D.A. to probe deals between City of Industry and ex-mayor's family businesses

D.A. to probe deals between City of Industry and ex-mayor's family businesses
An audit finds that former City of Industry Mayor Dave Perez and his relatives financially benefited from city contracts. Above, one of the larger signs identifying the city on Hacienda Boulevard. (Karen Tapia / Los Angeles Times)

The Los Angeles County district attorney's office has opened an investigation into the financial dealings between the City of Industry and companies controlled by a former mayor and his relatives, officials said.

City Manager Kevin Radecki confirmed Friday that investigators have contacted Industry officials about municipal contracts that have generated more than $326 million in payments to businesses owned by David Perez and his family over the last 20 years.

"They're going to aggressively look at what's been happening here," Radecki said.

Perez and his attorney did not respond to calls requesting comment.

This is not the first time prosecutors have examined the Perez family's transactions with the city. The district attorney's office launched a probe in 2009 but ultimately brought no charges. That same year, a Times investigation detailed the Perez family's grip on contracts for trash hauling, street sweeping and other services in the tiny city, home to about 400 people.

According to a recent city-ordered audit, the district attorney's office made fresh inquiries late last year. An office spokeswoman said Monday that there was no active investigation. On Friday, however, another office spokeswoman acknowledged that an inquiry was underway. "I can confirm that we are re-examining the case. That's all I can say at this time," Shiara Davila-Morales said in an email.

Commissioned after Perez stepped down as mayor in 2012, the audit by the firm KPMG concluded that the outlays to the family's companies were accompanied by invoices that lacked detailed descriptions, raising the question of whether the municipality was overcharged for basic services.

"It is nearly impossible to determine with absolute certainty" that the billings were "reasonable, accurate and commensurate with the work performed," the audit said.

Auditors found that payments to the companies averaged $16 million a year over the last two decades.

The contracts included $4.9 million for lawn-mower rentals, and street-cleaning fees billed at six times a competitor's rate, auditors found.

In addition, Perez has been accused by city officials of ordering hundreds of thousands of dollars in unauthorized work to be performed on city property, with the money flowing to the family's business interests.

Radecki said Perez himself acknowledged ordering such work at Follows Camp, a stretch of parcels along the San Gabriel River, 20 miles from the city. That project led to a proposed state fine of about $5.8 million because of damage inflicted on the environment, records show.

Industry bought the land in 2011 for $5.25 million with plans to turn it into a destination for camping, hiking and picnicking. But the unpermitted work resulted in the improper dumping of about 880,000 gallons of rock and sediment into the river, state records show, and the destruction of spawning habitat for a federally protected sucker fish.

Radecki said 80% of the work was unauthorized. "I'm 100% positive he ordered this work," he said of Perez. "He told me he ordered the work and he would take full responsibility."

As part of its own investigation, the city sent letters of inquiry to people involved in the project. Among the recipients was Mark Radecki, the city manager's brother.

"Who directed or asked you to perform this maintenance work?" the letter asked.

"City of Industry Mayor Dave Perez," responded Mark Radecki, who at the time was working for an engineering company not owned by Perez.

City records show that Perez also was sent a letter of inquiry. It was not clear whether he answered it.

The Follows Camp project is not the only taxpayer-funded project that Perez is alleged to have taken personal control of.

Robert Barron, facilities coordinator for the City of Industry's Homestead Museum, said that Perez showed up one day in 2009 and asked, "When are we ever going to get to work on this house?" About 10 days later, crews arrived to repair floors at the museum's Workman House. Work continued intermittently for a couple of years and at one point, Barron said, workers told him it had been approved by Perez.

He said he also quizzed workers about whether they needed to get approval from the city.

"They said, 'No, Big Dave told us to keep going,'" Barron said.

Radecki, the city manager, said the work was not authorized and the city eventually stopped paying for it.