Vernon probes former official’s nearly $1 million compensation

In his final year as city administrator for the city of Vernon, Bruce V. Malkenhorst took home $911,000.

The year before, 2004, he was paid $858,000, and received $841,000 and $729,000 the years before.

But Vernon City Atty. Nicholas Rodriguez said Malkenhorst may have actually been padding his salary by hundreds of thousands of dollars.

The extra income totaled more than 40% of his total compensation in some years. For example, records obtained by the Los Angeles Times show “cash-outs” the equivalent of 940 hours of salary in 2004, 920 in 2003 and 880 in 2002. His hourly salary was about $250.

In 2005, his last year on the job, Malkenhorst’s compensation was supplemented by 1,000 vacation hours -- equal to about 25 weeks -- and 920 hours of executive leave. But Rodriguez said there was no obvious accounting for the cash-outs that explain how Malkenhorst amassed those hundreds of extra hours during at least three years.

The city of fewer than 100 residents has hired a forensic accountant to find an explanation, but Rodriguez said there may not be one that makes sense, noting the tiny industrial town’s past penchant for unorthodox dealings.

“There can be no explanation that makes this level of cash-out reasonable, responsible, good business or government,” he said.

Malkenhorst, 78, could not be reached for comment.

The probe into Malkenhorst’s compensation is part of a larger response by Vernon to a lawsuit the former administrator filed against the city in late July.

When he retired, Malkenhorst walked away with the highest pension in California history: more than $500,000 a year. But the state found that the pension was obtained improperly and slashed it to $115,000. That eventually prompted Malkenhorst to file a claim with Vernon for the balance he felt due to him. The city denied it and Malkenhorst sued.

The city released an 85-page report — kept secret for almost 10 years — that alleged that he had used hundreds of thousands of dollars in public funds for expenses including massages and Christmas gifts for family and friends, as well as to pay taxes for properties Malkenhorst owned. The report, written by a former city attorney and released to the Vernon council in September of 2004, had been quickly hidden by city officials, who hired lawyers to successfully block prosecutors investigating Malkenhorst from ever getting their hands on it.

Max Huntsman, a member of the district attorney’s public corruption unit, said the city fought prosecutors hard years ago to not only keep the critical report private but to keep certain public records away from investigators. Ultimately, investigators said some records were missing.

“They took all copies of that report and housed it off-site so there would be zero copies at City Hall,” Huntsman said. “They wanted to bury it so no one could access it.”

Though prosecutors used public records to piece together a case of misappropriating funds against Malkenhorst, there were allegations in the report — such as the property tax payments — that they did not know about. The report also laid out a case that city officials, including an attorney who replaced Malkenhorst as city administrator, Eric T. Fresch, tampered with or destroyed records. In 2008, Fresch made $1.65 million. He died in an accident last year.

Rodriguez said so that far the city was also finding that some records are missing.

During his pretrial hearing, Malkenhorst’s attorney argued that Vernon paid the administrator what they intended and wanted to.

“The people who are running the city say, ‘We like Bruce Malkenhorst. We want him to be able to get around in a limousine. We want him to use it for personal or business uses,’ ” the attorney, Bart. H. Williams, said at the time. “‘We want him to make a lot of money.’”

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hector.becerra@latimes.com