South Gate Chases Legal Firms
The scandal-plagued city of South Gate, saddled with more than $8 million in attorneys’ fees during the reign of a former city treasurer now facing public corruption charges, is trying to recoup the losses by going after law firms it once employed.
The prime focus of the city’s campaign is the downtown Los Angeles firm of Albright, Yee & Schmit, which it accuses in a lawsuit of helping former Treasurer Albert Robles by exerting “enormous influence over the city and significant power over the city’s affairs and decision-making ability.”
Robles was charged in November with money laundering, bribery and wire fraud. Prosecutors allege that his actions cost the city $12 million over four years.
South Gate is considering major cuts in services, as well as selling off city property to make up for losses during the Robles era, which ended in 2003 when voters threw him out of office.
Trying to get money back from law firms has been one means of attempting to balance the books.
On Friday, South Gate scored a victory when a Los Angeles Superior Court judge ruled that the law firm of Sheppard, Mullin, Richter & Hampton had overcharged the city when it defended Robles in a criminal trial.
Judge John P. Shook put off a decision on monetary damages against the firm until the city’s allegation that fraud and false claims were involved in the overbilling is addressed in a jury trial.
The city’s former leaders had already paid $551,837 to defend Robles, and the firm was seeking $445,087 more that it said it was due.
Shook said in his decision that the city should not have been charged more than $150,000 for the defense of Robles.
“The court finds that the fees charged the city by Sheppard, Mullin were more than excessive and unreasonable, transcending beyond the stratosphere into deep outer space,” Shook wrote in his opinion.
The firm “believes that it will be vindicated in due course,” said Thomas M. Brown, Robles’ attorney in that case.
In October, another judge ruled that Sheppard had to repay the city $517,000 in legal fees related to defending Robles in a separate criminal investigation.
The new lawsuit, against Albright, Yee & Schmit, which seeks at least $1.8 million, alleges that the firm’s work went far beyond serving as legal counsel for the city.
Rather, officials said, the firm helped Robles and his allies defend themselves against recall efforts and aided them in launching recall efforts against political rivals.
The city also accuses the firm of working on Robles’ behalf through measures that allowed him to increase his authority at City Hall and reduce the power of his opponents.
The Los Angeles County district attorney’s Public Integrity Division is investigating Albright, Yee & Schmit’s ties to Robles, said Deputy Dist. Atty. Anthony Colannino.
Prosecutors said they were awaiting a judge’s ruling on what evidence related to the law firm, seized from South Gate City Hall and other locations, could be used in their investigation.
The managing partner for the firm denied the accusations, saying the city was trying to avoid paying money that it owed.
“The lawsuit is meritless,” said Clifton Albright. “They’re using the threat of this lawsuit to avoid facing up to their creditors.”
Rickey Ivie, an attorney representing the firm, said that the lawsuit “reads like an indictment” and that, given the paucity of evidence of wrongdoing, he expects “this pleading to be truncated and much of it stricken by the court.”
Albright, Yee & Schmit contracted with South Gate in October 2001 to provide legal services related to labor and employment matters.
“We represented the city and did a good job for the city,” Albright said.
But in its complaint, South Gate says the firm had a huge financial stake in “consolidating and preserving the power of Robles in the city,” adding that Albright, Yee’s efforts for the city eventually accounted for 85% of the firm’s total billed work.
The lawsuit accuses the firm of collaborating with Robles and others to retaliate against a city clerk, Carmen Avalos, who was critical of Robles and the council majority.
According to the lawsuit, the firm worked with Robles and his allies on the City Council to cut “the city clerk’s salary from $75,000 per year to $7,200 per year ... [and take away] the city clerk’s authority to hire and fire her own staff.”
The suit also says Albright, Yee helped Robles initiate recall efforts against Avalos, current Mayor Henry Gonzalez and former Councilman Hector de la Torre.
On Feb. 25, 2002, the suit says, a courier dispatched by Albright, Yee tried to file a recall petition -- bearing the firm’s name -- at City Hall against Gonzalez.
According to the lawsuit, Avalos told the City Council later that day that the messenger had received a call indicating that there was a “mistake” on the document before going into the office of one of the firm’s workers, Cristeta Klaparda.
“Recognizing that this would demonstrate that the Albright firm, as counsel for the entire city, not simply the majority bloc [on the council], was behind an effort to recall some of its elected officials,” the complaint continues, “Klaparda attempted to conceal this effort by replacing the petitions with petitions that did not reference the Albright firm.”
The city also alleges that Klaparda and a former police official tried to initiate investigations into political rivals in November 2002.
Klaparda and the former official allegedly had a businessman act as a go-between who would pay a private investigator so the payments could not be tracked to the city or the firm, South Gate alleges.
The suit questions whether the firm overbilled for its services, citing one worker who received pay for 7.6 hours of work on the day she gave birth.
Albright, Yee is also accused in the suit of drafting resolutions and giving legal advice to create a position of deputy city manager for Robles.
This gave him not only a second salary, but also managerial power that he would ostensibly not have had as the treasurer, the suit says.
The law firm allegedly worked with Robles to create the Community Services Department, a “ ‘super department’ whose true function was to ensure the reelection of the majority bloc and preserve their political interests through a number of means that misused public monies for private purposes and depleted the city’s general fund,” the suit says.
One of the firm’s key roles within this department, according to the suit, was trying to defeat the recall effort launched against Robles and his allies on the council.
The city accuses Robles and the firm of directing propaganda activities -- through the Community Services Department -- meant to support the council majority, including “going door to door in the city and offering public works services such as tree-trimming and trash pickup” and “building and giving away a ‘dream house.’ ”
“All of these events,” the suit continues, “were accompanied by political campaigning [by Community Services workers] on behalf of Robles” and the council majority.
(Robles and his allies were recalled in January 2003.)
Clifton Albright strongly denied all the major allegations but declined to go into specifics.
He did, however, stress that his firm had no role in defending Robles against the recall campaign.
“We weren’t fighting the recall. We weren’t interested in that,” Albright said.
“The recall was improperly initiated, and the city wanted to fix that, to make sure that the proper procedures were being followed.”
Ivie, the attorney representing the firm, said Albright, Yee & Schmit simply did its job.
“None of the services the firm provided breached any duty or violated any law, or were unethical in any way,” he said.
“They performed their services in a highly professional manner and are entitled to be compensated.”