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Prosecutors Win Round in Lynwood Investigation

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Times Staff Writer

Federal prosecutors have obtained a court order blocking the city of Lynwood from paying more than $1 million to friends of former Mayor Paul Richards for work they never did.

The federal court order, obtained by prosecutors late Wednesday, allows the federal government to seize, as illicit, funds the city had initially agreed to pay to Bevan Thomas and his wife, LaVerne Jackson, under two contracts that were ultimately canceled.

At a separate hearing on the disputed contracts Thursday in state court, Assistant U.S. Atty. Victor Rodgers explained that investigators had provided a federal magistrate with evidence that the funds were “traceable proceeds of fraudulent conduct.”

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Rodgers offered no further explanation, and the investigators’ affidavit on the matter was filed under seal.

Lynwood hired Thomas, who had once worked for a private trash hauler, as a consultant to help develop a sanitation department in a city that had been contracting out garbage pickup services. Jackson was hired to identify unsafe conditions in city neighborhoods and recommend improvements. Thomas was to be paid $2.6 million over 10 years; Jackson, nearly $600,000.

But the contracts were canceled shortly after they were executed in late 2001, when Richards lost control of a City Council majority.

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Because the contracts called for Thomas and Jackson to be paid fully if they were discharged without cause, they sued and agreed to settle with the city in January for $1.4 million.

The federal government then stepped in, with prosecutors asking the city to stop payment on a check for a first installment of $700,000. At that time, Assistant U.S. Atty. Daniel Shallman requested that the city hold off making the payment until March 31, “pending the outcome of the government’s ongoing criminal investigation which concerns, in part, the validity of the underlying contracts.”

The city agreed. But lawyers for Thomas and Jackson countered by asking Los Angeles Superior Court Judge David Minning to order the city to pay up.

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When Minning indicated he would order the city to pay -- and the federal criminal investigation dragged on longer than anticipated -- prosecutors went to federal court to obtain the seizure order.

“The plot thickens,” Minning remarked wryly Thursday.

He ordered the city to pay the settlement, but stayed his order until May 25 to give the city a chance to appeal. If that appeal does not generate an additional stay, the city will have to pay its first installment.

But its check will be made out to the U.S. Marshal’s Service.

Thomas and Jackson, who said through an attorney that they had done nothing wrong and were entitled to the funds, would have an opportunity to contest the seizure in federal court.

“Let the cards fall where they may,” Minning said. “Why shouldn’t the money be held by the federal courts and let federal investigators decide what to do with it?”

Edward M. Robinson, the lawyer for former mayor Richards, said Thursday that Richards’ position is that the contract should not have been terminated and that “the citizens of Lynwood would have received good value for their money” if the contract had been allowed to run its course.

In obtaining the seizure order, federal prosecutors presented a one-page warrant that provides clues about where a 2-year-old criminal investigation of Richards and others is heading.

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The document says the seizure is based on alleged violations of federal statutes dealing with theft involving public money or bribery involving public officials, money-laundering and depriving taxpayers of honest services.

Earlier grand jury subpoenas in the federal probe show that prosecutors are also looking into transactions between Richards and the neighboring city of Compton.

These include a deal in which Compton agreed to sell Richards, who has no experience as a developer, some of its best city-owned land for millions of dollars less than it is worth.

Another deal that has attracted the interests of prosecutors involves Richards’ sister, Paula Harris, grand jury subpoenas show.

Richards had voted to award a contract to her that would have brought her a $1-million commission for negotiating a deal between the city and a billboard company that, records show, Richards already had in the works.

Richards’ political opponents rescinded that contract, too.

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