Los Angeles County prosecutors have filed corruption charges against the city manager of Bell, a former state senator and a San Diego developer in a sweeping probe of a failed solar project in the City of Industry involving the alleged theft of up to $20 million in public funds.
Paul Philips, the former manager of the City of Industry and now the top administrator in Bell, former state Sen. Frank Hill (R-Whittier), attorney Anthony Bouza, and William Barkett, the La Jolla-based developer of the solar project, this week were all charged in connection with the corruption case, according to authorities and court documents.
The City of Industry advanced $20 million to Barkett's company, San Gabriel Valley Water and Power, between 2016 and 2018 to build a 450-megawatt solar project in the rolling hills between Diamond Bar and Chino Hills, both of which opposed the development over environmental concerns, according to court documents. But the project never broke ground and the money was never paid back.
Amid growing concerns over the stalled project, the City of Industry terminated its lease with the developer in 2018, according to court papers.
Though some of the allocated money was paid to other vendors, Barkett is accused of spending about $8.3 million on personal items, according to the Los Angeles County district attorney's office. He also allegedly falsified or altered invoices to inflate the amount.
“Public corruption erodes the trust of our citizenry and hampers progress,” Dist. Atty. George Gascón said. “There is no place for it in Los Angeles County.”
Philips, who oversaw negotiations of the deal as the then-top administrator of the City of Industry, surrendered Friday to authorities on one count of misappropriation of public funds. After the project's collapse, the City Council forced out Philips, who is now the city manager of Bell.
Philips appeared in court Friday and posted $25,000 bail. His attorney, Steve Cooley, said Philips "has done nothing wrong. He was a clean-up-the-city city manager. He got nothing. He was not in charge of the money."
Philips is expected to enter a plea at a Sept. 10 hearing.
Barkett was arrested Wednesday in San Diego County on criminal charges of embezzlement, money laundering, grand theft and misappropriation of public funds, sheriff's officials said. He remains in jail on $1-million bail.
Hill and Bouza, who acted as contract negotiators on behalf of the City of Industry, will be arraigned Tuesday and face a series of conflict-of-interest charges in connection with the case, according to authorities and court documents. Bouza, who also faces a charge of misappropriation of public funds, was arrested Wednesday and later released on $45,000 bond.
Bouza and Hill are accused of having a financial conflict of interest when they allegedly drafted or otherwise influenced contracts with the city, according to court documents.
Hill's attorney, Tony Rackauckas, said his client did not receive any of $20 million paid out and that the former state senator was brought in by Industry to find green solutions for the city's power and that he did not have anything to do with the distribution of the money. Rackauckas said Hill denies he had a conflict of interest and that all those involved knew he would stand to benefit only if the project was a success.
It is not the first time Hill has been in trouble with the law. He resigned his state Senate seat in 1994 after he was convicted and sentenced to four years in federal prison in a separate corruption case in which he took an illegal $2,500 payment from an undercover FBI agent. His conviction in that case was part of a wide-ranging probe of corruption in state government that led to the conviction of 14 people, including five legislators.
Prosecutors allege Barkett, Hill and Bouza were all working together in the development deal, according to court documents. Hill, who was being paid to represent the city's interests, had a financial stake in the solar project through another company associated with San Gabriel Valley Water and Power, according to court documents. Bouza allegedly was owed $1.5 million by the developer.
As part of the initial deal, the City of Industry would be able to recoup its money once the project was built. When the project failed to break ground, the city sued Barkett's company in 2019, accusing it of being a 'sham" to line the pockets of its owners and contractors. The suit accused the developer of submitting invoices for services never performed.
The massive solar farm would have encompassed ranch lands within the jurisdiction of the neighboring cities of Diamond Bar and Chino Hills, which both opposed the solar farm in some of the pristine canyons.
After walking away from the project following a political fallout with Hill, Industry council members in 2019 agreed to a partnership between the city, Diamond Bar and Chino Hills to jointly own the Tres Hermanos ranch.
The City of Industry — a small municipality along the 60 Freeway in the San Gabriel Valley consisting mostly of industrial businesses and home to fewer than 300 residents — has long been under a cloud of suspicion for its financial dealings and insular government.
For years, the city government was headed by former Mayor Dave Perez, who owned trash-hauling and maintenance companies that racked up millions of dollars a year in contracts with the city, a 2009 Times investigation found.
Of 90 potential voters in the city at the time, about 30 were members of the Perez family or people who lived in properties owned by the family’s investment firm. Many of the remaining voters were city officials or their relatives, or others living in city-owned homes rented at low rates.
An audit years later by KPMG found that Perez’s companies had made a fortune off the city, with contracts valued at more than $326 million.
The district attorney’s office launched an inquiry after the Times report, but the mayor was not charged with conflict-of-interest crimes because his companies’ contracts were awarded before he assumed office.
In 2016, a state controller’s office review discovered that the city paid tens of millions to contractors without tracking how the money was spent or whether the services were even provided. City officials charged lavish meals, wine tastings, massages, an iPad and a 65-inch television to city credit cards. Of more than $235,000 in credit card expenses, 83% of that amount was deemed questionable
This story originally appeared in Los Angeles Times.