Corruption Case Is Settled for $400,000

Continuing a campaign to recoup public funds lost to kickbacks and other corruption, San Bernardino County reached a $400,000 settlement Tuesday with a firm accused of providing gifts to officials in exchange for public contracts.

Minneapolis-based Miller and Schroeder Financial Inc. agreed to pay $350,000 to settle a county lawsuit against the company and one of its executives, James R. Iverson. John R. Larson, an attorney who represented the company, agreed to pay $50,000.

The San Bernardino County Board of Supervisors approved the agreements Tuesday during a closed-door session, said county spokesman David Wert.

The settlements bring to more than $7 million the sum captured by the county through a lawsuit against 22 individuals and companies--a significant step in polishing the county’s tarnished image. Ten of the 22 defendants have settled with the county.

The deals come on top of a series of reforms aimed at protecting the county against corruption and restoring the public’s faith in its government. For example, officials have imposed new restrictions on real estate transactions and purchasing standards and increased oversight of finances.

“The settlements announced today mark an important milestone in the board’s efforts to recover the county’s losses and make sure everyone is held accountable for their actions,” said Board of Supervisors Chairman Fred Aguiar. “Combined with the dozens of reforms the county has enacted, these settlements are proof the county is back on the right track.”

Miller and Schroeder representatives did not return phone calls seeking comment.

According to the lawsuit, filed in June 2000, Miller and Schroeder provided county officials with travel to and lodging at a variety of getaways, including Mexico, Hawaii and Canada, throughout much of the 1990s. The gifts were each “sufficiently large so that each of them created a risk that they might influence the judgment of the officials who received them,” the lawsuit said.

During the same period, the county and affiliated government agencies paid Miller and Schroeder more than $1 million to underwrite nearly $700 million worth of bonds. The bonds paid for a number of public projects, such as the financing of the Glen Helen Blockbuster Pavilion. The Devore facility, billed as the nation’s largest outdoor amphitheater, opened in July 1993.

The lawsuit alleges that the gifts were received by current San Bernardino County Supervisor Jerry Eaves and three former county officials--investment officer Sol Levin, Treasurer-Tax Collector Thomas F. O’Donnell and Chief Administrative Officer James Hlawek.

The men have pleaded guilty in separate but related criminal cases.

Last year, Levin and O’Donnell were each sentenced to a year and a day in halfway houses after pleading guilty to misconduct charges.

Hlawek, who has admitted receiving improper cash or in-kind payments worth as much as $70,000 in the mid-1990s, is expected to be sentenced in December.

Eaves, in a loosely related case, pleaded guilty to official misconduct and was sentenced to three years’ probation. He is barred from seeking reelection in three years.

The county has filed a separate suit accusing other financial firms of making improper, illegal and undisclosed payments to Hlawek, O’Donnell and Levin in the 1990s.

“Completely earning back the public’s confidence will be a long and difficult process, but every day the county is making serious progress toward that goal,” Aguiar said.

That progress has been hampered somewhat by other recent developments, especially a separate scandal that has enveloped the district attorney.

Earlier this summer, court documents showed that San Bernardino County Dist. Atty. Dennis Stout and two lieutenants secretly aided the candidate challenging Eaves for a Board of Supervisors seat.

The documents showed, for instance, that Stout’s aides encouraged Ed Scott, Eaves’ opponent in last year’s election, to find a “marginally honest” private investigator who would research Eaves’ use of credit cards. Stout was prosecuting Eaves while he was assisting Eaves’ opponent, and the district attorney later acknowledged that he “let the public down.”

He also stepped down from the prosecution of Eaves’ criminal case, handing it to the California attorney general’s office in a move that ultimately led to Eaves’ recent plea agreement.