Prosecutors and criminal investigators are joining a Los Angeles City Hall effort to determine how two controversial Department of Water and Power nonprofits have spent more than $40 million in ratepayer money, The Times has learned.
An official in Dist. Atty. Jackie Lacey’s office, speaking on the condition of anonymity, said the agency is “participating in an effort to obtain the records and determine whether a crime has been committed.”
It was not immediately clear whether prosecutors had formally begun an investigation or sought grand jury subpoenas requiring production of financial records on the two nonprofits.
But the district attorney’s involvement could help end a months long stalemate between city officials, who want the records, and officials at the DWP’s largest union, who have been fighting to keep them private.
City officials, including Mayor Eric Garcetti, have been trying unsuccessfully to get the documents since September, when The Times reported DWP officials had only scant information on the nonprofits’ expenditures.
The groups were created more than a decade ago to improve relations between labor and management after layoffs at the city-owned utility. The organizations – the Joint Training Institute and the Joint Safety Institute – are overseen by DWP General Manager Ron Nichols and the union’s politically powerful business manager, Brian D’Arcy. No detailed public accounting of the group’s expenditures has been released since their formation.
Nichols, who has been unwilling or unable to provide the city officials the records they requested, announced his resignation this month, a day after attending a meeting with city auditors about the groups.
D’Arcy skipped the meeting, prompting City Controller Ron Galperin to subpoena the labor leader to compel him to testify and produce financial records.
D’Arcy subsequently filed a lawsuit asking a judge to quash the subpoena, saying the nonprofits are independent entities not subject to the city controller’s administrative investigative authority.
Loyola Law School professor and former U.S. prosecutor Laurie Levenson said such a civil battle could drag on “forever.” But the involvement of the district attorney in the dispute could “shake things up,” she said, noting a criminal investigation would be taken more seriously. “Judges give much more deference to prosecutors bringing criminal cases. It gets people’s attention.”
Galperin offered no comment on Tuesday’s developments, and D’Arcy could not be reached for comment.
Limited records provided The Times by the DWP show the nonprofits have spent about $1 million a year on salaries for a few of the institutes’ top executives.
A Joint Training Institute administrator was paid $212,236 in 2012, the records show. Jon Pokorski, another top administrator and president of the electrical workers’ union local, was paid $171,361.
Federal tax forms filed by the nonprofits offer only broad summaries of the organizations' outlays, including more than $360,000 spent on travel from 2009 to 2011 and nearly $2.4 million spent on “other.”
Early Friday afternoon, a Times reporter visited the nonprofits’ offices at a DWP electrical plant in Sun Valley. The twin glass doors were locked, and no one responded to repeated knocks. Reached on his office telephone, the training institute’s administrator, John Vanacore, said he could not comment and hung up.