Robert Rizzo steered Bell contracts to business partner, prosecutor says

A Los Angeles County prosecutor Tuesday accused Bell’s former city administrator, Robert Rizzo, of steering city contracts to a partner in a horse-racing business.

Deputy Dist. Atty. Max Huntsman pointed out multiple city agreements with Dennis Tarango’s engineering firm from 2005 to 2009, the years the two co-owned Golden Aggie Ranch Inc. Tarango was the city’s planning director at the time.

Among the documents were requests by Tarango for pay raises and Rizzo-approved environmental reports that Tarango’s firm was hired to conduct. Of the $10.4 million paid to Tarango’s firm since 1995 for its building and safety, engineering and planning services, nearly $3 million was paid out while he and Rizzo were private business partners.

Tarango testified Tuesday that it was Rizzo who proposed that the two start a horse-racing venture to reap tax benefits.

“I mentioned to Mr. Rizzo I was paying a lot of taxes the year before and I’d like to find a way to reduce that,” Tarango said, recounting a conversation he had with Rizzo about seven years ago.

A few days later, he testified, Rizzo approached him and brought up the tax advantages of owning racehorses. After meeting with an accountant, the two formed Golden Aggie Ranch in 2004 as an S corporation, which does not pay federal income tax. Instead, income or loss is divided among shareholders who report it on their own income tax returns. The corporation and its assets, not shareholders, are liable for the losses of the business.

Tarango testified that he believed his relationship with Rizzo was proper and their business dealings were legal.

Rizzo, who has already been ordered to stand trial for misappropriation of public funds through his lavish contracts and awarding of loans to colleagues and city politicians, is also charged with misappropriation of public funds and conflict of interest relating to his business relationship with Tarango.

Tarango testified that Rizzo would give him a breakdown of the expenses each month and Tarango would write a check to Golden Aggie Ranch. In all, the district attorney’s office said, he contributed about $200,000 to the racing enterprise.

He attended races a handful of times a year and said he met Rizzo in Kentucky to purchase racehorses.

Tarango also testified that his business relationship with Rizzo was not a secret and was discussed openly at City Hall. Once, Oscar Hernandez — the recently ousted mayor — joined them at a race in Los Alamitos.

In October 2008, Tarango said, he learned that the city was cutting his company’s business by nearly half. Later that month, Tarango made only a $5,000 payment to Golden Aggie Ranch although he owed $30,000. Huntsman called the timing a “highly relevant fact” that illustrated the symbiotic relationship between Tarango’s private and public dealings with Rizzo.

But Tarango said that his planning firm and horse racing business were kept separate and that he never felt pressured or coerced by Rizzo. He attributed his final, small payment to the struggling economy and an ongoing divorce that left him unable to afford horses.

Tarango said he approached the district attorney’s office after hearing his name in the news.

“I had nothing to hide, so I don’t feel uncomfortable,” he said.

Golden Aggie Ranch has since been dissolved, and Tarango was asked to step down from his role as Bell planning director in October.

Rizzo’s attorney said there was nothing improper about the private business relationship because his client wasn’t approving or benefiting from the contracts Tarango made with the city.

“Obviously, people who work together have relationships together,” James Spertus said. “It is just overreaching for a prosecutor to start fantasizing about possible conflicts of interest that don’t exist.”

As in the previous hearing, Spertus’ request that Judge Henry J. Hall recuse himself was denied.

“In this climate I think it will be extremely difficult for someone to dispassionately apply facts to law and set Rizzo free,” the defense attorney said outside the courtroom.

Spertus also objected to cameras in the courtroom, which Hall allowed, calling the case “a matter of grave public concern.”

corina.knoll@latimes.com