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Small, financially troubled Maywood hires engineering firm slammed in audit

Small, financially troubled Maywood hires engineering firm slammed in audit
Several recent decisions by Maywood officials have drawn criticism. (Brian van der Brug / Los Angeles Times)

Eduardo De La Riva, a Maywood city council member, said he warned his colleagues that an engineering firm they were considering hiring might have been booted out of South El Monte because of questionable practices.

De La Riva said he heard from someone in South El Monte that the company, ECM Group Inc., had lost its contract over billings.

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But that didn't stop the council of the small, financially troubled city in southeast Los Angeles County from voting in May to hire the firm. The following month, South El Monte released an audit that accused ECM of submitting false time sheets and billing reports to the city.

The audit slammed the company, saying that among other things, workers were reporting as many as 27 hours for some work days.

The hiring follows a recent spate of decisions by Maywood officials that have provoked criticism. Already facing a state audit and scrutiny by the district attorney's office over whether the city violated open-meeting laws, Maywood this year hired a laid-off Boeing project manager whom the mayor had met as a customer at his auto shop to be its city manager, even though he had no municipal experience.

Maywood also granted its council members, clerk and treasurer $250 monthly mileage stipends to drive in and around the county's second-smallest city, at just over one square mile, by size. Using the Internal Revenue Service's suggested reimbursement rate for business travel of 54 cents a mile, city officials would need to drive 463 miles a month to reach the $250 mark.

De La Riva, who serves as Maywood's mayor pro tem, called the mileage stipend a "pay raise" in disguise.

Two South El Monte council members, Mayor Pro Tem Gloria Olmos and Joseph Gonzales, told The Times they had questioned why the audit, which had been finished in March, took so long to be made public. Late Tuesday, South El Monte's city manager, Anthony Ybarra, resigned.

His resignation came after South El Monte's  mayor was charged in a bribery case and the release of the audit, which criticized how the city was run.

The mayor pleaded guilty Thursday.

The report was commissioned after an auditor last year advised South El Monte to conduct an investigation into its internal reports to look at a variety of issues, including its "relationship with certain consultants and the contract monitoring process."

South El Monte terminated its contract with ECM in April. The company had been providing construction and engineering services to the city for about 18 years.

In May,  Maywood hired ECM on an interim basis until a contract was brought back for council approval. Two council members —  De La Riva and Councilman Ricardo Villarreal — voted against the hiring.

"I was not interested in bringing the company into Maywood," Villarreal said. "I had heard rumors that they were in trouble in South El Monte."

They said Maywood Building and Planning Director David Mango recommended the firm to the council.

"I had nothing to do with the selection," Mango said in a phone interview.

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Before abruptly hanging up, Mango, who was hired after settling a wrongful termination suit against Maywood and Bell, said the city was looking for a new engineering firm but ECM is still being considered for the job. Officials said ECM's contract expired in August.

According to the audit released by South El Monte, when the firm was "confronted" with information about its billing practices, "ECM principal Hector Castillo admitted that the above referenced labor claims are fictitious, and were generated in order to secure the maximum fee allowed under the contracts."

"I tried warning the City Council about questionable billings and here we have him on record admitting he submitted fraudulent billings," De La Riva said.

Maywood City Clerk Gerry Mayagoitia said he was asked to sign a contract for ECM shortly after the firm was hired, but refused because he felt it hadn't been approved in an open meeting.

It was the second time he had been asked to sign a document that had not been approved publicly, Mayagoitia said. The first time occurred when Maywood hired its new city manager, he said.

In response to criticism from Mayagoitia, ECM had an attorney send a cease and desist letter to the city clerk on Aug. 29.

In the letter, attorney Vicki Roberts wrote that "ECM emphatically states contrary to said report, its principal never made any admissions of fraudulent billings. That part of the report is categorically denied."

In a subsequent email to The Times, Robert said the audit was "extremely intimidating, that it was perceived hostile" and that English was not Castillo's first language so that may have caused a misunderstanding.

Samuel R. Biggs, a partner at the firm SingerLewak, which conducted the audit, said their report was based on city documents and interviews.

"We didn't lie in our report. Our intention is not to be out there on some witch hunt. We're very objective and independent in what we do .… The report speaks for itself."

Councilman Thomas Martin did not respond to emails or phone calls requesting comment. Mayor Ramon Medina responded via text message saying he would call back but never did. Councilman Sergio Calderon said in a text message that he's "not speaking to any media about any controversial issues."

The three council members had supported the mileage stipends even as the city faced a state audit that found that Maywood had amassed $16 million in debt with no plans to pay it off.

De La Riva and Villarreal worry the recent decisions will create more problems for a city that is already saddled with legal and financial hardship.

Maywood gained notoriety in 2010 when, on the brink of bankruptcy, officials laid off much of the City Hall staff and dismantled its Police Department. It contracted policing services to the L.A. County Sheriff's Department and had the neighboring city of Bell handle many administrative functions.

Those plans, however, were scuttled after The Times revealed huge salaries paid to top Bell officials, which eventually led to criminal charges and convictions.

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UPDATES:

10:50 a.m., Sept. 1: This article was updated with comments from ECM Group and the SingerLewak accounting firm.

4:30 p.m. Sept. 1: This article was updated to indicate that South El Monte Mayor Luis Aguinaga pleaded guilty Thursday.

This article was originally published on Aug. 29 at 5 a.m.

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