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Water district sues company, accusing it of overbilling

Central Basin sues the politically connected Pacifica Services, which has received millions from the water agency over the years.

July 25, 2013|By Hector Becerra and Devin Kelly

The Central Basin Municipal Water District, which has emerged as a key player in the FBI investigation into a state senator, on Thursday sued a politically connected company for allegedly overbilling it by nearly $1 million.

The lawsuit marks the beginning of an effort by the new management of Central Basin to change the agency's political culture and investigate allegations of wrongdoing by the old leadership, officials said. Tony Perez, a former Metropolitan Water District engineer who was installed as the district's new general manager in May, said he is trying to understand how the district spent money and awarded contracts.

"The time has come and we're holding everyone accountable for their actions at Central Basin," board member Leticia Vasquez said in an interview. "I think is a huge and major step forward in helping restore some accountability."

The suit comes as Central Basin is enmeshed in a growing scandal tied to the FBI's investigation of state Sen. Ron Calderon (D-Montebello). Calderon's brother Tom, a former assemblyman, was a longtime consultant who received more than $750,000 from the public agency. Last month, federal prosecutors served a subpoena at Central Basin seeking documents and other records related to contracts, including those granted to Tom Calderon and connected to the hiring of Gil Cedillo Jr., the son of ex-state legislator and new Los Angeles City Councilman Gil Cedillo.

The company targeted in the lawsuit, Pacifica Services Inc., has received millions of dollars from the agency over the years. The firm provides consulting, engineering and other project management services. It also donated thousands to political campaigns of water district officials over the years. Pacifica did not return calls seeking comment.

The agency hired a law firm to look at previous expenditures, he said. Perez said that Pacifica billed the district $867,000 above what was contractually agreed upon and that invoices were vague and provided almost no verification for work done. Central Basin hired a forensic engineer earlier this month to go through the billings.

"This is our way of rebuilding trust, whatever trust we lost in the community," Perez said of the embattled agency.

Director Art Chacon said the district has to make sure that engineering and other contracts go out to bid, adding that he had long felt that Pacifica was too cozy with several of Central Basin's leaders.

Two years ago, The Times wrote a series of stories about Central Basin's awarding millions of dollars in contracts to politically connected individuals and organizations that had helped the district deflect critics and avoid outside scrutiny.

Pacifica has close ties to the agency, with four employees working out of the water district's office. The firm had donated thousands of dollars to directors over the years. But on July 16, an attorney for Pacifica sent a letter to Central Basin demanding payment for "all delinquent amounts, including interest" for a total of $268,504. The attorney declined to comment when reached Thursday. Calls to the company's offices and to its chief executive, Ernest Camacho, in Pasadena were not returned.

According to the lawsuit, a last amendment was proposed by district staff that would have extended the contract two years and increased the billable amount to $5.8 million. That motion was not approved by the five-member elected board of directors. But Central Basin alleges that Pacifica kept improperly billing the district, with more than $500,000 being mistakenly paid out by staff, Perez said.

Phil Hawkins, a former assemblyman and Central Basin director, said that an entrenched leadership in past years that included ex-general manager Art Aguilar and Tom Calderon had created a tight circle that led to contracts he said appeared to be political.

In an interview, Aguilar defended the work Pacifica did for the district, calling it "invaluable." He said the district used Pacifica for contract work such as a recycled water pipeline extension, and to provide day-to-day engineering services.

"They were fantastic," Aguilar said, arguing that Pacifica helped the district save money by taking the place of staff engineers.

Aguilar also weighed in on the firing of Gil Cedillo Jr., who was let go this month from his $112,000 job at Central Basin. He had been a staffer for both Ron and Tom Calderon before being hired at Central Basin as a business development manager — a position that could have paid him as much as $143,000, according to district records. The district also paid the younger Cedillo $22,000 to finish his college education. His work at Central Basin and ouster was first reported by Los Cerritos Community News.

"He was the best-qualified of the candidates we had, without a doubt," Aguilar said.

Last month, federal prosecutors served a subpoena at Central Basin headquarters in a search for records. Perez said the agency would fully cooperate with federal investigators.

hector.becerra@latimes.com

devin.kelly@latimes.com

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