Los Angeles city leaders are suing to have a court-appointed receiver take control of two controversial nonprofits affiliated with the Department of Water and Power whose managers have refused to show what they’ve done with more than $40 million of public money.
City Atty. Mike Feuer filed the lawsuit on Wednesday, hours after City Controller Ron Galperin refused to sign checks for annual city payments of nearly $4 million due to the nonprofits this month.
The moves are the latest salvos in a months-long battle between the city’s top elected officials, including Mayor Eric Garcetti, and DWP union chief Brian D’Arcy over transparency of the nonprofits.
“On behalf of the ratepayers, I urge the court to appoint a receiver to run the trusts to restore oversight and transparency,” Garcetti said. “This is the ratepayers’ money, and they have the right to follow their money.”
The nonprofits, the Joint Training Institute and the Joint Safety Institute, were created in the early 2000s after job cuts at the city-owned utility. Since then they have been receiving annual payments from the city of up to $4 million, with essentially no public oversight of how the money is spent.
The nonprofits are co-administered by trustees appointed by the International Brotherhood of Electrical Workers Local 18, the DWP’s largest union, and DWP management. Each side appoints the same number of trustees.
Feuer’s lawsuit accuses the union of “usurpation of authority” at the nonprofits because D’Arcy, a union trustee, has refused to hold meetings of the groups boards since two key Garcetti allies were named as trustees earlier this year.
The allegations in the lawsuit paint a picture of D’Arcy running the nonprofits like a personal fiefdom since excluding the management trustees.
According to the suit, D’Arcy: unilaterally appointed himself “chair” of the nonprofits, filed a lawsuit on behalf of the trusts to quash a subpoena demanding that he turn over detailed financial records and appear for an interview with city auditors while under oath, and released only “select” financial records to “third parties.”
In February, D’Arcy posted on the union website an audit of the nonprofits done by an accounting firm he hired. He has also shared some records with the Los Angeles County district attorney, saying he trusts prosecutors to be more impartial than his political rivals.
The district attorney’s office has acknowledged that it is looking into the nonprofits but did not immediately respond to a request for comment Wednesday afternoon.
D’Arcy also did not respond to a request for comment.
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