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Follow the Money Lost at the Great Park

Most of us would say that $260 million is a lot of money to spend, especially when you have little of substance to show for it. But that’s the price Irvine has paid to develop 88 acres of the proposed 1,347-acre Great Park.

According to an audit compiled by the law firm Aleshire & Wynder, “We believe there are grounds for legal recovery” of some of the money, “including contract claims, claims under the False Claims Act and professional negligence should the [City] Council wish to explore them.”

Now, following the release of that audit and a second report, both on how the millions were spent over a decade, the Irvine council certainly does wish to explore options for recovery and has asked special counsel for ideas on how the city can get some of that money back. But the search for answers likely won’t need to go very far.

After all, the reports are ripe with examples that give an appearance of impropriety. Some contractors seem to have been simply overpaid for what they did, according to the report.

Forde & Mollrich, a public relations firm tasked with promoting the undeveloped park, saw its pay fluctuate wildly. One month, the firm received $50,000 and, another month, $100,000. Investigators say they found “no clear evidence” as to the reasoning.

Ken Smith, landscape architect for the park plan, may have gone months without performing any actual work, despite being paid $10,000 a month.

Continue reading at the Orange County Register…

Larry Agran Spent $200 Million At Great Park, But His Adviser Scores New York Times Story

By R. Scott Moxley

We once could have imagined The New York Times sending a future reporter to a completed Orange County Great Park in Irvine for an awe-inspiring article in the paper’s “Great Homes & Destinations” section. Don’t laugh. There’s no shame in being fooled a decade ago. That’s when Irvine political boss Larry Agran promised OC that the decommissioned El Toro Marine Air Corps Station wouldn’t just be filled with new houses.

The failed, 1992 Democratic presidential candidate said the development plan included man-made canyons, waterfalls and wildlife corridors; an architecturally impressive sports stadium and amphitheater; breathtaking university buildings; botanical gardens and a conservatory; and Smithsonian-caliber museums. Agran even guaranteed the Great Park would be bigger and more impressive than Manhattan’s Central Park and San Diego’s Balboa Park. All Irvine voters had to do to reap that historic milestone was to keep him and his political machine in control of the city.

This month, a Times reporter with “Great Homes & Destinations” did focus on Orange County, though the story wasn’t about the Great Park–at least directly. That’s no surprise. During Agran’s 12-year reign, not a single major proposed feature was built even though $200 million evaporated from the park construction kitty.

Where did all that taxpayer money go?

Well, there is an orange balloon hovering over the property, a public-relations stunt Agran laughably hails among his major accomplishments. There’s the $125,000 playground set that, when Agran’s consultants finished submitting change orders, cost $1.25 million. There are the untold millions of dollars used for glossy mailers telling residents around election times that the park will go down in history as a model of foresight and efficiency. There’s also the $47 million spent on wildly unrealistic conceptual drawings.

Such wasteful disbursements make sense only when you understand that Agran’s objective for seven consecutive elections was remaining in power by capturing publicity for proposing a park, not actually building one. Each election, he called his political machine “The Great Park Team” and, as time progressed, told voters, who weren’t seeing progress, that construction was imminent. Said the 69-year-old man who has never bothered getting a private-sector job and hasn’t built anything tougher than a tool shed, public parks are really, really complicated projects.

Given the proposal suffered setback after setback under Agran’s incompetence and mismanagement, it took magic to keep him in power, and for that feat, we can thank Arnold Forde, his private campaign adviser who co-owns Forde & Mollrich in Newport Beach. A onetime consultant to Jerry Brown, Forde grabbed a no-bid, no-benchmark contract to take $100,000 per month in park funds in exchange for allegedly performing public-relations tasks. Never mind another successful, veteran PR firm volunteered to do the job for $85,000 less per month. The Forde deal wasn’t so much about skill–how difficult is it to promote a park?–as it was about ties to Agran, who, with the aid of loyal, robotic, sidekick Beth Krom, separately funneled another $67,000 per month to two additional pals, Democratic operatives Chris Townsend and George Urch. Townsend and Urch, by the way, also enjoyed no-bid steals. If you’re counting, those three sweetheart pacts dwindled park construction coffers by $167,000 per month.

Continue reading at the O.C. Weekly…

Did Consultant Charge Political Donation to Great Park?

By Adam Elmahrek

A $2,500 payment to the Democratic Party of Orange County is listed on the check register of the lead design consultant for Irvine’s Great Park, raising questions about whether the consultant illegally used public funds and charged the city for a political donation.

The document was attached as an exhibit to the deposition of Gafcon Inc. owner Yehudi Gaffen and made public late Friday. City officials have been releasing public records obtained in the course of its forensic investigation into the park’s finances.

According to Councilwoman Christina Shea — who sits on a subcommittee overseeing the probe –Gafcon over the years submitted bulk invoices that didn’t itemize costs.

Those bulk billings totaled $47 million between 2004 and 2014, and auditors requested the check register to determine what expenses San Diego-based Gafcon used to justify its invoices. None of the expenses on the document have precise dates.

Gafcon is the former managing consultant for Great Park Design Studio, the team of consultants hired to design the massive park on the site of the former El Toro Marine Corps Air Station.

About the check to the Democratic Party, Shea said, “you can’t justify giving money to the Democratic Party and charging the city for it.”

Bob Stern, a government ethics expert who helped write the state’s Political Reform Act, agrees. He says asking the city to pay for a “straight donation” to a political party would be illegal, a “misuse of public funds.”

But there are exceptions, Stern said. For example, if the consultant paid the party for a park advertisement on one of its brochures, that would not be considered illegal, he said.

In his deposition, Gafcon owner Gaffen said he couldn’t recall what the payment to the political party was for.

In addition to the payment to the Democratic Party, Shea questioned a $15,000 check to the Great Park Conservancy, a foundation that supports park development, and a $2,500 payment to the Korean American Coalition — Orange County, a group that promotes the civil rights of Korean Americans. Shea said those payments were irrelevant to the park’s design.

The Great Park Conservancy, Shea said, is a nonprofit whose mission is to raise money for the city’s project.

“It doesn’t make any sense,” she said.

In his deposition, Gaffen didn’t say much when asked by Anthony Taylor — the Aleshire & Wynder attorney brought in to help with the investigation – about the charges. But he did say the Korean organization received its payment because it was “probably a nonprofit that was involved at some time with the botanical garden,” which is one of the park’s features.

The Great Park has long faced allegations of corruption as consultants — who funneled tens of thousands of dollars to campaigns to reelect the former Democratic City Council majority — were awarded no-bid contracts that critics called excessive and wasteful.
A Republican city council majority unseated the Democrats in the 2012 election and ran on campaign promises to bring fiscal accountability to the 1,300-acre project, which was supposed to rival New York’s Central Park but has so far fallen short of expectations.

The Republican council members initiated the in-depth audit last year, and Democrats on the council say the investigation is a political witch-hunt aimed at bolstering the Republicans’ election fortunes by trampling on the park’s reputation.

Shea points to what she called questionable payments now being uncovered by the audit as evidence that suspicions about the park’s finances had merit. She said auditors are examining detailed expenses of consultants that were previously unknown to the city, and the Gafcon check register was just a “snapshot.”

In addition, she said, financial records obtained from consultant Forde & Mollrich – whose former $100,000 per-month public relations contract is the poster-child for everything critics say went wrong with the park – have shown “serious problems.”

“They’re (auditors) starting to see a lot of red flags,” Shea said.

Continue reading at the Voice of O.C.

Irvine will take Great Park PR firm to court for records

By Kimberly Pierceall

IRVINE – A dispute over Great Park spending records is headed to court.

Irvine plans to argue in Superior Court that public relations firm Forde & Mollrich should turn over financials demanded by auditors investigating Great Park contracts. A principal with Forde & Mollrich, long criticized for its $100,000 a month no-bid contract to boost the Great Park’s image, has said the information is proprietary and has disagreed with charges that the firm has been uncooperative.

The City Council voted unanimously 5-0 Wednesday to take the firm to court if necessary to compel partner Stu Mollrich to hand over financial information sought by auditors and to undergo a second sworn deposition. Auditors recommended both of those events occur by Aug. 29. Mollrich didn’t attend Wednesday’s special meeting.

The council appeared to agree for different reasons, though.

“We need to know if Irvine has been cheated,” said Mayor Steven Choi, when discussing why the action was necessary. Council members Jeff Lalloway and Christina Shea agreed that the firm had been uncooperative, the dispute needed to be settled and the firm’s actions are what had caused the audit’s cost to keep rising. The audit has cost the city $1.08 million since June 2013.

Councilman Larry Agran, though, said the audit“does need some adult supervision,” namely a judge who could settle the issue.

Forde & Mollrich was paid $7.2 million between July 2005 and January 2013 for its work on the Great Park. Its fee had been reduced from $100,000 to $50,000 a month in 2012. The firm’s contract was terminated last year.

Continue reading at the Orange County Register…

Irvine asks judge to open firm’s books

By Jill Cowan

At a special meeting Wednesday, the Irvine City Council unanimously voted to ask for a court order compelling a powerful consulting firm to open its books for an ongoing forensic audit of the effort to transform a retired military base into a grand municipal park.

“I don’t care how great someone may be,” said Councilwoman Christina Shea. “They need to follow our laws.”

The move came after a top executive at Forde and Mollrich — a firm accused of wielding undue influence over the planning of the Orange County Great Park — refused to hand over information that auditors said was necessary to gauge whether the $7.2 million in fees paid to the firm for their work on the project were properly earned.

The audit is examining how the city spent more than $200 million on plans for the park, with what the project’s critics say is little developed ground to show for it.

When he was deposed for the audit, Forde and Mollrich partner Stu Mollrich declined to provide detailed information about the firm’s overhead costs and payroll, saying that it was beyond the scope of the probe.

Audit attorneys, meanwhile, argued that the records were key to understanding the firm’s specific responsibilities under its $100,000-per-month fixed-fee strategy and public relations contract.

Furthermore, they said, the firm agreed to make internal financial records available when it signed on to work for the city.

When Forde and Mollrich’s attorneys declined written requests for the records earlier this month, the auditors issued an ultimatum: Turn over the documents by 5 p.m. Aug. 18 or get ready to appear before a judge.

The deadline passed without the records changing hands, although audit attorney Anthony Taylor told the council Wednesday that the firm offered to go to mediation earlier in the week.

Still, Taylor said, Mollrich hadn’t expressed a willingness to comply with auditors’ requests, and urged the council to move forward with the resolution.

“We’re here in large part because of Forde and Mollrich,” he said. “They are absolutely driving up the cost of the audit.”

In January, the council authorized the use of subpoenas for the audit.

Over the last several weeks, testimony from a slew of former park officials has been made public — many of whom described the park’s design process as directionless and beset by cronyism.

Those claims have been strongly rejected by the park’s most ardent champions, including Irvine Councilman Larry Agran, who say the audit is a political witch hunt.

Continue reading at the Daily Pilot…

Former Great Park Consultants Defy Demand for Records

By Adam Elmahrek

Former Great Park consultant Forde & Mollrich has defied an ultimatum set by the city of Irvine to turn over financial records relating to the firm’s infamous Great Park public relations contract by 5 p.m. Monday.

The firm informed an attorney working for Irvine that it would not comply with the demand, according to Councilwoman Christina Shea. Shea said the City Council would hold a special meeting this week to consider taking the issue before a Superior Court judge, who could order Forde & Mollrich to turn over the records.

The standoff comes after months of attempts by auditors to obtain records during a forensic audit into the park’s finances. The probe – commissioned by the Republican council majority – is trying to determine whether Forde & Mollrich severely overcharged for services related to its years-long $100,000 per-month public relations contract to promote the park.

That contract over the years became the symbol for critics who allege corruption and waste at the 1,300-acre park project. While initially envisioned to compete with New York Central Park, the park has fallen short of expectations while spending north of $200 million.

Park critics allege the company’s services were not worth anything close to $100,000 monthly, and that the no-bid contract meant overinflated profits for the politically connected firm.
Since 2005, Forde & Mollrich has been paid more than $7.2 million.

Forde & Mollrich partner Stu Mollrich couldn’t immediately be reached for comment. But in a 12-page statement sent to a Voice of OC reporter, the firm described at length its accomplishments on behalf of the park and accused the audit of catering to the political agenda of the council majority.

“This audit has the appearance of a star chamber proceeding, conducted entirely in secret,” the statement reads. “Even members of the City Council have not been allowed full access to the information regarding invoices and reports of the subcommittee, its attorneys and consultants.”

In a July 30 deposition under a city-issued subpoena, Mollrich flatly refused to answer questions regarding employee salaries, overhead and profit margins related to the firm’s park contract. The deposing attorney, Anthony Taylor with Aleshire & Wynder, LLP, threatened Mollrich with a contempt hearing at Orange County Superior Court.

If the city approves pursuing a court intervention, Shea said the judge could order Orange County Sheriff’s deputies to escort Stu Mollrich and/or Arnolde Forde before the court and order them to turn over the records.

However, Shea acknowledged, it’s unlikely that it will get to that point.

Forde & Mollrich’s statement claims the firm has provided over 25,000 pages in records, doesn’t have the records specifically demanded and is not required under its fixed-fee contract to reveal financial information like profit margins and employee salaries to auditors.

The firm compared its fixed-price contract to hiring a contractor to build a house. “You don’t have the right to audit the contractor’s books, ask how many employees he hired, how much he paid them and what the profit was,” the statement says.

“Mr. Taylor’s demands would violate the privacy of our employees and place our firm at a competitive disadvantage in bidding and negotiating future contracts,” according to the statement. “The only thing that matters is whether the services that were contracted for were received and whether they were satisfactory.”

According to Shea and Taylor’s letter, Forde & Mollrich’s city contract specifically requires production of the demanded records.

Continue reading at Voice of O.C.

Forde & Mollrich Partner Threatened With Contempt

By Adam Elmahrek

A forensic audit of the Great Park project has taken another twist with Stu Mollrich of Forde & Mollrich — the consulting firm at the center of the ongoing scandal — refusing to disclose finances related to the firm’s former $100,000 per-month public relations contract with the park.

Mollrich, appearing for a July 30 deposition under a legislative subpoena, was threatened with a contempt charge after refusing to answer questions about Forde & Mollrich’s overhead, employee salaries and profit margins. He argued the company didn’t have to disclose that information because it’s a private business.

Yet this information goes to the heart of questions that for years have surrounded the public contract. Park critics allege the company’s services were not worth anything close to $100,000 monthly, and that the no-bid contract meant overinflated profits for the politically connected firm.

The park’s defenders, meanwhile, argue that the audit is nothing more than an attempt by the Irvine City Council’s Republican City Council majority to smear the council’s Democrats, who, until 2012, controlled the council and therefore the park project.

Over $1 million has been spent on the investigation.

So far, depositions and an initial report by Newport Beach-based auditor Hagen, Streiff, Newton & Oshiro Accountants have carried a narrative of waste, abuse and dysfunction between the park’s top management and the consultants that were supposed to answer to the city.

But to longtime critics of the Great Park project, the Forde & Mollrich contract holds special significance as the symbol for years of mismanagement and alleged corruption at the park. While initially envisioned to be Orange County’s rival to New York’s Central Park, the 1,300-acre project has fallen short of expectations.

In his deposition — which ran over eight hours and as transcribed totals 263 pages – Mollrich flatly refused to answer a question about the salary for then Forde & Mollrich employee Sam Allevato, who is also mayor of San Juan Capistrano.

That sparked a contentious back-and-forth between Mollrich’s lawyer, who attended the deposition, and Anthony Taylor, the deposing attorney from Aleshire & Wynder, LLP, which was brought in to help with the investigation.

Mollrich’s attorney David Elson — from the firm Manatt, Phelps, & Phillips, LLP – argued that the consultant’s profits under the contract are irrelevant. What is relevant, Elson argued, is whether the city received the services promised in the contract.

“So you think it’s perfectly acceptable if a public agency is overcharged?” Taylor asked Elson.

Responded Elson: “Overcharged – why are they overcharged if there’s a public process, and at the end of the public process, they received all the deliverables they’re – they’re promised?”

Taylor said he wants to measure the city contract with other Forde & Mollrich contracts to see weather the city was being charged commensurate with the fair value of the services it received.

Taylor noted that “every day” there are lawsuits under the False Claims Act whereby companies are sued for marking up something like a pipe, “ten times what it should have been.”

Continue reading at the Voice of O.C.