A low-key lawyer makes millions on Vernon’s dime
Eric T. Fresch is Vernon’s million-dollar man, a lawyer and former administrator who is not only one of the nation’s highest paid public officials ever, but one of the least known.
No photos of Fresch hang in City Hall, and his image cannot be found on the Internet. Until recently, his name rarely appeared in print. He’s not a familiar figure even in Vernon, where he has raked in $7.5 million in salary and fees since 2005, routinely flying down to the small southeast Los Angeles County city from his Marin County home on Mondays and back on Wednesdays — often first-class.
Some in Vernon liken the 56-year-old attorney to the Wizard of Oz, deftly working the levers from behind the scenes of a city that covets governmental privacy as much as he does his own.
“Eric Fresch is considered by many Vernon business owners to be a man of mystery,” said Steve Freed, president of the Vernon Property Assn., a business-advocacy group. “Very few business owners have ever met the man, and while many people in the business community think Mr. Fresch is the man running the city, no one in city government will confirm he is the one pulling the strings.”
With the city increasingly under political fire — state Assembly Speaker John Pérez (D-Los Angeles) has proposed legislation to dissolve it — Fresch’s pay has become a rallying point for those who’ve long said Vernon is run for the benefit of its leaders. The battle over Vernon’s survival as an independent city increasingly has pushed this inside figure into the public eye. State Atty. Gen. Jerry Brown, who is investigating city officials’ salaries and spending, alluded to Fresch’s as “excessive” and “egregious.”
By his own account, Fresch has been a tireless public servant: In 2008, he averaged 82 hours a week and worked 363 days, including every Saturday, every Sunday and every holiday except Christmas, according to city billing records. He made $1.65 million that year, as city administrator and assistant city attorney and is now a $525-an-hour legal consultant, on track through July to his fifth straight $1-million year.
One former employee remembers he wore “the nicest suits in City Hall,” while others speak of his “entourage” of consultants and lawyers, dogging his steps. In Vernon, he has an armed driver, and while traveling he’s spent tens of thousands of taxpayer dollars at five-star hotels, including the Ritz-Carlton in New York.
Fresch did not respond to repeated interview requests for this article. City officials refused to answer written questions about his work, his relationship with a private investigator who was paid millions through city contracts, or his brother’s qualifications to be a $332,800-a-year energy consultant.
Their silence is not unusual for Vernon, which has fewer than 100 residents, a power plant that generates an abundance of electricity and revenue, and a history of acting more like a big business than a small town.
In a brief phone interview in August, Fresch seemed surprised even to be asked about his earnings. After all, he said in his only public comments to date, lawyers of his caliber in private practice bill up to $1,000 an hour.
“I would be confused if someone would be outraged at what I made,” he said, then called back within minutes to amend what he’d said.
“If people think that I am a city guy making that kind of money, they would have every right to be outraged,” he said. “I’m not trying to say that municipal compensation should be at the level that I’m doing. I’m saying that if you bring a guy like me in, and do transactions for several hundred million dollars, this would not be out-of-line compensation.”
The Fresch family’s ties to Southeast Los Angeles County stretch back more than two decades, sometimes marked by business disputes and controversy.
Late patriarch Eugene Fresch made headlines in 1988 when Huntington Park gave a trash-hauling contract to his new company, H.P. Disposal, even though it had no headquarters, no trucks and no experience. Eric and his older brother Curtis joined him in the business, according to records and interviews.
The elder Fresch, a successful businessman in Ohio, had moved his family to Las Vegas in the early 1970s and partnered in a company that ran the Hacienda hotel and casino.
By the time he won the garbage contract, his sons had opened a poker club in Huntington Park that was pumping $500,000 a year into the city treasury. In their running of the Huntington Park Club Corp., the contrast between the siblings was readily apparent, said people who knew them.
“Curtis was big on the $600 bottle of wine stuff,” said Jack Leonard, 77, a former general manager of H.P. Disposal who later sued and settled with the Fresches over his share of the business. “He was a big-shot type. He always wanted to be the big spender. Eric was just the opposite. You never knew when he was around.”
In 1990, the Los Angeles County Sheriff’s Department conducted a lengthy investigation of the poker club. No charges resulted, The Times reported. In 1997, Curtis Fresch pleaded no-contest to one felony count of willfully making a false state tax return, court records show. The conviction was set aside when his probation was terminated in 1999.
In 2004, a former business associate won $2.1 million from Curtis Fresch in a civil racketeering lawsuit that included allegations that he’d tried to extort $500,000 from the man in a casino-related deal. He has not paid the judgment.
Curtis Fresch, 59, has worked for Vernon since 2005. So far this year, records show, he’s made more than $300,000 as a $160-an-hour renewable-energy consultant and administrative aide to the City Council.
He hung up when called for comment and did not return a subsequent voicemail message.
By the time Curtis was hired in Vernon, Eric Fresch’s career there was well established.
He graduated from the University of San Diego Law School in 1980 and six years later was a consultant to Vernon. Over time, he became an advisor to City Administrator Bruce Malkenhorst Sr., handling financial transactions and regulatory matters.
In 2003, Vernon’s city attorney, Eduardo Olivo, was pushed aside and then fired after he accused city officials of giving him false information to relay to L.A. Times reporters who had requested expense records. Malkenhorst picked Fresch to take over. The next year, city officials also reclassified Fresch and other Vernon staff attorneys as “safety employees,” bumping up their future pension benefits to a level usually reserved for police and firefighters. The city justified the move by describing Fresch as a prosecutor, but when asked by The Times, officials could not say if he’d ever prosecuted a case.
Malkenhorst retired in 2005 amid a district attorney’s investigation and is awaiting trial on charges he spent $60,000 in city money for massages, golf outings, meals and political contributions. Fresch replaced him in the top job in 2006.
The men’s personalities and management styles were starkly different, some who know them said: Malkenhorst was the sometimes-intimidating presence who fired people at will, including firefighters threatening to strike, but he also could be paternalistic and warm. Fresch was more detached, but generally diplomatic and genial.
Carl Algee, a former Los Angeles police officer who worked as a contract security guard at Vernon’s power plant from 2003 to 2007, sometimes drove Fresch to or from Los Angeles International Airport and said he was impressed by his mental agility.
“He is a human computer. Extremely intelligent,” Algee said. “I used to hear him making deals on the way to the airport, and it was just amazing.”
Freed, of the Vernon Property Assn., said Fresch is cool under fire and “very skilled at deflecting indefensible issues.” Once, he recalled, Fresch was grilled at a public meeting about his brothers’ pay — in addition to Curtis, younger sibling, Patrick Fresch, makes $62.50 an hour, or about $130,000 a year, in gas department sales and customer service.
“He replied that he was not the one who hired his brothers, therefore he was not the right person to answer the question,” Freed said.
The city first hired Curtis Fresch in 2005 through a company set up by private investigator J.D. Hicks, whose offices in Tiburon were less than a mile from Eric Fresch’s 3,200-square-foot hillside home overlooking San Francisco Bay.
Hicks and his company, Project Labor Group, made millions from contracts for security and other services at the power plant from 2003 until June 2009, when the company filed a Chapter 7 bankruptcy petition. The filing listed gross income of more than $4.4 million for the preceding three years, during which the company appears to have worked only for Vernon.
City officials did not respond to questions about Eric Fresch’s relationship with Hicks. He did not return phone and e-mail messages and has vacated his Tiburon office.
The City Council on Dec. 6 approved a new contract for Curtis Fresch through Nevada Renewable Power, a company he formed in 2007. The contract, with the redevelopment agency, will “benefit the health, safety, and public welfare of all persons and property in the city,” according to a staff report by Michael Montgomery, a consultant who heads the agency.
But when asked, Montgomery could not describe Fresch’s qualifications or duties: “I don’t know,” he said, then declined to answer other questions.
City officials similarly say little about Eric Fresch’s job performance. For most of the last six years, he was paid an annual salary of about $330,000, plus $365 for every hour above 25 a week. From 2006 through 2009, he logged nearly 60 “extra hours” a week, averaging $1.1 million in each of those years in what amounted to overtime pay, highly unusual for salaried employees.
Department heads under Fresch also benefited from the extra-hours billing system, which the city phased out in the last year. In 2009, City Atty. Jeffrey Harrison made $800,000, while Light and Power Director Donal O’Callaghan and Finance Director Roirdan Burnett were paid $785,000 and $570,000, respectively.
O’Callaghan resigned in October, shortly before he was indicted on conflict-of-interest charges related to his wife’s work for the city, and Harrison left earlier this year, with a $1-million settlement. Burnett, still with the city, bristled when asked about the billings, many of which he approved. “I’m not going to answer questions that I find to be absurd,” he said before hanging up.
When asked about what Fresch did to earn his large pay, City Administrator Mark Whitworth this summer defended it as a measure of the expertise needed by the city, whose 1,800 businesses employ about 55,000 people.
“When people say he is an ordinary person, he is not in the least. He’s extraordinary,” Whitworth said. “Eric is one of those people who we think does a wonderful job.”
But he and other city officials did not respond to a request for examples of the multimillion-dollar transactions Fresch said justified his pay. Vernon’s annual financial reports do reflect some large deals under Fresch’s leadership, as well as some costly setbacks.
In 2006, the city issued $430 million in bonds for the purchase of 15 years’ worth of prepaid natural gas for its Malburg Generating Station. It later sold the power plant and other energy-related assets for $342 million to an affiliate of Natural Gas Partners, a Texas energy-investment firm. Vernon will get the plant’s output for the next 15 years at a preset price.
Vernon also waged an unsuccessful three-year effort to build a 943-megawatt power plant that was strongly opposed by neighboring cities.
In a letter to City Council members last year, Fresch listed his accomplishments as city administrator, including improvements in management structure and better communications with Wall Street. He also assured them that, in his new role as consultant, his hourly rate would not rise.
“And as always, the amount of hours I work are subject to the city’s request and approval,” he wrote. “Thank you for the privilege of serving this city.”
Times researcher Scott Wilson contributed to this report.
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