FBI Probes 2 Officials’ Business

A consulting business created by two Corona councilmen to help cities form their own utility companies is being investigated by the FBI amid criticism that the officials’ actions were a conflict of interest.

Community activists and one council member have faulted Darrell Talbert and Jeff Miller for creating the business at the same time they were pushing Corona’s effort to take over the city’s power grid from Southern California Edison.

Their firm, Municipal Energy Solutions, included as investors two officials from the city’s utility department and a contract attorney who represented Corona on energy issues.

Critics said they didn’t find out about the existence of the company until months after it was formed.

“It was a total deception on their parts to the City Council and staff and the citizens of this community,” said Councilman Jeff Bennett.

An attorney for the councilmen denied any wrongdoing, saying the consulting business was completely separate from their work with the city. Indeed, Municipal Energy Solutions never sought business ties with Corona, trying rather to win deals with nearby cities such as Temecula and Moreno Valley. The firm never received any contracts and closed down in March 2003, less than a year after it opened.

At least five people said they had been interviewed by the FBI or Corona police in recent months, including Bennett, who said he had talked to agents on four separate occasions. A sixth person, Corona resident Jeff Warner, said he received a subpoena to testify before a federal grand jury in Riverside, though a date for his testimony had not been set.

Mark Austin, an attorney representing Talbert and Miller, said, “They were also questioned, but they were specifically told they were just witnesses and they were not suspects.”

The FBI declined to comment on exactly what agents were investigating, and Corona police referred all questions to the FBI.

The situation has its roots in the energy crisis of 2001, when Southern California Edison customers saw their bills increase substantially.

Cities such as Riverside and Anaheim, which had their own municipal utilities, were able to keep rates lower than those that relied on Edison. This prompted some cities to start their own utilities. But Corona went further, trying to seize Edison’s power lines, substations and other infrastructure.

In June 2002, Talbert and Miller formed Municipal Energy Solutions. The three other investors were Glenn Prentice and George Hanson, the then general manager and assistant general manager of the city’s utility, and David Huard, a lawyer with Manatt, Phelps & Phillips who represented Corona on energy issues.

According to marketing materials, the company offered to help cities create their own municipal utilities. The literature cited Corona’s achievements and Talbert and Miller’s role in those successes. The firm sought a $7,500 monthly fee, plus 2% of the gross profits from any project created based on their recommendations.

While trying to get their business off the ground, Miller and Talbert were leading advocates of the plan to take over Edison facilities in Corona. The City Council approved the effort in December 2002 -- and it was then that some community activists publicly raised concerns about Miller and Talbert’s role with their new firm.

Edison fought Corona’s takeover attempt in court. The city dropped the plan in May 2003, after spending $3 million in consultant fees and legal costs.

Those bills prompted community activists to demand more information about the takeover effort. That eventually led them to Miller and Talbert’s firm.

Corona residents Jack Wyatt and Louise Mazochi, who formed a group opposing the Edison buyout, have sought more than 300 e-mails Talbert and Miller sent from their home computers that they believe are related to city business. Wyatt, a retired Edison executive, and Mazochi, who runs a swimming pool business, want to find out whether any money Corona spent on its utility ended up helping the consulting business.

Joel Kuperberg, an attorney for Talbert and Miller, said these e-mails are unrelated to city business and therefore private.

A Riverside County Superior Court judge will decide May 14 whether to make the e-mails public. Bennett, who has read the e-mails, said they were definitely related to city business and should be released.