Corruption Costs a County in Money and Confidence

It’s never much fun paying a visit to the tax man. But when 66-year-old Ellen Scruggs ambled into the collector’s office last week to fork over another $1,756.17 in property taxes, there was an added frustration.

“That money is going into somebody’s pocket,” said the Fontana retiree. “It’s making some people live good while the rest of us suffer. Where is the money?”

That’s a popular question these days in San Bernardino County, home to a dizzying series of scandals and lawsuits that read like a glossary of government corruption: fraud, bribes, kickbacks and good old boys.

The allegations against county officials, which began surfacing in 1998, have boiled over with alarming regularity in recent months: Expense-paid trips to a Canadian fishing resort. Free rounds of golf on well-groomed courses. Jaunts to Cabo San Lucas, Paris, Hawaii.

Such lavish gifts, along with bribes and kickbacks from companies doing business with the county, poisoned contracts worth millions of tax dollars. The county’s new administrators say they are struggling to account for money that was lost or tainted in the series of scandals--and are spending hundreds of thousands more just to untangle the mess.

Beyond the costs that can be tallied in a ledger, however, are the effects on county government workers and citizens who have learned to distrust their leaders.

Taxpayers routinely slide their checks across the counter “with a comment of what to do with it,” said Dennis Draeger, an assistant tax collector.

Some county employees have retired early “rather than stick around here,” said William Brown, the county’s interim director of human resources. And county recruiters say they have to dispel fears about corruption to fill jobs.

“This is the damage of this scandal: The 14,000 employees of this county are viewed as substandard,” said Jim Erwin, head of the union that represents sheriff’s deputies and others. “They hear it all the time: ‘You work for the county? It’s crooked.’ ”

FBI and Sheriff’s Department investigations have led to guilty pleas from seven men, including four former high-level San Bernardino County officials. Most will be sentenced this fall.

Frustrated that the FBI wasn’t showing its hand to a new administration determined to clean house, the county in December 1999 hired the consulting firm Arthur Andersen and a team of lawyers to conduct a separate probe.

That led to a lawsuit in June against 22 business leaders and county officials--including one of the county’s supervisors--in an attempt to recover the public’s money.

The scandal has become an exercise in perpetual motion.

Last week, for example, a trash company named in the June lawsuit--which received $20 million in county contracts after allegedly bribing a county official--settled for $6.6 million.

But even as the county celebrated that victory, it was putting the final touches on another suit accusing a brokerage of steering county money, with the blessing of friendly county officials, into ill-advised mutual funds--and pocketing $308,000 in commissions to which it was not entitled.

The district attorney’s office, the Securities and Exchange Commission and the state Fair Political Practices Commission also are wading into a chaotic mix of ethical lapses and financial transgressions.

Participants and observers say the number of cases shows that corruption became commonplace in county government during the 1990s as the region was whipsawed by rapid growth and economic distress, creating temptations that many officials could not resist.

In court documents, one former county official acknowledged accepting more than $7,000 in bribes over the past three years. But his attorney reportedly offered a defense of sorts: Accepting bribes, he said, was “a way of doing business” in San Bernardino County.

Attorney Robert Hartmann--whose remark was quoted by a local newspaper from court documents that have since been sealed--did not return calls seeking comment. But many other observers say it has been the sad truth of San Bernardino County government: “You have to pay to play,” Erwin said.

“It brings to mind the phrase ‘arrogance of power,’ ” said Michael LeMay, a professor of political science at Cal State San Bernardino who has followed the corruption case. “It became a culture. And everybody took their cues from that.”

The scandals are especially unwelcome in a county with a shabby image that has struggled to join the economic boom of recent years. Historically blue-collar, San Bernardino County is now a mosaic of bedroom communities; while some are solidly middle class or even affluent, the county’s urban core has struggled with crime, unemployment and blight.

County Workers Share Job Woes

Some communities have never recovered from the closure of military posts, such as Norton Air Force Base. The number of jobs available in San Bernardino County is rising, but area officials were disheartened to learn recently that most of the new jobs have been minimum-wage retail positions--and that the number of professional jobs is on the decline.

Among those who suffered during the recession of the last decade were county employees, who for several years in the mid-1990s were forced to take as many as 10 days off each year without pay to reduce budget shortfalls of tens of millions of dollars.

At the same time, San Bernardino experienced enormous population growth. It was a tumultuous decade for the county--and that helped create a culture of bribes and kickbacks, LeMay said.

“That’s the key to why it was so pervasive,” LeMay said. “Critical questions didn’t get asked.”

In the midst of changes and budget cuts, county officials were giving away contracts in exchange for bribes, investigators charge. Among local residents and county employees, the tough economic times made the corruption scandal tough to stomach, Erwin said.

“A lot of these people, they took benefits away, bled benefits and income away from employees to fill the county coffers and save money,” Erwin said. “And then they gave it away.”

This is what’s happened so far:

* In August 1998, the county’s chief administrative officer resigned after the FBI began investigating him. James Hlawek had been the county’s top bureaucrat for four years--during which three separate bribery scandals developed.

* In October 1999, Hlawek, Treasurer-Tax Collector Thomas O’Donnell and two other county administrators pleaded guilty to federal bribery charges. The charges were connected to several allegations, including a claim that, in exchange for tens of thousands of dollars in kickbacks, a financial consultant received $400,000 in county business.

* In June, the county sued Supervisor Jerry Eaves, accusing him of accepting trips, rounds of golf and other gifts from a bond underwriting firm. Eaves failed to report the gifts to the public, then voted on contracts that brought the firm at least $1 million. Eaves was accused of accepting fishing excursions at a Canadian resort and trips to Hawaii and Mexico.

* The suit also named 21 other people and companies, accusing them in a series of bribes and gifts that led to or tainted hundreds of millions of dollars in taxpayer-funded business contracts.

* A county grand jury last year indicted Waste Management Inc., the nation’s largest trash company, in another corruption case. The company was accused of teaming up with a con man to ruin a business that had challenged its plan to build a giant landfill in the desert.

Many charges connected to the case have been dropped, but county planning director Valery Pilmer resigned after pleading guilty to hiding files connected to the case from investigators, county spokesman David Wert said.

* Many other county officials have followed. Chuck Jervis, for example, director of the county medical center for 18 years, admitted spending nearly $1 million on computer equipment without approval and pushing the county to hire the subsidiary of a company in which he had a financial interest. Jervis was scolded by state ethics officials, and resigned last summer.

For all the disenchantment among residents and county government workers over the bewildering series of scandals, at least Eaves, the county supervisor, has mustered some political support.

A former state lawmaker, Eaves denied that the gifts created a conflict of interest, but last month he paid $7,200 in exchange for being dropped from the county’s lawsuit.

The only elected official accused in the scandal, Eaves remains a county supervisor, and some believe the lawsuit against him was political payback for his support of a candidate who ran against a fellow supervisor.

Assemblyman John Longville (D-Rialto), for example, says his friend and fellow Democrat committed fairly minor documentation errors but has been unfairly lumped in with officials who are under investigation in connection with far more serious offenses.

“In the midst of all this, Jerry Eaves screwed up,” Longville said. “There is no question he should have been more careful. But this is a guy who, for decades, has been working for the interests of the people of San Bernardino. This is causing him tremendous grief right now.”

Despite that support, however, Eaves must face a jury of a different kind: the public. He’s running for a third term this fall.

Several unions have already suspended or withdrawn their support of Eaves. The San Bernardino County Safety Employees Assn., for example, endorsed Eaves in January, but its 34-member board of directors voted unanimously in May to suspend the endorsement, Erwin said.

Meanwhile, a new San Bernardino County government is trying to move beyond the debris of scandal.

After an extensive search, the county in April 1999 hired a new chief administrative officer, former Fresno County Administrative Officer Will Randolph, to take over for Hlawek as the top bureaucrat and the executor of the county’s $2.2-billion annual budget. Randolph was chosen because he was “ethical to a fault,” Wert said.

Already, under his guidance, there are more checks and balances over decisions that involve the public’s money.

For example, Wert said, the county has shored up its policies for using competitive bidding to drive down the cost of publicly funded projects. There are more controls over spending. If the county writes more than $25,000 in checks annually to an outside company, for instance, supervisors must review the spending.

And the county budget is running a surplus again, Wert said: $19 million this year.

“We think that county employees and residents have been receptive to what this new administration has been implementing,” Wert said. “We are taking this by the horns. We are trying to set things straight.”

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Jerry Eaves is also referred to as Gerald Eaves or Gerald R. Eaves in other Los Angeles Times stories.

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