Federal Audit Blasts Well-Connected L.A. Firm

Cordoba Corp., a politically prominent Latino contracting firm, is harshly criticized in a final Commerce Department auditor’s report for improperly spending $675,000 in government funds in a failed effort to run a federal program for minority businesses in Los Angeles.

The recently completed report, obtained by The Times, is the result of a lengthy audit that Cordoba owner George Pla predicted would find his company blameless in the demise of a Los Angeles center established by the federal government to assist minority businesses.

In response to the final report, Pla, a close ally of Los Angeles City Councilman Richard Alatorre whose firm holds many municipal contracts in the Los Angeles area, emphasized that he has not exhausted his appeals. He said that top Commerce Department officials still must decide whether to accept the audit results.

“This is not over; it is only part of the process,” he said in a telephone interview.

If his appeal fails, however, Pla acknowledged that he will be obligated to repay the Commerce Department $222,756 of the money that the auditors said he improperly claimed as costs of the so-called MEGA Center.

Until recently, Cordoba was part of a consortium known as Metro East Consultants, which was being considered for a $65-million contract to oversee construction of the Red Line subway extension. Metro East lost the contract, in part, because required information was left out of its bid.

The MEGA Center, opened in downtown Los Angeles in 1994 with a $3.1-million federal commitment, was a highly touted element of the Clinton administration’s effort to boost the then-beleaguered California economy. When the center closed in 1995, government officials said that it was not performing as anticipated.

The auditors found that Cordoba, in running the MEGA Center, improperly claimed about $675,000 in costs, received $223,000 in unearned funds, accrued debts of $263,000, was delinquent in paying more than $483,000 in taxes and failed to provide adequate services to the minority businesses that paid for help.

In addition to their criticism of Cordoba’s management of the Los Angeles program, the Commerce Department auditors issued an unusual warning to other federal agencies to be careful about hiring Cordoba for future contracts.

“Cordoba has clearly demonstrated that it did not operate as a responsible recipient of federal funding,” the report said.

The auditors rejected Cordoba’s argument that most of the problems experienced by the company were brought on by actions of the Commerce Department, which oversaw the MEGA Center project.

“It is rather ironic,” the auditors noted, “that a company engaged to provide sophisticated financial services and business advice would seek to justify its own failure to meet business obligations by claiming it was forced into a bad deal.”

The auditors noted that many clients complained about the services they were provided by the MEGA Center, which charged fees to minority businesses seeking help. It noted that 41 clients have requested refunds totaling $17,329, and the company has refunded $10,200 to 23 of those clients.

Critics have alleged that Cordoba received the MEGA Center contract by using its political connections.

Among those who wrote letters to the Commerce Department on Cordoba’s behalf were Rep. Matthew G. Martinez of Monterey Park and then-Deputy Mayor Al Villalobos.