California League of Bond Oversight Committees

FBI Pursuing Allegations Against West Contra Costa School District
Dec. 10, 2014  |  By Theresa Harrington  |
EXCERPT: RICHMOND -- The SEC isn't the only fed in town. The FBI confirmed Tuesday that it is also looking into the West Contra Costa school district's $1.6 billion bond program.
    FBI agent Greg Wuthrich said Tuesday that its inquiries are similar to the allegations being investigated by the Securities and Exchange Commission. 
    The FBI's involvement came to light after Trustee Madeline Kronenberg told this newspaper that she was contacted by an FBI agent in relation to the SEC's investigation into the district's construction bond financing. 
    "The FBI does all the SEC investigations," Kronenberg said. "That's what my understanding is. The FBI is the investigative agency, and SEC is the judicial agency.
    But Wuthrich said that's not true. 
    "Like the SEC, we actually received allegations as well; however, we are definitely not the investigative arm of the SEC," he said. "We look at different things than they would. We're going to be more of the criminal arm, and they're going to be more of the regulatory arm."
    In July, the SEC sent subpoenas to the West Contra Costa district and then-board President Charles Ramsey, seeking numerous documents and other records related to its bond construction program. Since then, the board has approved more than $700,000 in legal contracts to represent Ramsey, the district, Kronenberg and Associate Superintendent for Business Services Sheri Gamba in the investigations. At least one district resident is unhappy that the board agendas did not divulge that the contracts would cover legal fees amassed as a result of multiple federal investigations. 
    Anton Jungherr filed a Brown Act complaint with the district Tuesday, alleging that the board agenda that contained an amended contract for Ramsey's legal fees and Kronenberg's legal fees stated only that the bills would be specifically related to the SEC investigation. ... 
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Judge rejects Contractors' Meal Gambit
South Bay companies tried to claim wining, dining, was free speech

Dec. 14, 2014 | By Greg Moran |
EXCERPT:  The fancy meals, trips, and gifts given to South Bay school officials by two construction companies vying for school building contracts were criminal acts and not constitutionally protected free speech, a San Diego judge has concluded.
   The ruling on Friday (12/12/2014) by Judge Eddie Sturgeon came in a high-stakes case filed by Sweetwater Union High School District against construction companies Gilbane and The Seville Group. The district is seeking the return of millions of dollars paid to the companies, contending the contracts were tainted by findings of conflict of interests among school officials.
   State law says when public officials enter into a contract in which they have a financial interest, the deal is void — and any money paid out has to be returned. The district is seeking the return of $26 million.
   The conflicts came to light after U-T Watchdog began reporting on the relationships between contractors and officials at the Sweetwater Union High School District and Southwestern College.
   The stories spurred a sweeping investigation by District Attorney Bonnie Dumanis, which ended up with 18 contractors, school board members and officials eventually pleading guilty to a variety of charges.
   In defending the lawsuit seeking return of school bond funds, the companies claimed that the gifts weren’t bribes. They argued the companies were exercising their free speech rights by “petitioning” government officials. That meant their conduct was shielded by the constitution.
   To support that argument, the companies argued that among the 18 guilty pleas, none were for bribery. Instead, most defendants pleaded to failing to properly disclose gifts and benefits they received. ...
   The judge flatly rejected the construction company argument.
   Sturgeon said that the law the contractors cited doesn’t apply if the conduct was illegal. In a tentative ruling that he finalized on Friday, he wrote that the gifts were clearly meant to influence the decisions of the school officials, and the guilty pleas from the contractors and officials confirmed it was illegal. ...
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SEC Subpoenas - Contracts Show School Board President, Not District, Client of Brother's Law Firm
Sept. 5, 2014 | By Theresa Harrington |
EXCERPT: RICHMOND - Contracts the West Contra Costa school board approved for legal fees related to a Securities and Exchange Commission subpoena received by board President Charles Ramsey reveal that his brother's firm may not disclose information gathered to the district. 
   "Although there is currently an agreement that the firm's fees and expenses in this matter will be paid and advanced by the West Contra Costa Unified School District, this agreement confirms that Charles Ramsey (and not the district) is our firm's client in connection with this matter," an Aug. 5 engagement agreement with Ramsey Erlich Attorneys at Law signed by Charles Ramsey states. Ramsey's brother, Ismail Ramsey, is a partner in the law firm. ... 
   An initial amount of $18,000 was crossed out in the district contract and replaced with $150,000. Boilerplate language requiring the firm to indemnify the district and to maintain general liability insurance was also crossed out, along with a clause that would have granted the district ownership of all documents produced. ...
   In addition, the board agreed to pay F1 Discovery, which was hired by Ismail Ramsey's firm to collect documents in response to the subpoena, $10,000 for work through June 30, 2015. Language assigning ownership of the documents to the district was also crossed out of this contract, which noted that Ismail Ramsey's firm "is trying to get the SEC to agree to new terms, thus reducing this volume."
    Charles Ramsey received the subpoena in connection with an SEC investigation into the district's construction bond financing. The district, Contra Costa County treasurer, the district's finance team and some of its consultants and advisers also received subpoenas.
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Ramsey Ehrlich Contract PDF:

Securities & Exchange Commission Subpoena of West Contra Costa School District Reveals Scope of Inquiry
Aug. 26, 2014 | By Theresa Harrington |
EXCERPT: ... RICHMOND - The Securities and Exchange Commission appears to be undertaking a much broader probe of the West Contra Costa school district's controversial, $1.6 billion bond program than earlier thought, according to the subpoena released Tuesday in response to a public records request by this newspaper. 
    The subpoena and accompanying letter dated July 31 listed 20 separate requests for correspondence, financial documents, audits and audio and visual recordings with the Contra Costa County Treasurer, auditors, KNN Public Finance consultants, Piper Jaffray underwriters, SGI Construction Management, the state Board of Education and the Internal Revenue Service. The request included documents from the school board, citizen's bond oversight committee, district facilities subcommittee and others related to 11 bond sales between 2009 and 2013. 
    The SEC letter gave the district until Aug. 15 to comply or be subject to a fine and/or imprisonment. News of the SEC inquiry broke in mid-August, but its scope and specifics have remained a mystery because neither the SEC nor the district will comment on specifics. The district would say Tuesday only that it is complying with the request. ...    Since 1998, voters have approved six bonds worth $1.6 billion to finance the third largest school construction program in the state, behind San Diego and Los Angeles. The district has issued about $1 billion to finance an extensive school rebuilding program, with nearly $600 million remaining. But growing opposition to the bond program, with watchdog groups calling for greater financial accountability, contributed to the failure of a seventh bond -- for $270 million -- in June. ... 
    ... Board President Charles Ramsey said Tuesday that some of the transactions listed in the subpoena were approved by the district's finance staff, lawyers and even a Contra Costa County Superior Court judge. 
    ... District resident and former bond oversight committee member Anton Jungherr said he was pleased that the SEC is investigating the district. "Yes, I am encouraged by the SEC investigation. It's consistent with the letter I signed (asking for a third-party review of the district's bond program)," Jungherr said. The fact that board members each appoint a member of the district's bond oversight committee takes away its independence, he said. "It's basically a conflict of interest when you have the people that you're overseeing appointing the overseers," Jungherr said. The SEC provided supplemental information to the district stating that it may share its files with other government agencies, particularly U.S. attorneys and state prosecutors. It has also subpoenaed Ramsey, members of the district's finance team, and some of its consultants and advisers. 
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PDF of the SEC subpoena to WCCUSD:

2014 News • Archives

West Contra Costa County School District
Support for Kids or 'Pay to Play'?

May 25, 2014  |  By Robert Rogers  |
EXCERPT: RICHMOND -- Roughly $2.8 million has poured into campaigns to pass West Contra Costa school district bond measures since 2002, the bulk from groups that have benefited from the massive taxpayer-funded construction projects that the successful ballot measures have unleashed, according to an analysis of campaign finance records by this newspaper. The bulk of the contributions have come from construction companies, architectural firms and organized labor, groups that have been heavily involved in building and renovating dozens of schools throughout the district thanks to the $1.44 billion the measures have freed up since 2002. If voters approve Measure H, a $270 million proposal on the June 3 ballot, it would be the seventh bond for school construction in the district passed since 1998. Those measures have saddled West Contra Costa property owners with the largest tax burden in the county. ... 
   Tom Butt, a Richmond councilman and owner of architectural firm Interactive Resources, has donated $67,750 to the campaign committee, and his firm has received contracts for more than $9 million in work, he said. "The people who are most willing to make a contribution are those who are involved in the contract," Butt said. "That's just the way it is. (West County) is not unique." Butt credited school board President Charles Ramsey with spearheading the bond program and the prodigious campaign fundraising that helped sell them to voters. "He is a fundraiser," Butt said. "When Charles comes to you, you hang on to your billfold." And Butt's firm is small potatoes compared with other major donors. 
   The Seville Group Inc., a Pasadena-based construction-management firm that has overseen the bond-funded school building projects, has pumped about $250,000 into the campaign committee, according to campaign finance records. 
    WLC Architects, based in Rancho Cucamonga, has contributed more than $361,000. The school district has not provided records requested by this newspaper on how much money the two firms have made from the bond program. SGI has also contributed to political campaigns backing Ramsey -- for his current run for mayor of Richmond and an unsuccessful 2002 bid for Assembly but not for his school board campaigns -- and school board member Madeline Kronenberg. WLC also has been a major donor to Kronenberg's campaigns. The two board members run the powerful Facilities Subcommittee, which approves construction cost increases and makes contract recommendations to the full board. ...
   WLC Architects Vice President Kevin MacQuarrie said his firm has been working for the district since 1998 but declined to specify how much money it has made on the jobs. WLC is working on several current projects for the district. He said the work in the district is "efficient and transparent" and praised the board's "vision, which is to provide the highest-quality school facilities in the state." As for the political campaign contributions, he said it's business as usual. "Part of what WLC does for clients is help support their bond program efforts, because it benefits the children of that district," he said. "There is absolutely no pay to play." SGI has a checkered history, including at least 19 violations of Fair Political Practices Commission rules and charges that it wined and dined school district officials in San Diego to score lucrative contracts. ...
   SGI did not return phone calls seeking comment. Ramsey defended the bond program, and SGI, which he said has done a good job managing construction projects. "If (critics) have evidence, bring a lawsuit," Ramsey said. "The (bond) program is well-run, it's well-managed. I'm not an expert, (but) the info we have is not raising any red flags." Ramsey acknowledged that district staff recently recommended switching from SGI to a different firm, which had a lower bid, for part of the construction-management job during hearings last year. But the board opted to disregard staff advice. ...
Staff writer Theresa Harrington contributed to this report

Pricey school construction spending draws scrutiny in West Contra Costa bond measure
May 25, 2014  |  By Theresa Harrington  |
EXCERPT: ... The free-spending school district builds at will, proud of a $1.6 billion program that gives school communities everything they want -- including large theaters, swimming pools and dental clinics -- at costs that appear to far exceed the norm in other districts. And on June 3, the district is going hat in hand once more to district residents, some of the poorest in the county, seeking another $270 million for such basic upgrades as removing asbestos and repairing overloaded wiring, as well as for renovating and replacing schools, including some that had been marked for possible closure due to declining enrollment.... ... District staff failed to provide much of the detailed financial records of costs associated with school contracts in response to numerous requests from this newspaper and the public. But a review of publicly available data appears to show that West Contra Costa -- with more than 50 schools and about 30,000 students -- spends far more than many other districts on school construction. School construction cost expert Paul Abramson, who creates an annual school construction report comparing costs nationwide and regionally, found the average new high school in the region that includes California cost about $43.5 million for about 1,250 students, approximately $321 a square foot, in 2013. But in the West Contra Costa district, projected costs for 1,300-student Pinole Valley High, which is slated to be rebuilt over the next four years, have skyrocketed far beyond that. In January, Fay told the oversight committee the school would cost $200 million, more than four times the state average. By Wednesday, his estimate had increased to $250 million, including "soft costs" for architects and other services, or about 93 percent of the $270 million that voters are being asked to approve for Measure H. ... 
Staff writer Robert Rogers contributed to this report
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Bond Firm's Hospitality Under Review State to Probe Dinner for School Officials
April 18, 2014 | By Ashley McGlone |

EXCERPT: ...State ethics regulators have opened an investigation into hundreds of dinners purchased for school officials by Stone & Youngberg, an underwriter that has issued billions of dollars of bonds across California - many approved by recipients of those meals.
    The company has picked up the tab for dinners during conferences for school officials, and the state is checking to see how many meals and other gifts went unreported on mandated conflict-of-interest disclosures.
    U-T Watchdog in 2012 reported on school officials in Poway, who retroactively disclosed accepting $2,200 in Stone & Youngberg meals over five years. The officials were responding to a corruption probe in South County, where officials were being prosecuted for similar failures to disclose meals from vendors and contractors.
    In response to the Watchdog's Poway story, the California Fair Political Practices Commission has launched a statewide probe of Stone & Youngberg's hospitality, to determine whether other school districts made the same omission as Poway.
    "We opened an investigation based on the article you wrote, so we are looking at unreported gifts by Stone & Youngberg to officials," said Gary Winuk, chief of the commission's enforcement division. "The whole purpose of the law is so the public knows which public officials are receiving gifts, so they can decide for themselves how it affects doing their jobs on behalf of the public."
    Stone & Youngberg's managing director and head of public finance, Stephen Heaney, did not respond to calls and emails seeking an interview for this story.
    The pattern of giving by Stone & Youngberg may be similar to that of De La Rosa & Co. investment bankers, which was the subject of another state investigation last year. Investigators found that nearly 200 public officials failed to report De La Rosa gifts, leading to some $24,000 in fines against 97 officials. Others received warning letters.
    The De La Rosa case affected seven public officials in San Diego County. ...
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The Sweetwater Union School District School board finally draws the line on ‘pay to play’ political contributions
January 14, 2014 | Victor Skinner|
EXCERPT: ... The Sweetwater Union School District school board voted unanimously Tuesday in favor of a $750 limit on contributions from individuals to school board candidates. The district’s previously unlimited contribution policy led some board candidates to accept very large contributions from teachers unions and construction contractors, according to media reports.
  The measure says contributions can only come from individuals.  School board trustees Jim Cartmill, Bertha Lopez, and Pearl Quinones are facing corruption charges for allegedly accepting thousands of dollars in gifts and meals for awarding school construction contracts to contributing companies, NBC reports.
Some local residents who attended the board meeting where the new rules were approved told the San Diego Union-Tribunethe measure was not only necessary, but long overdue.
  “This is the fifth time this issue has been on the agenda in two years,” local resident Maty Adato said. “They’ve never wanted to adopt it.”  It’s easy to see why. NBC reports board president Jim Cartmill accepted a $20,000 contribution from SGI Construction Management during his reelection campaign in 2010, when the company was working in the district as part of a $644 million voter-approved bond measure. ...  
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