Yorba Linda's city manager ruled over City Hall almost unchecked, collecting hundreds of thousands of dollars in unauthorized payments, boosting the salaries of friends and ordering staff to cover it up, according to a report by a special investigator hired by the City Council.
Arthur C. Simonian, fired by the City Council in September but reinstated by court order two months later, awarded himself more than $300,000 in benefits and extra compensation from 1987 through 1998 without the City Council's approval, according to the report, made public Tuesday by Mayor John Gullixson.
Simonian also gave himself annual bonuses of up to $14,000 despite a warning by the city attorney that doing so was illegal, the report states.
Vicki Baker, the city's finance director from 1993 to 1998, told investigators that Simonian instructed her to withhold some benefits from his W-2 tax statements, including a leased 1997 BMW and a $1-million life insurance policy he received at city expense. Simonian also ordered her to alter payroll documents given to the council, hiding his car expenses and the bonuses he granted to himself and his staff, she said.
Simonian's attorney, R. Craig Scott, could not be reached for comment. In a Sept. 2 letter to the auditors, Scott objected to the investigation as a violation of Simonian's civil rights and devoid of due process.
Scott said it was obvious there was "no sincere interest" in conducting a balanced investigation since the mayor and City Council had already planned to oust Simonian before the report was completed.
The three-part report, a confidential inquiry ordered by the City Council after Simonian was accused of financial malfeasance in August, was released by Gullixson against the advice of the city's attorneys, and two months after the four-member council rejected his resolution to make the report public.
Gullixson, who led the council vote to fire Simonian, said he decided to release the special counsel's findings to blunt Simonian's adamant denials of wrongdoing.
"My own personal feeling has been that I wanted them out from Day One," Gullixson said Tuesday night.
Unauthorized Bonuses Said to Be Unlawful
The mayor is the target of a recall campaign led by Simonian's supporters.
The special investigation included a detailed audit of Simonian's earnings, expense accounts and benefits package, as well as a review of the city's management bonus program and compensation received by other top city officials.
The Tustin-based law firm of Parker, Covert & Chidester conducted the investigation in August and September, with assistance from consultant Edward S. Kreins and the Irvine accounting firm of Diehl, Evans & Co.
Among the investigation's findings:
* Yorba Linda City Atty. Leonard Hempel told Simonian in 1984 that state law prohibited him from granting himself bonuses without the authorization of the City Council. Despite this, Simonian awarded himself bonuses totaling $143,514 from 1987 to 1998.
* The City Council had not given Simonian an annual performance evaluation since at least 1994. Kreins, the investigator, concluded that "a number of the problems would not have occurred if the Council had properly evaluated Mr. Simonian."
* Investigators found that City Engineer Roy Stephenson, one of Simonian's closest friends, still has close financial ties to a former business partner, Ray Berryman, who has several major contracts with the city. Stephenson sold his interest in their old engineering firm--Berryman, Stephenson Inc.--and receives payments from Berryman.
* Simonian approved improper salary increases and benefits for Stephenson without council approval. This included a 5% raise, $6,000 a year in deferred compensation and a $1-million life insurance policy that cost the city $13,005 in annual premiums.
* Simonian refused to turn in receipts when being reimbursed for his work-related expenses, and listed only very general explanations for the charges, such as "supplies" or "golf course," according to Baker and the current city finance director, Susan Hartman.
The Yorba Linda City Council fired Simonian on Sept. 7, the same day they received the special counsel's investigative report. In October, the city sued their former city manager to recover more than $300,000 in alleged improper compensation he collected since 1984.
The Orange County district attorney's office reviewed the allegations but declined to prosecute Simonian, saying the benefits in question could be allowable under the very broad terms of the city manager's employment contracts.
Orange County Superior Court Judge John C. Woolley on Nov. 24 ruled that the City Council's 3-2 vote to fire Simonian "without cause" was improper, and ordered to city to put Simonian back on the payroll.
Simonian's attorney successfully argued that the council in fact fired his client for the alleged financial improprieties, which the council discussed in a closed-door session with its attorney shortly before the vote.
Mayor's Decision to Release Report