4 Main Figures Charged in Port District Fraud

The four alleged masterminds behind a purchasing scam that authorities say cheated the San Diego Unified Port District out of at least $700,000 were charged Thursday with multiple felony charges of fraud and theft.

The men allegedly used the money to pay for a variety of private merchandise such as auto repairs, televisions, stereos and computers.

The charges against the men, two of whom worked in the Port District’s purchasing department--including its former director--and two others who worked for the Genuine Parts/Napa auto parts store, are the result of an 18-month investigation. The district attorney’s office says the probe is continuing and could involve about 20 more people.

Thursday’s charges follow by two months a complaint lodged against a former Harbor Police lieutenant who authorities say benefited from the scam by receiving $16,045 in goods, services and materials--such as repairs to his truck and the construction of a patio and fence at his Ramona home--that were billed and paid for by the Port District.

First Guilty Plea

Last month, the former policeman, William Clair, who was described by authorities as being on the periphery of the scandal, pleaded guilty to one count of felony grand theft as part of a plea agreement with the district attorney’s office. Clair, who is to be sentenced on Feb. 28, faces up to a year in County Jail and a maximum fine of $10,000.

Anthony D. Samson, chief of the district attorney’s fraud unit, said the four men charged Thursday were “the ones who caused it to happen . . . the core group” that both initiated and conducted the scam at least from Jan. 12, 1986, to July, 1, 1987.

The four men, who will be arraigned Feb. 2, were identified as: Richard Miles Cersosimo, 48, former director of the purchasing department; Rudi Michael Enriques, 37, a meter repairman in the Port District’s purchasing department; Paul Robert Manes, 48, who was manager of the auto parts store on 12th Avenue, and Arnoldo Olivarria Castillo, 54, the sales agent who handled the Port District’s account for the auto parts store.

An arraignment had been scheduled for Thursday morning, but only Manes and Castillo appeared before Municipal Judge Charles L. Patrick, who granted a postponement. Enriques’ attorney said he was on his way to the courthouse, and the lawyer for Castillo said his client was on vacation in Mexico and is expected to return next week.

According to Samson, all the defendants knew they were the focus of the investigation, and both Enriques and Manes were publicly named as taking part in the alleged conspiracy when Clair was charged in November.

As outlined in documents, Enriques faces 21 felony counts and a maximum 10 years in prison; Cersosimo faces 11 counts and about 8 years in jail, and Manes and Castillo each face 9 counts and 8 years in prison. The felony counts range from grand theft and appropriation of public monies for personal use to falsification of accounts and conspiracy to defraud another of property.

Enriques and Cersosimo both resigned from the Port District, and Manes and Castillo have been suspended without pay, said Roy Hedges, general manager for the Napa Distribution Center of San Diego.

Samson said the four men worked as a team to steal from the Port District. The men allegedly used a blizzard of phony and altered business documents, such as invoices and requisition forms, to cover up illegal purchases that were paid for by Port District funds.

The Port District paid for items it never received, and the bogus charges made by the auto parts store contained a 67% markup, Samson said. He noted that the markup not only provided the store with profit but also helped Manes and Castillo individually because both were paid a commission. The prosecutor said that Napa Auto Parts is not under suspicion and that company executives have cooperated with the investigation.

A key to the scandal was that, although individual purchases may have cost several thousand dollars each, they were “laundered” through the Port District’s purchasing system by way of a series of low-cost invoices, each of which were kept below $250, thus allowing them to be routinely paid without question.

Port District officials say they have instituted changes in the purchasing system to prevent a recurrence of the scam.

A new aspect of the fraud revealed Thursday accuses the four of also engaging in a bid-rigging scheme. According to the complaint, Cersosimo allegedly solicited official bids for equipment, which Castillo signed for Napa Auto Parts offering prices below or near the cost at which Napa would obtain the items on the open market.

Cersosimo, according to the charges, would then declare Napa the low bidder. Manes allegedly would then bill the Port District at the price the auto store officially submitted. But then, the complaint charges, Manes would have Napa bill the Port District separately for any difference between Napa’s bid price and any higher cost Napa paid in the marketplace for the items, plus a 67% markup over and above Napa’s actual cost.

Samson said the investigation has taken so long because of the lengthy paper trail and altered documents the district attorney’s office has had to analyze. He estimated that his office has pored over 48,000 documents and interviewed more than 140 people.

In all, he believes the scandal may have cost the Port District $1.5 million, though his office has so far been able to identify only about $700,000.