Head of L.A.-area BBB resigns amid scandal

The head of the Southern California chapter of the Better Business Bureau has resigned amid a scandal over the group's letter-grade rating system and controversy over his high pay.

William Mitchell, a 26-year employee of the Better Business Bureau of the Southland, is leaving because of health concerns, said Bob Richardson, the chapter's director of operations.

The national organization, which issues ratings to businesses supposedly based on how fairly they treat consumers, has been criticized in recent months for giving businesses better grades if they became dues-paying members.

The system was based on one devised under Mitchell's leadership of the Southern California chapter, where businesses have long complained that heavy-handed recruitment tactics amounted to a system of pay-for-play.

The ratings controversy reached its peak last month when, according to reports, Los Angeles business owners critical of the BBB obtained high ratings for fake businesses immediately after paying membership dues for them.

Mitchell resigned quietly last week, Richardson said, telling only top executives at the local chapter. He will remain on the job until a replacement is chosen.

Mitchell underwent open- heart surgery about three months ago, Richardson said, and would not be available for interviews.

Richardson said that Mitchell's decision had nothing to do with the controversies. "Pay for play had nothing to do with this," Richardson said.

The national organization announced last month, in the face of growing criticism, that it would stop giving higher grades based solely on membership, and that it would examine its ratings system overall.

An audit of the Southern California chapter's practices is underway, said Alison Southwick, a spokeswoman for the National Council of Better Business Bureaus.

Carmen Tellez, a critic of the BBB whose company received a significantly higher grade after she agreed to pay nearly $400 in dues, said she does not plan to remain a member, even after changes in the group's policy and Mitchell's resignation.

"Not a single person from the BBB contacted me and apologized for what happened," Tellez said Monday. Her Whittier company, CharmandHappy.com, provides clowns for parties. "I'm certainly not signing up again next year."

Tellez said the group should abandon the grading system altogether and just offer consumers descriptions of how well companies treat consumers.

Mitchell's compensation had also made him a lightning rod for criticism. In 2008, he was paid in excess of $400,000 — more than the heads of other BBB chapters and even the group's national president.

Richardson defended Mitchell's compensation, saying that the package might have included trips to national meetings of the organization's executives or a one-time bonus.

But Ken Berger, head of the watchdog group Charity Navigator, which tracks nonprofit organizations, said it was important to "shine the light of transparency on questionable salaries."

He said earlier that Mitchell's salary seemed out of line with comparable organizations and others at the BBB.

sharon.bernstein@latimes.com

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