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.

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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.”

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