L.A. community colleges settle with firm over billing allegations

The Los Angeles Community College District Board of Trustees announced Wednesday that it has reached a settlement with a Pasadena firm, Gateway Science & Engineering, over alleged billing improprieties. The company will continue to supervise the $450-million building program at Los Angeles Mission College.

The district had alleged that Gateway approved payments to the construction company FTR International for work it had not performed at a 90,000-square-foot fitness center on the campus

The project was plagued by delays and allegations of faulty workmanship, which were detailed in a Times series last year on the community college district’s $6-billion campus reconstruction program.

Based on a report by its inspector general, the district had notified Gateway of its intent to terminate the company’s contract.

Gateway is owned by Art Gastelum, a former Los Angeles City Hall lobbyist and political fundraiser who has raised money for several college board trustees. Gastelum has denied the allegations.

Last month, a Los Angeles County Superior Court judge determined that the evidence presented against FTR International did not support the charges and that trustees abused their discretion by barring the Irvine firm and its owner Nizar Katbi from temporarily bidding on or contracting for further work.

The district is appealing the decision. Katbi is seeking damages against the college system and individual board members who voted against the company.

Wednesday’s settlement calls for Gateway to pay for a one-year pilot program that will use sophisticated technology to uncover potential conflicts of interest among contractors in the Mission College building program.

The company will also work with a district-appointed project executive who will review Gateway’s work over the next year. The firm has agreed to reimburse the district for the expense.

“I’m extremely grateful to the board for their support and feel vindicated that Gateway has not done anything wrong,” Gastelum said.

Earlier this week, the college district asked the Los Angeles County district attorney to investigate alleged wrongdoing by a contractor formerly employed in the building program.

A report released late Tuesday by the district’s inspector general alleges that while serving as project manager at Mission College, Nick Quintanilla may have created a conflict of interest by soliciting and approving contracts worth more than $600,000 with companies in which he appears to have had a financial interest.

Quintanilla was employed by Gateway but left that job in October 2010, according to the report.

While serving as project manager in 2005, Quintanilla approved a $27,000 contract with KAY Management, a Canoga Park firm that he also owned and operated, according to the report. Later, Quintanilla approved contracts worth more than $623,000 with Rudy’s Trucking and Rudy’s General Construction, which appear to have been acquired by KAY Management. All of the contracts appear to violate state conflict- of-interest codes, according to an investigation by Inspector General Christine E. Marez.

Quintanilla did not respond to a request for comment.

The report also alleges that other project staff may have engaged in improper financial relationships with Rudy’s and other subcontractors. It did not find evidence that Gateway had prior knowledge of the activities.

In a statement, board President Miguel Santiago said the inspector general’s investigation was among a number of actions taken to reform the construction program funded by taxpayer-approved bonds.

“Today’s action follows a long list of aggressive actions our board has taken to eliminate mismanagement or waste of taxpayer dollars, and to ensure that every one of our employees and contractors is following the law,” Santiago said.

The district attorney’s office is already investigating allegations that Karen Hoefel, former vice president for administrative services at Mission College, had an “unlawful financial interest” stemming from her co-ownership of a company that worked at the campus.

Deputy Dist. Atty. Dave Demerjian, head of the office’s Public Integrity Division, said he will review the report on Quintanilla before determining whether to open a new inquiry.

carla.rivera@latimes.com