Accused of Misspending, Job Agency Chief Quits and Predecessor Is Sued
Little more than a year after firing its director for allegedly misusing federal money, an El Monte job-training agency Friday accepted the resignation of his successor, who is under investigation for similar allegations.
The Mid-San Gabriel Valley Consortium also filed suit this week against the previous director, Doug Shaw, who allegedly used $650,000 in federal job-training funds for personal expenses and to pay salaries and benefits to people who were not entitled to the money.
The agency’s five-member board held a special meeting Friday to accept the resignation of Shaw’s successor, Dan Garcia, as executive director. Ron Crossley, 49, the agency’s treasurer, was appointed interim executive director until a permanent replacement can be hired. Garcia declined to comment.
Garcia has headed the agency since May, 1993, when Shaw, 51, was suspended. Shaw, who directed the nonprofit agency for 16 years, was fired in October and is under criminal investigation by the U.S. Labor Department.
On June 1, the consortium learned that Garcia, previously a witness in the investigation, had become a target, said consortium attorney Michael Colantuono. Garcia then voluntarily resigned without giving a reason, Colantuono said.
“We can only speculate that Dan felt that he needed to devote his energy to his family and to his personal situation,” the attorney said.
The agency’s lawsuit against Shaw contends, among other things, that he headed outside businesses that competed against the agency for government contracts and that Garcia, then his assistant, raised the bid on one agency contract so a company run by Shaw could get it.
The allegations of misspending were detailed in an audit last year which revealed that Shaw allegedly used federal money for hotel stays in Las Vegas and purchases at toy stores and lingerie shops, among other things.
Attorney Arthur Lindars, who represented Shaw when he was fired, said he doubted that the amount of money allegedly misspent by Shaw totals the sums detailed in the lawsuit. He also disputed the accusation of misuse entirely, calling it “an unfounded allegation.”
The lawsuit filed Thursday in Los Angeles Superior Court seeks, under federal anti-racketeering laws, triple damages of nearly $2 million from Shaw, two private companies he ran and an accounting firm, among others.
It also seeks an injunction to end one contract with the city of Los Angeles now held by Timely Concepts. That contract to renew dog licenses could total $300,000. The consortium maintains that after being fired by the agency, Shaw, a consultant for Timely Concepts, used insider information to help the company win the contract in April.
Officials from Timely Concepts have said in the past that Shaw’s experience does not qualify as specialized insider information or trade secrets.
Also included in the lawsuit is the Los Angeles auditing firm of Rubin & Ozurovich, which provided financial audits to the consortium from 1988 to 1991, for failing to discover any problems.
Those named in the lawsuit either did not return phone calls Friday or declined to comment because they had not yet seen a copy of the suit.
According to the lawsuit, Shaw:
* Spent $39,622 for personal items using consortium credit cards and cash advances from January, 1989, to December, 1992.
* Paid $452,579 in salaries to workers at the El Monte City Employees’ Credit Union, the city of Bradbury and the city of El Monte, beginning in October, 1983, and continuing until May, 1993, even though those employees were not eligible to receive federal job-training funds. Lindars said the payments to Bradbury employees had been approved by the board.
* Made $40,534 worth of personal phone calls on a consortium cellular telephone from October, 1987, to May, 1993.
* Bought $69,718 worth of gasoline for personal use with a J.E. Dewitt gas station card from July, 1991, to March, 1993.
* Allowed $44,459 to be spent on unauthorized pay raises, air fare and vacation pay for consortium employees.
* Persuaded his assistant, Garcia, in 1988 to raise the rate the consortium charged the Santa Ana Police Department for collecting dog license fees so Shaw’s own company, Civic Collections, could successfully take over the consortium’s contract by offering Santa Ana a lower rate.
The agency, previously known as the Mid-Valley Manpower Consortium, has an annual budget of about $3 million in federal funds that are routed through Los Angeles County. The consortium provides job training and placement yearly to 1,000 adults and young people in Baldwin Park, Bradbury, El Monte, South El Monte and surrounding unincorporated areas.
Since the allegations of misspending surfaced, the agency has agreed to reimburse the county about $120,000. But the county could ask for more money in the future, which is one reason why the lawsuit was filed, said consortium board Chairman Raul Martinez.
