D.A. investigates Bell’s business fees

Los Angeles County prosecutors are investigating Bell’s practice of arbitrarily requiring some business owners to pay thousands of dollars in fees, in the seventh outside investigation into alleged wrongdoing at City Hall.

The Times reported earlier this week that former Bell city administrator Robert Rizzo and others demanded that restaurants, tire shops, auto detailers and a market either pay special fees or guarantee thousands of dollars in sales tax revenue for the city each year. Since then, more merchants have come forward to say they also were forced to pay the fees.

The owner of one Bell car wash said he was so outraged at paying his $300-a-month fee that he wrote “bribe” in Spanish on the memo line of some of his checks to the city.

“I put that because I knew it was a bribe,” said Gerardo Quiroz, who paid a total of $10,000 to the city. Quiroz owns car washes in two other L.A. County cities but said Bell was only one that charged the fees.

The L.A. County district attorney’s office has assigned half a dozen prosecutors and several investigators to look into possible criminal activity in Bell. Investigators have spoken to at least three business owners who allege they were illegally charged under the fee program.

“If we find something that is criminal that we can prove, we will certainly file charges,” said Dave Demerjian, head of the district attorney’s Public Integrity Unit, which is leading the investigation. “We are still looking at a lot of potential issues in Bell ... and other targets.”

Bell city officials announced they were also investigating the fees and could decide in the next few weeks whether to scrap the program. Interim city administrator Pedro Carrillo said some businesses are still being charged the fees and that his office is trying to determine exactly how many. It’s unclear whether the fees would be refunded if they are found to be illegally obtained.

“We will take action, depending on the findings,” Carrillo said.

City records reviewed by The Times as well as interviews show that at least 20 businesses were subjected to fees and that the city collected at least $245,000 in revenues. But the records cover only a fraction of the city’s fee collections, so that number is expected to grow.

It appears that city officials targeted mostly small mom-and-pop businesses.

The district attorney’s probe into the fees marks the latest in a string of investigations in Bell, where eight current and former officials have been charged with public corruption. The state attorney general’s office filed civil charges against Bell officials and has asked a court to appoint a monitor to oversee Bell’s operations. The U.S. Justice Department is investigating potential civil rights and voting rights violations by the city, and the state controller, U.S. Securities and Exchange Commission and State Department of Corporation have each launched probes of Bell’s finances.

The scandal became public in July, when The Times revealed that top Bell officials received huge salaries, notably Rizzo, who was set to earn $1.5 million this year. Revelations about the special fees underscore evidence that the city took unusual and aggressive measures to generate revenues. State auditors already have concluded that Bell levied unlawful taxes and fees on its residents, most of whom earn relatively low incomes. The city also imposed one of the highest property tax rates in Los Angeles County.

Legal experts said the Bell fee program is unprecedented and pointed out that state law requires municipalities to identify the purpose of fees in conditional-use permits. Typically, such fees are used to defray costs associated with the business or development seeking the permit, such as new traffic signals or parking lots.

City officials have been unable to provide any guidelines or other records explaining how businesses were singled out or how the annual fees were calculated. Records show that the fees were deposited into the city’s general fund, which was used to help pay the salaries of Rizzo and other city officials.

In one instance, a tire shop owner paid at least $144,000 over a four-year period, according to city records. Another tire shop owner was required to pay $13,000 a year. Yet the very next permit approved by the city for an auto repair shop did not require the owner to pay any annual fees, records show. One auto dealer had to guarantee the city $80,000 a year in sales taxes or pay the difference.

Some merchants said they felt intimidated or pressured to agree to the terms if they wanted to do business in the city. Some who fell behind on their payments said the only way to appeal was to show up at City Hall and try to negotiate with Rizzo or his assistants. One business owner said city officials threatened to close down his business if he didn’t pay the fees.

Quiroz, the car wash owner, closed his business out of frustration over the fees. Now, he’d like his $10,000 refunded.

“I’m going to do everything possible to get my money back,” he said.

robert.lopez@latimes.com

paloma.esquivel@latimes.com