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L.A. County scrutinizes government contractors

D.A.'s office likens their positions to those of elected officials and says the same standards should apply.

December 14, 2010|By Hector Becerra and Sam Allen, Los Angeles Times

Criminal charges filed last week against two former top officials of the Beverly Hills Unified School District, accusing them of misappropriating more than $5 million in public funds, underscore a push by Los Angeles County prosecutors to target suspected wrongdoing by local government contractors.

Contractors are often used in key management jobs for cities, school districts and other government agencies — jobs that were once handled by government employees. Prosecutors argue that a person who has sway over how government money is spent should not get a free pass simply by being paid as an independent contractor, rather than being on the municipal payroll.

"We don't think you should be able to get away with designating yourself a consultant when in fact you're acting as an employee and the agency you're working for is treating you as an employee and taking your advice as an employee," said David Demerjian, head of the district attorney's public integrity unit.

Demerjian said his department is stepping up conflict of interest investigations into independent contractors suspected of having enriched themselves at taxpayer expense by using their influence as public officials to make deals in which they have a financial interest.

Earlier this year, prosecutors brought public corruption charges against a former contract construction manager for the Los Angeles Unified School District, accusing him of using his influence to hire people to work for a company he owned. The manager, Bassam Raslan, pleaded guilty last week to violating conflict of interest rules, in what officials see as a victory in their efforts.

The Beverly Hills case targeted the district's former superintendent and its former facilities director.

According to prosecutors, facilities director Karen Anne Christiansen secretly negotiated to become an independent contractor. Court papers say she was paid more than $5.2 million by the school district between 2006 and 2009. According to prosecutors, while she was managing the district's facilities work as a contractor, she negotiated contracts with an energy firm to conduct business with the district and her own company. Her actions allowed her company to reap extra profit from her work for the district, prosecutors allege.

Christiansen, 52, and former Beverly Hills schools chief Jeffrey Hubbard were charged with two counts each of misappropriation of public funds. Christiansen was also charged with six counts of conflict of interest.

Christiansen could not be reached for comment. But Hubbard, now superintendent of the Newport-Mesa Unified School District, denied doing anything wrong.

"It's absolutely not true," he said. "It's an injustice. This is my career. It's just not right. I don't know how I could have anything to do with it."

As the use of contractors in local governments has become more common, agencies have had to pay greater attention to potential financial conflicts.

Michael Jenkins, a municipal government lawyer and adjunct professor at the USC School of Law, said conflict of interest laws for government officials apply to any contractor who makes or influences decisions.

"You can't evade the effect of conflict laws by changing the label," said Jenkins, whose firm, Jenkins & Hogin, represents several cities in Los Angeles County.

Jenkins said it is fairly common for cities to hire a contractor when they lose a manager or director of a major department. For example, Diamond Bar, which Jenkins represents, plans to replace its outgoing finance director with a temporary contractor as it searches for a full-time replacement. Because of the nature of that position, the contractor would be subject to the conflict of interest laws, Jenkins said.

Demerjian said a public official, which a contractor can be, perverts the public trust when making decisions in which he or she has a monetary stake.

"A public official shouldn't be wearing two hats," he said. He or she "should only be acting in the best interest of the public. You don't want people in a situation where they may be making decisions because it enriches them rather than because it's in the best interest of the agency."

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