California prosecutors accuse Bell leaders of plotting to enrich themselves

State prosecutors accused Bell leaders of secretly plotting to enrich themselves and conceal their lucrative compensation, filing a suit Wednesday aimed at limiting the officials’ pensions, forcing them to refund hundreds of thousands of dollars in back salaries and removing three City Council members from office.

The allegations, contained in a civil suit filed by Atty. Gen. Jerry Brown, mark the first legal actions taken against Bell’s leaders since The Times reported in July that they were among the highest paid municipal employees in the nation, with Rizzo leading the way with a salary of nearly $800,000. The L.A. County district attorney’s office also is investigating Bell, looking at the salaries as well as allegations of voter fraud and questionable business dealings. Federal prosecutors are investigating whether the city violated the civil rights of its predominantly Latino immigrant population with selective enforcement of traffic laws and code violations.

After reviewing boxes of city documents over two months, state prosecutors said Rizzo and his colleagues “took great pains” to conceal their high pay from the public.

“What is clear is that the City Council and city administrator and other officials abused their public trust. They engaged in a collaboration that [amounted] to a civil conspiracy to defraud the public,” Brown said.

Rizzo’s attorney said his client had done nothing illegal and accused Brown, who is running for governor, of using the suit for political gain.

“At this particular point in the election cycle, it doesn’t surprise me that charges have been filed,” attorney Jim Spertus said.

The attorney general’s lawsuit does not charge Bell officials with crimes. Brown had agreed earlier to limit his investigation to civil remedies and allow the Los Angeles County district attorney to focus on a criminal case.

In the suit, prosecutors cited several examples of actions that they said provided evidence of conspiracy by current and former City Council members and administrators. One was an e-mail from then-Assistant City Manager Angela Spaccia to incoming police Chief Randy Adams, warning him to change the language of his contract to make it more difficult for outsiders to figure out his full compensation.

“We have crafted our Agreements carefully so we do not draw attention to our pay,” Spaccia wrote in the 2009 e-mail. “The word Pay Period is used and not defined in order to protect you from someone taking the time to add up your salary.”

Another example was an ordinance passed in February 2005 by Bell’s council and labeled a measure “limiting compensation for members of the city council.” In fact, the law nearly doubled council members’ pay from $673 to $1,332 per month (and that sum did not include other salaries they received from various city boards).

The Times has reported that both Rizzo and the City Council obscured their full salaries by receiving payments from four separate city boards and commissions. In at least two cases, the city provided inaccurate information in response to requests for Rizzo’s salary.

The Bell scandal has already prompted state legislation designed to make it easier for residents to learn the salaries of public officials. Brown said Wednesday that he had launched a review of all local government salaries of more than $300,000, citing several examples across the state of high compensation levels he said might be suspect. He also called for the creation of a state commission to look at caps on public salaries.

In addition to dealing with compensation, the lawsuit requests that the court appoint a receiver to oversee the city. Brown acknowledged that asking a judge to remove elected officials from office and demanding that they return their salaries is highly unusual.

“Some areas of the law we’re plowing may be novel,” he said. “We’re testing the proposition of what public officials can pay themselves…. The fact that someone is elected doesn’t mean they get a license to steal, doesn’t mean they get a license to line their pockets.”

Michael Colantuono, a veteran government agency attorney, said Brown is using a statute sometimes employed by taxpayer groups to oppose expenditures of public funds they consider illegal. Section 526a of the California Code of Civil Procedure establishes the right to sue over “any illegal expenditure of, waste of, or injury to, the estate, funds, or other property of a county, town, city or city and county of the state.”

Colantuono agreed that it was highly usual for prosecutors to use the tactic.

“I cannot think of a time the attorney general has used it,” he said. “The interesting question is: Does the attorney general have standing?”

“I think this is unprecedented in my opinion … in part because of the scope and sheer number of officials being sued,” said Michael Jenkins, who has taught local government law at USC’s Gould Law School for more than a decade and now serves as city attorney for several communities. “But then again I think you have an unprecedented situation in Bell that requires this kind of action.”

The lawsuit named eight top Bell officials, including Rizzo, Spaccia and Adams as well as Mayor Oscar Hernandez, council members Teresa Jacobo and George Mirabal and former council members Victor Bello and George Cole. None of the officials returned calls seeking comment.

Two sitting council members – Luis Artiga and Lorenzo Velez – were not named in the lawsuit. Velez never got the high salaries the rest of the council enjoyed. Artiga told The Times he had been cooperating with investigators and believed his colleagues should step down.

“I failed,” Artiga said. “I should have asked more questions. I should have investigated more. I let the community down and I ask for a humble forgiveness.”

It remains unclear how much money the attorney general wants the officials to refund. If portions of their back salaries are ruled illegal, it could significantly reduce their pensions.

At his final salary, Rizzo would become the state’s highest-paid pensioner, earning at least $600,000 annually. Adams would be the third-highest, receiving an estimated $411,000.

Brown’s lawsuit says the compensation of Bell leaders began to take off in 2006, after Bell held a special election to become a charter city, giving it more power over its affairs. Only 336 people voted in the election.

The election followed by a few months the passage of a state law that limited the pay of council members in general law cities, which includes most cities in the state. Salaries of Bell council members would have been capped at $400 a month.

Rizzo, according to the suit, told council members that becoming a charter city was a way to get around the new law and would allow them to increase their salaries (which eventually reached nearly $100,000). About the same time, the council gave Rizzo a 47% raise and Spaccia a 42% salary increase.

In 2008, the suit says, Rizzo went to great lengths to hide his salary from the public. In September, after a resident sought city salary information, Rizzo had a memo prepared that gave incorrect salaries for him and council members. The same month Rizzo’s contract was changed to obscure his salary. As The Times reported Tuesday, he signed five new contracts that kept his salary the same but changed the way he was paid. Rather than getting his entire pay from his primary job as city manager, much of it was divided among four city agencies.

Rizzo did little work for the agencies and the change was made “to conceal the full amount of his salary from the public,” the suit says.

Bell residents, who have been showing up at council meetings by the hundreds in protest since the scandal broke, cheered Brown’s action.

“Justice at last,” resident Ludibina Hernandez said. “They stole from the city and went past the definition of abuse. The officials need to pay for everything they stole.”

jeff.gottlieb@latimes.com

ruben.vives@latimes.com

richard.winton@latimes.com

Times staff writer Patrick McGreevy in Sacramento contributed to this report.