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City of Industry is focus of D.A. inquiry

Review aims to decide if conflict of interest laws may have been broken in regard to the mayor's businesses.

November 19, 2009|Rich Connell

The Los Angeles County district attorney has opened an inquiry into the mayor of the City of Industry's business connections with the city to determine if conflict of interest laws may have been violated, The Times has learned.

The review is focusing on Mayor David Perez and was prompted by a complaint lodged in September, said David Demerjian, head of Dist. Atty. Steve Cooley's Public Integrity Division. The complaint alleged that Perez "may have a financial interest in contracts between the city and companies he's affiliated with," said Demerjian, declining to identify the complainant.

Perez said he was not aware of the probe. "I feel confident that I'm doing everything legally," he said in a telephone interview.

Last month, The Times reported that companies partly owned by Perez, a member of a prominent family deeply rooted in the San Gabriel Valley town with less than 100 voters, hold multimillion-dollar contracts with the city to collect trash and provide public maintenance services.

Perez stressed that the agreements were in place long before he joined the council in 2001, when he says he removed himself from any business dealings with the city. He also says he has relied on the advice of city lawyers and their reviews of agendas to avoid ethics problems.

Both Industry and Perez have raised their profiles recently with a controversial push to bring a professional football team and an $800-million stadium complex to the eastern end of the heavily commercial city, near the junction of the 57 and 60 freeways.

Inquiries like the one involving Perez are initiated after a complaint review indicates there is a possibility of a crime, Demerjian said. "We'll open an inquiry to determine if there's any truth to it," he said. "We don't call it an investigation unless we consider it a crime."

Prosecutors will examine legal and factual issues related to "what involvement [Perez] had in making any contracts with the city, if any, [and] what his specific financial interest is, if any."

A trash hauling operation partly owned by Perez and his brother, who is an Industry planning commissioner, has held an exclusive franchise in the city for decades. Over the last year alone, the business was paid more than $12 million by the city, records show. Another Perez partnership collected several million more to maintain city landscaping, remove graffiti and perform other services.

Minutes show council meetings routinely begin with officials making hundreds of thousands of dollars in payments to the mayor's companies and Perez abstaining from the approvals.

Other steps were taken to avoid potential legal problems that could arise from City Council decisions to amend the public maintenance contract involving the mayor's company, officials said. Just days before Perez took office, other council members extended the agreement 24 years and included automatic cost-of-living rate increases, according to records and interviews.

Beyond the city contracts, Perez has financial interests in more than a dozen commercial and residential properties in the city. And yet another Perez firm operates a waste transfer station in the city that entered into a multimillion-dollar development agreement with the city's redevelopment agency in 2000 and received more than $10,000 in income from the city in 2008, records show.

Demerjian said that conflict of interest inquiries can be time-consuming, involving voluminous records and highly detailed government ethics laws. "The analysis is quite a complicated one legally," he said. "What the average person might think is a conflict of interest might not violate the criminal statutes."

Though Demerjian said his unit does not identify complainants, a former Anaheim police officer, who has battled the city legally, said he wrote the district attorney this summer about the mayor's business ties to City Hall, among other things. Rene Cota, who was charged with city code violations and had his Valley Boulevard bar shut down in late 2008, said he began looking into the city because he felt he was treated unfairly and lost so much money on his Industry venture.

Perez declined to comment on Cota's case, other than to say: "You just have to abide by the rules and code enforcement."

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rich.connell@latimes.com

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