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Engineering firm is the subject of a federal investigation

Ex-Maywood officials say FBI is looking into allegations of improper payments by AAE Inc. to obtain municipal contracts. An attorney for AAE denies any improper dealings.

January 07, 2011|By Hector Becerra, Robert Faturechi, Richard Winton and Sam Allen, Los Angeles Times

Federal prosecutors and FBI agents are investigating allegations that an engineering firm doing business in Southern California paid officials in at least one city in order to obtain contracts, according to people with direct knowledge of the investigation.

An FBI spokeswoman declined to confirm or deny the investigation. But two federal officials with knowledge of the case told The Times that the investigation had been proceeding for several years and involved "multiple municipal agencies." Investigators have been looking at how the firm, AAE Inc., had secured contracts, the officials said.

Paul Philips, the former city manager in Maywood, said FBI agents interviewed him at least three times last year and asked about AAE and any ties the firm had with members of the City Council. He said the agents also asked whether he knew anything about the firm's dealings with officials in other cities, including Montebello and Bell Gardens.

"They were trying to find out what their relationship was with the council," said Philips, who now serves as administrator of a joint police communications agency covering several Orange County cities. "They were really digging into that part."

A second former Maywood official, David Mango, told The Times that while working as part of an FBI undercover operation in 2008, he twice received envelopes containing thousands of dollars in cash from an AAE executive.

The executive provided him the money in hopes he could ease the way for the firm to get new contracts and receive quick payment for existing ones, Mango said.

Mango, who was Maywood's building and planning director until being fired in late August, said that he had worked undercover for the FBI for about four months that year, wearing a recording device and attending a local golf outing with AAE officials and government officials from other cities.

In September, Mango filed a personnel claim with Maywood, a small city southeast of downtown Los Angeles, alleging that he had been fired in retaliation for his work on the investigation. In the complaint, Mango said he had told the city's interim city manager, Lilian Myers, that he had "made complaints to the FBI" alleging that two members of the City Council "were engaged in public corruption." He also told her that he was meeting with prosecutors to discuss the case. Shortly afterward, he was fired, his complaint alleges.

City officials deny the investigation was the reason for Mango's dismissal but have declined to say why he was fired. "Mr. Mango's release from employment had absolutely nothing to do with the work he allegedly did for the FBI," Myers said.

Michael Carras, an attorney for AAE, strongly denied any improper dealings with elected officials and said he had no knowledge that the firm was being investigated.

Carras said his clients' interactions with elected officials and other public employees "is a matter of public record and one that is completely transparent and completely aboveboard."

AAE did not give any cash payments to government officials in Maywood or elsewhere, Carras said, and all political contributions conformed to the law.

The firm declined requests to confirm the existence of the probe or answer other questions.

Cities increasingly have turned to private contractors such as AAE to handle work that in the past often would have been done by government employees.

The firm, founded in 1994, has done a wide range of work for dozens of cities and other government agencies around Southern California, including designing and planning road and street repairs, traffic lights, sewers and other municipal projects.

Its website lists projects that it has completed in cities including Bell Gardens, La Puente and Montebello and says the firm has more than 100 employees in five offices in the region.

The work done by such firms is generally awarded through competitive bidding, but the FBI has been scrutinizing allegations that some firms have won contracts on the basis of improper conduct.

The federal officials who described the current probe spoke on condition of anonymity because the investigation is continuing.

One confirmed that Mango had worked with the FBI and worn a wire. That official said the investigation has focused in part on social events such as golf outings in which AAE employees mingled with government officials.

Aspects of the investigation have been ongoing since at least 2007.

One factor that appears to have delayed progress on the case is a significant change in the law that makes it harder for federal prosecutors to charge public officials with receiving an improper payment.

In June, the U.S. Supreme Court narrowed the grounds under which federal prosecutors could bring cases that allege a scheme to deprive the public of its right to "honest services."

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