2 Santa Ana Businessmen Arrested in Fraud Probe

Otto Bade and Paul Sepulveda, two Santa Ana businessmen who have held or been nominated for city posts, were arrested on suspicion of bilking the City of San Jose of thousands of dollars they received for weed-control work that was never done, San Jose authorities said Wednesday.

Bade and Sepulveda, who owned and operated Angels Comprehensive Services Inc., a landscaping firm in Santa Ana that had a $250,000 weed-control contract with San Jose, were the subjects of a two-month investigation by the Santa Clara County district attorney’s office, Deputy Dist. Atty. Michael Adams said.

The investigation was begun by the San Jose city attorney after a discrepancy estimated at $37,000 appeared in a $121,000 bill the company submitted last year.

Police arrested Bade in Santa Ana Jan. 31. Sepulveda, who is originally from San Jose and spent three years on the Santa Clara County Housing Authority, surrendered Monday in Santa Ana. Both were released on their own recognizance, said San Jose Sgt. Kenneth Yules. They are scheduled to be arraigned in San Jose on Feb. 21.

John Cruz, Bade’s attorney in civil matters, said he considers both businessmen “honest gentlemen” and expressed confidence that the billing was an “unintentional error.”

However, investigative sources said that submitting an erroneous bill may constitute a punishable offense. “You can’t submit the bill hoping that if it’s questioned, you can simply say later that it was an error. They could have gotten the money from the bill and said nothing. You can’t have it both ways.”

Adams said both men are accused of two felony fraud counts for filing allegedly false claims. If they are found guilty, each could receive a sentence of three years in prison and a $10,000 fine.

Sepulveda is a former member of the Orange County Health Planning Council who unsuccessfully ran for a seat on the board of the Santa Ana Unified School District in November, 1983.

Bade, who has business ties throughout Orange County, was appointed Jan. 20 by the Santa Ana City Council to the Santa Ana Uniform Appeals Board.

In 1984, as part of Santa Ana’s crackdown on slum housing, Sepulveda and his wife, Marylou, were the first to face criminal charges for allegedly neglecting to make repairs on a rental home.

They later pleaded no contest to one count of failing to obey the order of a building official and were ordered to pay a $250 fine and court costs.

Sepulveda drew criticism when he was nominated by Councilman John Acosta to serve on the city’s Housing Advisory Commission in May, 1985. At the time, Acosta praised Sepulveda as highly qualified for the job.

Bade and Sepulveda met three times with the city staff in San Jose in October, but no “acceptable explanation” was received, investigators said.

In a subsequent review of the billings, a city auditor found that the landscaping company’s payroll numbers “just didn’t jibe” with the number of hours charged on the bills.

The weed-abatement program was monitored by the San Jose Fire Department, which received information that the firm had overstated the number of hours worked.

Under the program, the Fire Department would contact the company’s subcontractor to clean up a property if the owner refused to cooperate. The city would later bill the property owner.

The discrepancies arose after Angels Comprehensive completed a three-month contract with the city and then began additional work, Deputy Dist. Atty. Ralph Greene said. Invoices for work the company claimed had been completed were so “unbelievebly outrageous” that the city investigated and stopped payments, he said.

The bills were sent back to the landscaping company, and another company was selected to continue the work, Greene said.

“Very simply stated,” Yules said, “Angels Comprehensive Service allegedly arbitrarily inflated the amount of hours they worked for the City of San Jose.”

Angels Comprehensive has won contracts for thousands of dollars worth of similar work in Santa Ana. The company was awarded a subcontract to help build Santa Ana’s cable television network after Group W Cable won a bitter bidding war for the city’s lucrative cable business.