Irvine Will Consider Suing to Recoup Great Park Funds

Irvine councilwomen Christina Shea (left) and Beth Krom at Irvine City Council meeting.

Adam Elmahrek

Irvine councilwomen Christina Shea (left) and Beth Krom at Irvine City Council meeting.

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Irvine City Council members Tuesday night decided to consider potential lawsuits against former Great Park consultants in hopes of recouping millions of dollars spent on the notorious public works project.

The decision came after lawyers and accountants hired by the city presented the findings of an investigation into over $250 million in taxpayer funds that Irvine leaders have spent on the park despite the fact that only 88 acres of the 1,347-acre project have been developed.

The reports, which cost upwards of $1.5 million, were done by lawyers from Irvine-based Aleshire & Wynder, and Christopher Money, an auditor from the forensic accounting firm Hagen, Streiff, Newton & Oshiro, Accountants (HSNO).

(Here are links to the report documents: Aleshire & Wynder ReportHSNO ReportFinal Report Exhibits)

During a presentation of their findings at Tuesday’s meeting, the lawyers and the auditor told council members that the park project was doomed from the start because designers were never given budgetary constraints. The result was a master plan – with glorious features like a man-made canyon — that would have probably cost over $3 billion and was financially impossible to achieve, according to their reports.

“The park got off to the wrong start right from the beginning,” Money said.

Park defenders have blamed Gov. Jerry Brown’s decision to ax the state’s redevelopment program and the Great Recession for the lack of progress. But Aleshire & Wynder partner David Aleshire said Tuesday that at best redevelopment funds would only cover a small fraction of the park’s total cost.

In their report, Aleshire & Wynder place much of the blame on Larry Agran, the former park chairman and ex-councilman who led the Democratic council faction that for years controlled the park. They claim Agran breached the firewall of Irvine’s council-manager form of government, which is designed to ensure a functional management structure.

Agran crossed the line into day-to-day administration, which made it possible for consultants to circumvent the park’s management by using their connections to him, according to deposition testimony.

The consultants had a natural interest in doing more design and work so they could make more money, Aleshire noted in his presentation, so it was important for park management to have control over them.

The general dysfunction of the project, Aleshire said, can be summed up by a quote from Arnold Forde, of the consulting firm Forde & Mollrich, which in many respects became the poster child for Great Park excesses.

According to Forde, master designer Ken Smith wanted design “freedom” – which Aleshire took to mean no budget constraints – while park CEO Mike Ellzey clashed with Yehudi Gaffen of Great Park Design Studio consultant Gafcon because Ellzey wanted to “run things” and Gaffen wanted “more input.”

“Everybody thought they were in charge,” said Forde in his deposition.

The park’s public relations contract with Forde & Mollrich went from $50,000 per-month to $100,000 per-month without any records to justify the huge spike, the investigation found. If true, that means the city paid an additional $2.7 million to Forde & Mollrich for seemingly no reason at all.

“I really tried to pinpoint if there was a change of service that occurred,” said Aleshire & Wynder attorney Anthony Taylor. “We never found a clear answer to that… [Forde] didn’t know, he deferred the questions to [Forde & Mollrich principal Stu Mollrich], and Mr. Mollrich admitted he had no documents to back up the increase in charges.”

The attorneys believe that Irvine can recover money stemming from conflicts of interest and other contract violations.

In one instance, Gafcon, which co-led the Great Park Design Studio with Smith, performed a home remodel for Forde & Mollrich principal Stu Mollrich at a 30-percent discount. The work was done under “very strange” circumstances, Taylor said.

Attorneys say that over $4 million should have been withheld pending an investigation of the work.

The council voted 3-1 to direct Aleshire & Wynder attorneys to write a closed session memo detailing the allegations of impropriety. Councilwoman Beth Krom, the only ally from Agran’s bloc remaining on council, voted no. Councilman Jeffrey Lalloway was absent.

Council members also decided to seek a court order compelling Agran to answer questions he refused to answer during his deposition. Specifically, attorneys want to know whether park consultants were volunteering for Agran’s campaign, which they consider potential contract violations.

Forde & Mollrich is known around the county as a high-priced political campaign consultant.

Agran has refused to hand over the names of his campaign volunteers, citing First Amendment protections to keep one’s associations confidential and saying that they would be the targets of retribution.

Krom agreed, and acknowledged openly at the meeting that some people who worked for the city also volunteered for her campaign.

It remains unclear whether any criminal charges will be filed. Taylor said attorneys have been in extensive talks with the Orange County District Attorney’s office.

But in an interview late Monday night, Agran dismissed reports of a criminal investigation as nothing to worry about.

“I know the district attorney’s office generally speaking is thoughtful, and they’re not going to be pursuing cases where none exist,” Agran said.

Agran, Krom and Gafcon and Forde & Mollrich continue to slam the investigation as a political witch-hunt initiated by a Republican council majority that took power after the 2012 election and has been targeting the Democrats ever since.

Krom said the real goal of the investigation is a massive privatization drive aimed at handing control of the park over to a developer, FivePoint Communities, that is building thousands of homes around the park. In a deal struck in 2013, the developer agreed to build 688 acres of the park.

She pointed out that the Republican council members’ benefitted from dark money campaigns to help elect them, and that the developer spent tens of thousands of dollars supporting the Republicans as well.

Meanwhile, Gafcon and Forde & Mollrich say the reports are rife with errors, and was done in secret and at the direction of a two-member subcommittee with a known axe to grind against Agran and other political opponents.

“As a result the audit subcommittee, together with their handpicked auditors and attorneys, have misused $1.5 million of public funds on a two-year long political investigation which has been marked by unsubstantiated accusations and misleading and incomplete references to depositions and documents,” Stu Mollrich said in a prepared statement sent to Voice of OC.

Gafcon and Forde & Mollrich say that HSNO and Aleshire & Wynder made it clear that they aren’t doing an audit abiding by The American Institute of Certified Public Accountants, but rather a targeted investigation.

Aleshire & Wynder attorneys say they did their audit as defined under the city’s contracts.

Gafcon has pushed back harder more than any other target of the investigation, and had some success. The firm has filed a complaint with the state Board of Accountancy over HSNO’s preliminary audit – which Agran contends has triggered an investigation of the accounting firm – released a video rebutting the audit, and requested a state legislative audit committee conduct an audit of the park audit.

In its report, HSNO hedged on questions regarding whether Gafcon double-billed the city, saying their determination is now inconclusive. Also, Aleshire & Wynder attorneys said their investigation into whether Gafocn’s work was shoddy – as alleged by park management – was also inconclusive.

Previous allegations that Gafcon billed a political donation to the park weren’t addressed in the report’s findings, although an exhibit to one of the reports claims the expense as among park costs.

Please contact Adam Elmahrek directly at aelmahrek@voiceofoc.org and follow him on Twitter: @adamelmahrek

Related Links:

Irvine Releases Investigative Reports on Great Park Project

Larry Agran Defiant During Great Park Deposition

Irvine Council Approves Great Park Forensic Investigation

Video Derides Findings of Great Park Audit

Auditor Sees Bias in Great Park Investigation

  • OG Mally Bieber

    Hey, where’s that great park we voted for instead of an airport?
    I know Larry Agran siponed off most of the money – but what did we get for it?

  • Roger Butow

    The first man who, having fenced in a piece of land, said “This is mine,” and found people naïve enough to believe him, that man was the true founder of civil society. From how many crimes, wars, and murders, from how many horrors and misfortunes might not any one have saved mankind, by pulling up the stakes, or filling up the ditch, and crying to his fellows: Beware of listening to this impostor; you are undone if you once forget that the fruits of the earth belong to us all, and the earth itself to nobody.” — Jean-Jacques Rousseau, Discourse on Inequality, 1754

  • Roger Butow

    “Where you come from is gone, where you thought you were going to never was there, and where you are is no good unless you can get away from it.”
    Flannery O’Connor

  • Roger Butow

    “Where you come from is gone, where you thought you were going to never was there, and where you are is no good unless you can get away from it.”
    Flannery O’Connor

  • Paris Merriam

    Get rid of Beth Krom. This blabbermouth never shuts up, and she has to go.

  • Roger Butow

    For those who believe, who are basically praying that criminal charges are forthcoming while we’re all still alive and breathing, while we still remember what this was all about back in the salad days, those days of yore 15 years ago, when hope sprung eternal: Good luck with that. How an external, an empowered enforcement agency could pursue when outstanding debts, recouping, is still in progress==Protracted and delayed justice. Enforcement like State or federal DOJ can’t/won’t file charges if remedies and cures are in progress. By initiating a recovery, a negotiated settlement process, even settling for 10 cents on the $==No crime has been committed, consultants and vendors walk away, and as I suggested maybe file BK. You can’t recover when a corporation folds, especially LLCs. Even those monolithic ones like Heritage fields, LENNAR, etc., folks. In many cases you can’t recover from and/or lien individuals, just businesses. Odd isn’t it, the SCOTUS decided corporations had the rights of individuals EXCEPT when collection time rolls around. You & I don’t have that benefit regarding our bills, dead beat debtors are ruined for life, dead beat corporations? Not so much, they just fold one, start another. Irvine has fallen into a PR trap: Until the recovery process for indebted vendors, only proven via long convoluted procedures taking years, is completed in a legal venue, theoretically no crime has taken place. Maybe someone blogging here who is a criminal defense attorney has a different take, but I thought that as long as a debtor attempted to pay the amount down, then criminal charges might be extremely problematic. Any DA, not just ours, looks at the odds, they have budgets too and there’s a bubble there, a decision event horizon where if success is very questionable, then no dice on filings—My concern all along was that once the $$$ is spent, spread around over years of malfeasance and discretionary abuse of public and private funds, interwoven invoices with other invoices, it’s Humpty-Dumpty out in Irvine. Never to be made whole again, the Great Park dream is over. It’ll be 2-3 City Council seating configurations from now before any appreciable return arrives, if at all, kind of late, don’t you think?

    • Paris Merriam

      Good points Robert. They see the DA coming, and now they are trying to recover money to stop a criminal investigation? Amazing!

  • Paul Lucas

    Civil lawsuit? Why no criminal charges?

    • David Zenger

      Why no criminal charges? Well, Paul, first you would need a criminal investigation, and that would require a DA with a basic understanding of right and wrong.

      • Paris Merriam

        Good luck with that.