates, records show.

"You guys want to do work in Iraq?" Quintanilla asked Hoefel in an October 2009 e-mail, after getting a lead on a Ministry of Oil project there.

Hoefel forwarded the e-mail to Delvin, who responded, "Not a chance."

Quintanilla also tried to increase the firm's business at Mission. In May 2009, he told Delvin that he wanted to fire building inspectors employed through another contractor and "have your group provide whole-building commissioning" in its place.

"I need you to review their proposal and make sure that you guys exceed their level of services," Quintanilla told Delvin in an e-mail, with a copy to Hoefel. "Thoughts?"

"We are definitely up for that," Delvin wrote back.

Quintanilla, in an interview, said the opportunity never materialized.

Another Mission College builder that hired M. Delvin & Associates was Masters Contracting Corp.

On her financial disclosure statements for 2009 and 2010, Hoefel said M. Delvin & Associates received more than $10,000 from Masters in each of those years. The forms do not specify whether the money was for work done at the college district.

But e-mails between Quintanilla and Michael Delvin indicate that Masters hired M. Delvin & Associates as a subcontractor for inspection work at Mission.

In a December 2009 e-mail, Delvin asked Quintanilla to verify that his firm could charge Masters $100 an hour for providing a construction inspector.

Quintanilla replied that he had talked to a Masters executive, and "I would think that he would not oppose a billing rate of 95 an hour."

In the same e-mail exchange, Delvin asked Quintanilla for help getting business with another district contractor, Sinanian Development. Delvin wanted to supply a "quality assurance" worker for an athletic field project at $100 an hour, he wrote.

In his reply, Quintanilla was upbeat: "Maybe I can get u 100 for the ballfields guy, let me meet with sinan today."

Quintanilla forwarded the e-mail exchange to Hoefel.

In an interview in a construction trailer at Mission, Quintanilla initially denied trying to get work for the firm. Confronted with his e-mails, he said he had helped contractors "help each other," describing it as a gesture of friendship for Hoefel.

"I just plain forgot that she would have a financial interest," he said. "I mean, that's my honest truth."

M. Delvin & Associates ultimately did not get any work on the Sinanian project, Quintanilla said.

"I don't think I did anything wrong," said Quintanilla, who left the construction program in October. "Something stupid, in retrospect, yes, by helping her, but nothing wrong."

paul.pringle@latimes.com

gale.holland@latimes.com

michael.finnegan@latimes.com

Copyright © 2014, Los Angeles Times
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