Plan to disband Vernon gains steam

Los Angeles County prosecutors have been building a highly unusual case, arguing that scandal-prone Vernon isn’t a true city and should be disbanded.

It started four years ago, when the district attorney’s office was once again in Vernon, investigating allegations of public corruption in the industrial city south of downtown L.A. Over the last 80 years, such investigations had become a regular occurrence in Vernon. And even when prosecutors filed charges, little seemed to change.

Some in the district attorney’s office began thinking about Vernon differently, questioning whether something more radical than another round of criminal charges was required to fix the community.

“There’s this arrogance of, ‘You can’t touch me. OK, so I get fined. Big deal. So I don’t live in the city, big deal,’” said Lael Rubin, a bureau director for the district attorney’s office.

Prosecutors began laying out a plan to essentially dissolve Vernon’s local government, producing a blueprint for disincorporation as the only way to fix the city. Prosecutors presented their plan in 2006 to a civil grand jury, which told the district attorney that the matter should go to the Legislature, Rubin said. Before that occurred, she said, the effort stalled amid a debate over the best way to proceed.

But it’s now back on the table amid new corruption charges in Vernon and an expanded investigation by the California attorney general’s office.

Dist. Atty. Steve Cooley said last week that he believed Vernon should be disincorporated. The city has been run like a fiefdom for generations by a small group that reaps financial rewards and faces no public accountability, he said.

For Assembly Speaker John A. Pérez, the latest investigation brought up a longstanding question about the city, which has only about 90 residents but is home to close to 2,000 businesses and which critics say has been controlled for decades by one family and a cadre of associates. “There’s still a bigger issue: whether Vernon is a legitimate city,” he said.

In documents obtained by The Times, including a report presented to the grand jury, prosecutors made the case that Vernon could never be allowed to incorporate as a city today because its structure is inherently undemocratic. The few residents are largely beholden to the city government because they either work for the city or live in city-owned housing, officials said. Contested elections are rare, prosecutors argued, and with little accountability from voters, public corruption has been allowed to fester at City Hall.

In the documents, prosecutors also argued that Vernon’s status as a city essentially deprived the county and surrounding cities of taxes that could be used for schools, hospitals and other services.

Many of the latest questions have come on the heels of accounts in The Times of high pay and travel expenses for top Vernon officials, including first-class flights to New York and Ireland and thousand-dollar-a-night stays at luxury hotels including the Ritz-Carlton in New York.

Last month, The Times also reported that an ex-employee of the city’s former contract security firm said he had been given a reduced-rent apartment owned by Vernon in exchange for voting for incumbent council members. Several Vernon officials had made $500,000 to more than $1 million a year, with Eric T. Fresch, a former city administrator and city attorney now paid as a legal consultant, making $1.6 million in 2008. Two weeks ago, Donal O’Callaghan, Vernon’s former city administrator, was indicted by a Los Angeles grand jury on charges of conflict of interest and misappropriation of public funds involving two contracts the city established with his wife.

“This place pretends to be a city, and it’s not,” said Assemblyman Hector De La Torre (D-South Gate). “We can’t allow, in the state of California, that kind of in-your-face subterfuge you find in Vernon. We should not allow it to exist.”

De La Torre said he supports the idea of disincorporating Vernon or merging it with other cities to create a large city that would be subject to greater scrutiny. He said that, like Cooley’s staff, his office studied the possibility about three years ago and concluded that disincorporation could be accomplished but would be challenging.

No city has been involuntarily dissolved in California. But there have been examples elsewhere.

The tiny town of New Rome, Ohio, was involuntarily disincorporated six years ago, amid accusations that it was just a money-making speed trap masquerading as a city.

Cooley’s office cited the legislative action that led to the dissolution of New Rome as a model for doing away with Vernon.

District attorney records detailed prosecutors’ previous efforts to have Vernon disincorporated.

Prosecutors began building their case while investigating the city’s 2006 election. Vernon’s leaders fought hard to keep three men from forcing the first contested election in 25 years, paying armed private investigators — two of whom were arrested on suspicion of pulling guns on people — to follow the men all over Southern California. And prosecutors felt the city was “stonewalling” efforts to collect public records needed to conduct a corruption investigation.

The blueprint for Vernon disincorporation makes repeated mention of the criminal investigations and cases that have arisen out of the city over the decades. But it also broadly questions whether Vernon is a real city. The conclusion was that the so-called exclusively industrial city could not be reformed like other places because democratic accountability was simply not in its political DNA.

“Due to the unique characteristics of the city of Vernon, such as its small resident population beholden to its elected officials,” the report said, “Vernon will continue its legacy as perhaps the oldest continuous political machine in the country.”

Over the decades, Vernon has been a magnet for controversy, much of it involving allegations that its city fathers have gone to unlawful lengths to maintain power. In the 1940s, a county grand jury launched a corruption probe that resulted in the mayor and five other officials being indicted on charges of voter fraud.

Charges against the mayor, John Leonis, were dropped, but four other people, including the fire and police chiefs, were convicted. In 1978, Leonis’ grandson, Leonis Malburg, was indicted along with the city clerk at the time, Bruce Malkenhorst, and a city attorney on charges of voter fraud, perjury, extortion and bribery. The charges were dismissed based on misuse of hearsay testimony during the grand jury proceeding, according to the district attorney’s office.

In 2006, Malburg and Malkenhorst were again charged with public corruption. Malburg was convicted last year, and Malkenhorst awaits trial.

Despite the scandal, Vernon’s business community is wary about disincorporation.

Peter Corselli, a manager at U.S. Growers Cold Storage, said Vernon is still, by and large, a business-friendly town. He worries that disincorporation could change that. But he admits that in recent years utility rates have gone up, and many people wonder whether the high salaries have played a role.

Steve Freed, president of the Vernon Property Assn., said many business owners think the city should not be disincorporated. Instead, they argue that it should be required to allow property owners to vote in its elections. There are no examples of this type of government in California, but some municipalities in other states do give property owners a vote.

Involuntarily disincorporating Vernon would require state legislation.

L.A. County prosecutors drafted language for such legislation that, though aimed at Vernon, would apply to all cities that have fewer than 500 residents and are smaller than 10 square miles. The proposal allowed for disincorporation in cases in which a city had a history of malfeasance, defined as meeting two of a list of conditions including voter fraud, a high-ranking official convicted of public corruption, violations of the state’s open-meetings law and abuse of public funds.

The process would call for prosecutors to send a report to the attorney general, who could then file a legal action with a Superior Court in the city’s county. The court would ultimately rule on whether to disincorporate a city.

In the wake of the latest revelations in Vernon, both De La Torre and Pérez said they would weigh some type of legislation that they believe has a chance at passage. Disbanding Vernon is going to be difficult, Pérez said, but “drastic options must be evaluated.”

hector.becerra@latimes.com

sam.allen@latimes.com