Orange Gets Double Dose of Good News

Two scandals that cost the city of Orange millions of dollars and happened several years apart each came to a head Tuesday with good news on both fronts.

First, the city won a $4.2-million judgment stemming from a suit involving Steven D. Wymer of Newport Beach, who defrauded Orange and other cities of $105 million.

Then the City Council announced that the city’s current trash hauler, under investigation on suspicion of stealing up to $6 million in city funds, had agreed to put $1 million into an escrow account for potential reimbursement. In what officials called an unrelated move, the council also voted to reduce trash rates and credit customers with rebates.

City Atty. David A. De Berry said the escrow account “gives the city additional assurance” of the commitment by the contractors to “make the city whole” for any losses.

In the Wymer case, the judgment was awarded last week by an arbitration panel for the National Assn. of Securities Dealers in Los Angeles and released publicly on Tuesday.

The city had sued Refco Securities, the firm where Wymer had trading accounts. Wymer was sent to prison in 1993 for swindling Orange out of $7.2 million, and defrauding other cities as far away as Iowa.

“This is important and positive news at a good time for the city,” said David Kiff, assistant city manager. “It shows the city’s persistence in seeking redress when we believe we’ve been defrauded.”

Through his company, Institutional Treasury Management Inc., Wymer lured primarily small cities into investing with him by promising big yields.

To achieve those lucrative yields, Wymer made risky financial investments and lost, according to federal securities regulators. He also shifted funds between accounts to cloak those losses and skimmed millions to buy a private plane and vacation homes.

Last year, his 14 1/2-year prison sentence for mail and securities fraud was reduced to seven years and three months.

In the city’s latest scandal, the Hambarian family, owners of the city’s trash hauling and recycling companies, announced the establishment of an escrow account as the criminal investigation moves forward.

Since mid-April, the Orange Police Department has been conducting a criminal investigation into the suspected theft of money belonging to city from the sale of glass, paper, aluminum and other material salvaged from the city’s trash stream.

An accountant for the Hambarians had been warning city officials since January 1995 that he had found serious irregularities with the books of the recycling company. A national accounting firm hired by the city confirmed the accountant’s finding and the police were notified.

Two informants have since come forward to tell police that as much $6 million may have been diverted from the city.

Meanwhile, on Tuesday night the council voted to reduce trash and recycling fees and to credit a one-time rebate to residents’ accounts.

Residents will receive a credit of $25.18, and non-residential trash customers will be credited with $12.12. Ongoing reductions for residents include cuts in recycling and trash pickup costs from $21.86 for every two months to $20.26.

The council denied that the reductions and rebate were related to the handling of the trash scandal. They attributed them instead to a decrease in the cost of dumping garbage at the county landfill from $27 to $22 per ton.

But residents were skeptical of the council’s move, and suggested it was a maneuver meant to deflect criticism. Some in the crowd also called for the resignation of Mayor Joanne Coontz.

“It seems odd that we don’t have good books, but we have enough money to offer rate reductions,” said Nick Lall, one resident who addressed the council.

The council reserved the right to impose further reductions or rebates if it recovers some of the money alleged to have been stolen.

Carole Walters, the president of the Orange Taxpayers Assn., presented the City Council with a petition with 342 signatures demanding the immediate termination of the contract with Sam and Alyce Hambarian and their sons Michael, Donald and Jeffery.

“We want to stop the contract now,” Walters said. However, De Berry, the city attorney, recommended that the contract be upheld unless the ongoing investigation provides proof of wrongdoing.

The council did, however, vote to deny the automatic contract extensions that the companies, Orange Disposal Service Inc. and Orange Resource Recovery Systems Inc., have come to expect. The Hambarian family has hauled the garbage in Orange since 1955.