A Los Angeles County grand jury Tuesday indicted the former city administrator of Vernon on three felony counts of conflict of interest and misappropriation of public funds involving business deals between the city and his wife.
The indictment of Donal O'Callaghan marks the third time in four years that a top Vernon official has faced public corruption charges, and prompted Los Angeles County Dist. Atty. Steve Cooley on Tuesday to voice support for disincorporating the city. Cooley noted that Vernon has been dogged for decades by accusations that it is a fiefdom run by a small cadre of insiders with little accountability.
"The Vernon saga continues. This has been going on for 75 years," Cooley said in an interview. "There has to be an ultimate solution. About two or three years ago, we worked on a project within this office to propose legislation that would allow a process of disincorporation when a city becomes something that's not really a city, more like a fiefdom.
"I think it might be time to dust off that proposal for Vernon. I think there's an atmosphere there where people get into that city and take advantage of the set-up. And the fact is, there's so much money there."
The charges come after a series of articles in The Times about high pay and travel expenses earned by top Vernon officials as well as a business deal involving O'Callaghan and his wife.
O'Callaghan was placed on paid leave in August after The Times inquired about consulting fees paid to him through a company headed by his wife, Kimberly McBride O'Callaghan, and about her work as a contract employee under his supervision.
The Times reported that Donal O'Callaghan had received $243,898 in consulting fees from the city through Tara Energy Inc., a company headed by his wife. Billed at $300 an hour for overtime through the first half of this year, the fees were in addition to his annual salary.
City records show that the council passed a resolution on Jan. 12, 2009, approving a contract with her under the name Kimberly McBride. It called for her "to provide such services as requested by the director of Light and Power, or his designee" but did not note that the two were married.
Kimberly McBride O'Callaghan had been paid about $13,000 during a three-month stint last year as a $40-an-hour bookkeeper at the Light and Power Department. Donal O'Callaghan was director of the agency at the time.
In response to the reports, Vernon placed Donal O'Callaghan on leave and launched an internal investigation. Los Angeles County prosecutors announced they were probing the deal last month.
Donal O'Callaghan's attorney, Mark Werksman, called the prosecution a "classic case of gotcha," and said the city of Vernon was betraying his client.
Werksman said Kimberly McBride O'Callaghan had a background in business administration and that she "performed valuable services at a reasonable salary." Donal O'Callaghan broke no law, Werksman said, adding that his client was being made a scapegoat by the city.
"The hiring was done with the knowledge and approval of the city attorney … and City Council," he added. "There was nothing surreptitious about the hiring."
But Deputy Dist. Atty. Max Huntsman said that Donal O'Callaghan is liable under the law, regardless of who else knew or approved of his wife's hiring. If convicted of all charges, he could face up to four years and eight months in prison.
Huntsman previously prosecuted Leonis Malburg, a former Vernon mayor convicted of voter fraud for lying about living in the city while actually living in a Hancock Park mansion. His grandfather had been accused of the same charges decades before but was not convicted.
Huntsman also is the prosecutor in the district attorney's office case against Bruce Malkenhorst, another former Vernon city administrator facing charges of misappropriating about $60,000 in city money.
Outside critics, including elected leaders in Sacramento, have said they believe the city of only about 90 residents is rife with problems arising out of its intensely insular government.
Most of Vernon's residents have some kind of connection, including family relationships, to leaders in city hall. Last month, The Times reported that an ex-employee of the city's former contract security firm said he was given a reduced-rent apartment owned by Vernon in exchange for voting for the incumbent council members.
Recently, many of the city's business owners have grown increasingly concerned and angry about the way some Vernon officials have conducted themselves.
Some Vernon officials racked up thousands of dollars in city-paid expenses traveling on first-class flights and staying in luxury hotels such as the Ritz-Carlton in New York.
Several Vernon officials had made $500,000 to $1 million a year — or more — thanks to a highly unusual, two-tiered pay structure that allowed them to bill for "extra hours."
