D.A. Refuses to Prosecute City Manager

Orange County prosecutors announced Wednesday that they will not press criminal charges against former Yorba Linda City Manager Art Simonian, fired by the City Council for allegedly collecting cash bonuses and other compensation without the council’s knowledge.

Deputy Dist. Atty. Michael Lubinski said there was insufficient evidence to prove criminal conduct. The benefits under review appeared to be allowable under the broad terms of Simonian’s employment contracts, he said.

“This is a clear vindication,” said Simonian’s attorney, R. Scott Craig. “We really appreciate the very careful analysis from the D.A.’s office, the first impartial agency to review this.”

Simonian is fighting to get his $142,000-a-year job back, and has filed a wrongful dismissal lawsuit against the city, Craig said. The city is preparing a countersuit to recoup compensation that it contends Simonian received without approval.

A divided Yorba Linda City Council voted 3-2 to fire Simonian on Sept. 7 after a city audit found he had given himself annual bonuses of up to $14,000 and was leasing a $50,000 BMW 540i at city expense. He also received a $1 million “whole life” insurance policy that cost the city $10,790 a year in premiums.

Mayor John Gullixson, who called for the investigation and led the vote to fire Simonian, accused the former city manager of hiding those perks from the council members and, on occasion, falsifying budget documents.

Gullixson criticized the office of Dist. Atty. Tony Rackauckas for dismissing the case based solely on a report provided by the special counsel the city hired to investigate Simonian. Prosecutors did not conduct any independent investigation, or interview witnesses.

“Simonian may have doctored financial documents, and they don’t even want to investigate,” said Gullixson, who is also a private attorney in Yorba Linda.

“What it comes down to, I think, is we have a new D.A. who wants a winning track record, and this case isn’t a slam-dunk prostitution or burglary case,” Gullixson said.

Simonian’s two supporters on the City Council, Henry Wedaa and Mark Schwing, praised the decision of prosecutors and called for an end to the continuing investigation of Simonian by the special counsel.

“Maybe now we can stop the reckless spending of city money on attorneys who only do the mayor’s bidding,” Wedaa said.

The district attorney’s review of the case boiled down to three allegations raised in the city audit: that Simonian improperly awarded himself a 10% bonus without council approval; that he was reimbursed for unauthorized auto lease expenses; and that the city manager acquired a “whole life” insurance policy that was not authorized in his employment contract. Such a policy is a hybrid between insurance and an annuity, and retains a cash value for the policy holder similar to an IRA.

However, Lubinski of the district attorney’s office said Simonian’s contract with the city stated that he was entitled to “all benefits” made available to other Yorba Linda city managers, and the council had approved a management incentive program that permitted bonuses equal to 10% of annual salaries.

Simonian’s contract also stated that he was entitled to a city car or a car allowance. Simonian opted to lease a BMW, which the city paid for and which was not prohibited by the contract, Lubinski said.

Finally, Simonian’s contract entitled him to a $1 million life insurance policy, above the standard term life policy offered for other city employees. Again, nothing in the contract barred Simonian from acquiring a “whole life” policy, Lubinski said.

Still, Lubinski said allegations that Simonian intentionally did not declare all of his income on tax forms “may have merit,” but would be left up to state and federal tax authorities to investigate.

Officials from the IRS have already met with the city to discuss the allegations. Simonian’s attorney said if income was not properly reported, it was because of mistakes made by the city and not his client.