Water District Employees’ Kin Work for Contractors : Santa Margarita: Officials’ children have been hired by firms that won non-bid pacts. Illegality is denied.

At times, relations between the Santa Margarita Water District and its contractors have seemed almost like a family affair.

In numerous instances, the children of district officials have been hired by companies that were awarded lucrative, non-bid contracts by the district.

Members of Michael P. Lord’s family, for instance, were hired by two of the water district’s largest contractors at the same time that Lord, the district’s assistant general manager, was recommending that those firms be awarded millions of dollars in contracts.

Susan Lord, his daughter, worked for MacDonald-Stephens Engineers doing computer drafting from mid-1988 to mid-1990. Lord’s son, Ken, worked as an intern for Robert Bein, William Frost & Associates during the same two-year period.

Bein, Frost and MacDonald-Stephens have received $17 million worth of contracts from the Santa Margarita district in four years.

Lord and his boss, General Manager Walter W. (Bill) Knitz, were suspended last month and are under investigation for accepting nearly $60,000 in gifts from contractors, developers and bankers, some of whom they recommended for non-bid contracts. In Lord’s case, for example, he accepted close to $19,000 worth of gifts from Bein, Frost and MacDonald-Stephens, records show.

The same state law that prohibits officials’ recommending contract awards to companies that have given them $250 or more in gifts in the previous year also says: “No public official at any level of state or local government shall . . . attempt to . . . influence a government decision . . . if the decision will have a material financial effect . . . on a member of his or her immediate family. . . .”

Don B. Schone, president of the water district’s Board, said he was sure that no laws were broken by any of those involved, but added, “this is something that needs to be reviewed and covered in our (forthcoming ethics) policy.”

Lord is by no means the only district official whose offspring have gotten jobs with Santa Margarita’s contractors. The children of at least three other district officials have been hired by district contractors. And a number of those contractors, in turn, have relatives who have been employed by the water district.

Gary M. Pohlson, Lord’s attorney, said Tuesday that there was nothing improper about Lord’s children being hired by district contractors.

Lord’s “kids went through the normal interview process,” Pohlson said. “They are both talented, smart youngsters. They didn’t get paid any extra money; they just got regular wages. There is nothing inappropriate about what happened.”

Some management experts, however, said it creates the appearance of a conflict of interest for the children of influential district officials to secure jobs with companies that have been awarded substantial contracts by the district.

“It winds up looking like you helped a public official’s kid get a job because you are getting contracts,” said Farouk Abdel-Wahed, chairman of the management department at the Cal State Fullerton School of Business Administration and Economics.

“In my opinion, it’s a conflict of interest,” said Russell Patton, personnel manager for Orange County.

The blood ties between Santa Margarita and its contractors, however, do not run afoul of the county’s anti-nepotism policy, which only prohibits family members from working directly under the supervision of a county official to whom they are related.

Ernie Schneider, county chief administrative officer, said there would be nothing wrong with his son getting a job with a county contractor, as long as he was qualified and was hired on a competitive basis.

But, he added, “it would be inappropriate for me to call someone up and say, ‘Hey, give my son a job.’ ”

Both Bein, Frost and MacDonald-Stephens have had their official records subpoenaed by a joint law enforcement task force looking into gift-giving to Knitz, Lord and other Santa Margarita officials.

Beside Lord, The Times has found the following family connections between the district and its contractors:

* John Seymour, who works in the computer services division of Bein, Frost, is the son of Dave Seymour, the district’s water distribution manager. Robert Kallenbaugh, the engineering company’s president, confirmed John Seymour’s employment with Bein, Frost and said it started several years ago. He declined comment on the situation. John Seymour did not return a call seeking comment.

* Diana DiPietro has worked for Bein, Frost’s media services division for nearly two years. She joined the engineering company while her father, C.J. DiPietro, was the operations manager for the water district. DiPietro left the district in February, 1992. Neither Diana nor her father wanted to comment.

* Danny Stephens, 35, began working nearly five years ago with the water district as an operator at the Chiquita treatment plant. Danny Stephens is the brother of David Stephens, part-owner of MacDonald-Stephens Engineers and a close friend of Knitz. Knitz received $7,240 in gifts from Stephens’ firm, records show. After granting one interview to The Times, Knitz has declined all comment. A spokesperson for MacDonald-Stephens also declined comment, and Danny Stephens could not be reached.

* Charles J. Maranto, son of Charles D. Maranto, the district’s former banker, worked for the district between August, 1990, and January, 1991, as a maintenance worker. The Times has reported that millions of dollars in district funds followed Charles J. Maranto as he moved to three different banks. The father noted that his son had not worked for the district for several years and declined further comment.

* Robert J. Regan III, 26-year-old son of water district operations director Robert J. Regan, was hired by Wal-Con Construction Corp. as a truck driver after the company had been awarded a multimillion-dollar, no-bid construction contract in unusual circumstances. The father signed some of the change orders that made the contract more lucrative for the construction company.

District spokesman Scott Hart said the elder Regan never knew his son was pursuing a job at Wal-Con until after the young man had already been hired. Hart said Regan never used his influence to get a job for his son.

* Jeff Moshier was given a summer job in 1985 at the district at the same time that his father, Martin Moshier, was a member of Santa Margarita’s board of directors. He was hired as a full-time employee in December, 1990, and now works as a junior accountant. He also works on the safety committee, according to a company newsletter. He declined to comment.

Shirley Grindle, an activist who keeps watch on countywide political activities, said it’s “quite a coincidence” that jobs went to district and company relatives.

“When you start establishing personal relationships, as these people obviously have, then your judgment gets clouded,” Grindle said. “This is a good example of unwatched, obscure government at its worst.”

Milt Jacobson, a resident of the district who criticized the board of directors at a public meeting last month, said the family ties between the district and various companies are incomprehensible.

“I think a lot of people would get angry about that,” he said. “I can’t believe that’s going on. How much worse can it get?”