Vernon officials’ compensation is focus of attorney general probe

The state attorney general on Wednesday subpoenaed records of all compensation paid since 2003 to Vernon officials, including former city administrators Eric T. Fresch, Donal O’Callaghan and Bruce Malkenhorst Sr.

The subpoena seeks records related to issues reported this summer by The Times, including top Vernon officials’ outsized salaries; a highly unusual pay structure that allowed some to bill hundreds of thousands of dollars a year for overtime; officials’ lavish travel expenses; and potentially inflated pension benefits for city attorneys.

Atty. Gen. Jerry Brown disclosed the Vernon probe at a news conference Wednesday in which he announced a civil lawsuit against eight officials and council members in the neighboring city of Bell, which The Times previously reported paid huge salaries to top employees.

In addition to Fresch, O’Callaghan and Malkenhorst, the subpoena seeks pay records for Vernon city Treasurer and Finance Director Roirdan Burnett, former City Atty. Jeffrey A. Harrison and “any other present or former official who received.... more than $110,000 in any single fiscal or calendar year.”

The records demand also extends to Vernon City Council members, who are paid annual salaries of $68,052, far greater than in most cities in Los Angeles County.

Interim City Administrator Mark Whitworth said Vernon will “cooperate fully” with the state investigation. He also noted that some changes already have occurred, including the departures of Malkenhorst and Harrison, in 2005 and 2010, respectively. The city also recently scrapped its pay structure allowing officials to bill $300 or more for “extra” hours worked.

“Over the past several years, the city has instituted a number of personnel changes and contractual changes to address compensation issues,” Whitworth said in a statement. “The city continues to be dedicated to supporting job-producing businesses by providing low-cost power and outstanding customer service.”

Vernon, southeast of downtown Los Angeles, is an industrial hub with 1,800 businesses but fewer than 100 residents, many of them municipal employees living in city-owned housing. The city, whose power plant generates not only electricity but huge revenue, also has a history of insularity and has long been dogged by accusations of municipal corruption.

Malkenhorst, a former city administrator who once was the highest paid city official in California, receives about $500,000 a year from the state’s public employee pension fund. He is awaiting trial on charges he embezzled $60,000 in public funds from the city, where he rode to work in a limousine.

Earlier this summer, citing documents obtained through the public records act, The Times reported that Malkenhorst had made $911,563 in 2005, hundreds of thousands more than previously reported.

But even that figure paled when compared to the $1.65 million Fresch earned in salary and hourly billings in 2008, records showed. Fresch now earns $525 an hour as a legal consultant. He made nearly $1.2 million in 2009, records show, and about $643,000 through July 31 of this year.

His brothers, Curtis and Pat, also have been on the city payroll, according to records reviewed by The Times. The City Council last year approved paying Curtis Fresch $160 an hour as a renewable energy consultant, records show. And Pat Fresch earned $62.50 as a sales and customer relations consultant for the light and power department.

O’Callaghan, who stepped down as city administrator in July to head capital projects for the power plant, was put on paid leave in August after The Times reported the city paid him $243,898 this year through a consulting company headed by his wife. That was in addition to his annual salary of more than $380,000.

Last year, O’Callaghan was paid nearly $785,000 as city administrator and director of the light and power agency.

kim.christensen@latimes.com

sam.allen@latimes.com