4 Accused of Rigging Construction Bids on Orange School Jobs

After a two-year investigation, the first indictments were handed down Wednesday against four people in an alleged multimillion-dollar contract bid-rigging scandal in the Orange Unified School District, the district attorney’s office announced Wednesday.

The school district’s former maintenance supervisor, Steven L. Presson, and his wife were indicted and arrested on felony charges of theft and misuse of public funds and property. Also indicted were William A. Gustafson and Ronald Brock, two officers of the Brock and Gustafson Construction Co. of Orange, which did business with the district.

The four are accused of taking part in a bid-rigging scheme in which the Pressons received kickbacks in the form of money, property or services and the contractors received $3 million in contracts with the school district, Deputy Dist. Atty. Martin G. Engquist said Wednesday.

‘Elaborate Scheme’

According to the indictments, the alleged bid-rigging occurred from 1980 through 1984 and involved “an elaborate scheme” in which dummy bids were made by several firms but a pre-selected contractor got the award.

No high officials, such as former school superintendents and school board members, were included in the indictments, but the investigation is continuing, Engquist said.

Steven Presson, 33, and Diane Elizabeth Presson, 37, who now live in Florida, voluntarily surrendered and flew back to California to be arrested and appear in Orange County Superior Court on Monday, Engquist said. Gustafson, 33, who now lives in Cave Rock, Nev., and Brock, 40, who lives in Hemet, both surrendered and appeared in court Wednesday, the prosecutor said.

Their arraignment was continued until May 29, and the four have been released on their own recognizance, he said.

The indictments were handed down by the Orange County Grand Jury, which heard testimony about the alleged bid-rigging scheme from 70 witnesses, Engquist said.

Resigned in 1984

Presson resigned from his school district position in December, 1984, a few months after an internal audit by the school district began raising questions about contract expenditures and school property.

The first details of the alleged bid rigging became public last July 9, when the Orange Police Department filed search warrant affidavits in Orange County Superior Court. Those affidavits charged that Steven Presson gave inflated contracts to a few companies between 1979 and 1984 in exchange for gifts and services.

The search affidavits also said that one of the contractors, William Salling, owner of Arboles Creative Woodesign Inc. of Orange, was giving evidence in exchange for a grant of complete immunity from prosecution.

Engquist confirmed Wednesday that Salling was given immunity in exchange for his testimony.

According to the search warrant affidavits, Steven Presson directed Salling to inflate some contract appraisals and divert the money to William Gustafson, “even though Mr. Gustafson was not going to be involved with any portion of the construction.” The court documents add: “Mr. Presson explained this conduct by telling Mr. Salling that he (Presson) needed to get some money to Mr. Gustafson.”

Court documents have not specified a total dollar amount for money, goods or services diverted in alleged kickbacks to the Pressons.

In a prepared statement, the district attorney’s office said Wednesday that “contractors received approximately $3 million over a five-year period from 1979 to 1984. It has been alleged that although these contractors were paid, much of the work has never been completed and much of the work was duplicated.”

The Orange Unified district includes schools in Orange, Villa Park and parts of Anaheim, Garden Grove and Santa Ana. Because of declining pupil enrollment, the school district has suffered severe budgetary problems in the last 10 years.

A special investigation by the state controller’s office said last December that the school district’s poor fiscal and management practices contributed to the alleged bid-rigging scandal. District officials, in response, said they already had changed to better fiscal procedures.

The indictments, which were made public Wednesday, said, “ . . . All of the offenses alleged above were first discovered on or after Aug. 9, 1985, by Investigator John Whiteley of the Orange Police Department. On that date, Investigator Whiteley first interviewed Mr. William Salling and learned that the contractors involved in the bidding process of the Orange Unified School District were not competitively bidding the construction projects and were paying each other for work performed under the names of other contractors and making payments to school district personnel as a result of being awarded construction contracts.”

While the court documents refer to several contractors as being involved in the alleged bid rigging, so far only officers of Brock and Gustafson Construction Co. have been indicted.

Investigation to Continue

In a press release on Wednesday, however, Engquist said: “The investigation into the Orange Unified School District will continue in an effort to determine whether other persons were involved in the alleged illegal activities.”

William G. Steiner, current president of the school board for the Orange Unified School District, said Wednesday that the school system has made many changes since 1984 to make sure contracts are bid and executed properly.

“This situation came to light in 1984 when the board hired a firm to make a professional audit,” Steiner said. “When some inconsistencies were discovered, the board instructed the district staff to notify the Orange Police Department.”

Steiner said a follow-up audit by the same firm is being made this year “to make sure we are on track. . . . We are hoping that we can put these past unfortunate events behind us.”

John Ikerd, acting superintendent of the school district, said that the changes recommended by the 1984 audit team have been made in district operations. “The needs have been identified and corrected,” he said.

The grand jury indictments appeared to exonerate top district officials.

According to the indictments, the Orange Unified School District, before 1985, “did not have actual or constructive notice of all the facts upon which these counts (criminal charges) are founded . . . the crimes were not discovered earlier because the school district was told lies and/or partial truths by the defendants about the facts surrounding the bidding process and the construction process. . . .”