Officials rethink San Gabriel Valley agency operations

Local officials are considering changing the way the San Gabriel Valley Council of Governments operates after the arrest of its executive director on conflict-of-interest charges.

Nick Conway, 60, surrendered to authorities on June 29 after prosecutors charged him with allegedly funneling funds from the council to his private consulting firm.

Prosecutors say Conway’s company, Arroyo Associates Inc., improperly received $143,000 to manage state and county transportation grants for the council.

The council includes 31 local cities — from Pasadena to Pomona — and representatives of nearby parts of Los Angeles County. It works on regional planning issues and seeks grant funds for road, transit and environmental projects.

Before Conway’s arrest, the council was studying whether to make Conway work directly for the agency instead of serving as an outside contractor.

But South Pasadena Mayor Michael Cacciotti, who also serves on the council of governments, said the organization doesn’t want to place full-time employees on its payroll because of the related pension and healthcare costs. By contracting with Arroyo Associates, the agency avoids those expenses.

Nonetheless, he said, the agency has to change the way it does business.

“It’s a murky area we have to address much sooner, rather than later, now that these issues have come up again,” Cacciotti said. “We really have to change the structure.”

Conway’s work and the role of Arroyo Associates have been under scrutiny for several years. Prosecutors investigated a possible conflict of interest in 2006, but brought no charges, according to Cacciotti.

The California Department of Transportation released two audits — one in 2006 and one in 2011 — looking at the council’s management of grants for the Southern California Assn. of Governments and the Metro Gold Line.

The 2006 audit found Conway had a conflict of interest and ordered the council to return some funds to the Southern California Assn. of Governments. In the 2011 audit, Caltrans asked that the council return $89,262 of a $250,000 Gold Line grant because of alleged conflicts of interest and mismanagement.

Walnut Councilman Tom King, former council of governments president, said it wasn’t legal for Arroyo Associates to be awarded council money for managing grants from agencies such as Caltrans or Southern California Edison.

“You can’t do that; it’s like pay-as-you-go,” King said.

But other council members said they and their staff attorney approved the management deals, and that Conway appears to them to have done nothing wrong.

“This isn’t one of those deals where somebody in a position of authority has a secret company and is awarding contracts without people knowing,” said Terry Tornek, a Pasadena councilman and a representative on the panel.

“It’s alleged [Conway] could be awarding work to his own company and profiting by insider trading,” Tornek said. But, he added, “I found [Conway’s arrest] to be very startling. I’m at a loss; he certainly never impressed me as doing anything illegal.”

Dave Spence, a La Cañada Flintridge councilman and former president of the San Gabriel Valley Council of Governments, called Conway’s arrest a tragedy fueled by a personal vendetta from other council of government representatives.

“He was entitled to have the costs associated with managing grants paid for,” Spence said.

adolfo.flores@latimes.com