The County District Attorney’s Office has released a rather critical report on the countywide agency that handles solid waste services, resulting in a criminal case being brought against one employee, but concluding that the former general manager could not be prosecuted.
The critical report comes on the heels of County Supervisors’ vote to leave the joint powers authority agency, choosing instead to have public works handle such matters for the unincorporated communities under their rule.
According to a news release from District Attorney Dan Dow’s office, the 51-page report is the culmination of a multi-year investigation by the Office of Public Integrity looking into allegations “that contracts were awarded without competitive bidding, that the IWMA failed to properly retain records, that credit card use policies were violated, and that IWMA General Manager William Worrell exceeded his spending authority, among other matters,” the release said.
Worrell, who has since retired, was the first permanent GM of IWMA since its inception in 1994.
Disturbing Practices Uncovered
Although the investigation led filing of criminal charges alleging embezzlement against former IWMA Secretary, Carolyn Goodrich, all other allegations were deemed unfounded or not rising to the level of a crime.
“The remainder of this report,” the DA’s Office said, “details additional important factual findings concerning disturbing practices and lack of proper oversight that should be reviewed by the IWMA Board of Directors and interested members of the public.”
In the report’s executive summary, the DA’s Office acknowledges receiving three written reports from Carl Knudson between February and June 2018 “that allege misconduct by employees and mismanagement” of the IWMA. The Public Integrity Unit opened its case after meeting in person with Knudson, the report said.
Knudson is a former IRS investigator and forensic examiner who was hired by a group of citizens, The Citizens Group of San Luis Obispo County.
An Exhaustive Review
The three-year investigation served 23 warrants, obtained documents, interviewed “multiple” potential witnesses, and conducted 11 formal interviews including two in Kentucky.
The exhaustive review included 11 computer hard drives with 4.62 terabytes of information, and 11 million “digital artifacts.” They narrowed the search using keywords to a manageable 263,000 emails and messages, 82,000 media-related items, 441 social media items, 282,000 “web-related” artifacts and 49,000 “other” documents.
The report points out that the DA’s Office prosecutes criminal case, and things like “ordinary” negligence — failure to exercise ordinary or reasonable care — don’t rise to the level of a crime. Many of the complaints about the IWMA, while reaffirmed, don’t rise to the criminal level.
Contractor’s Dealings Led to Review
IWMA has been under scrutiny by some people for years with regards to one of its contractors, Eco Solutions, owned by Charles Tenborg, alleging various types of misconduct over many years. These issues have also hounded Worrell.
Eco Solutions and Tenborg got a contract with IWMA in 1997 to operate two Household Hazardous Wastes (HHW) facilities — one each at Cold Canyon and Chicago Grade landfills.
Eco Solutions was contracted to collect, sort and prepare HHWs for transport.
The program expanded over the next 15 years and in 2013, when things started to unravel, Eco Solutions had five HHW facilities, including the one at the Morro Bay Sewer Treatment Plant on Atascadero Road. The contract was for $404,000 a year.
Tenborg sold his company in 2014 to 21st Century Environmental Management of California, LLP, which is in turn owned by Stericycle, Inc.
Knudson’s first two reports, given to the D.A.’s Office in February 2018, were about Tenborg and Eco Solutions, alleging that he committed perjury during a successful libel and slander lawsuit with Cal Coast News, an online news website, and Karen Velie and Daniel Blackburn, the reporters on the story.
CCN had published a news story in November 2012 about Eco Solutions and Tenborg’s contracts with IWMA, making some serious allegations. Tenborg won a $1.1 million judgment that included a $500,000 judgment against Velie.
Report’s Allegations Against IWMA
Knudson, in June 2018 produced a third, 28-page report on the IWMA, again making serious allegations.
One allegation is that Tenborg, under another company called CEC Electronic Waste Recycling, Inc., which recycled electronic gear — copiers, fax machines, TVs, VCRs — through a CalRecycle program, fudging the weights of what he’d recycled and what CalRecycle would reimburse.
In the end, Tenborg admitted to making a mistake on the reimbursement forms and the two sides settled the matter with Tenborg agreeing to repay $34,600. That agreement apparently let Tenborg off the hook for any claims that he committed perjury with the fake documents. Also, the statute of limitations is expired on that matter, according to the D.A.’s report.
CalRecycle, which has had numerous big criminal cases with regards to fraud in its CRV aluminum can recycling program, accepted his explanation of misunderstanding the rules and within two days agreed to the settlement.
One by one the report looks at various allegations of perjury by Tenborg and refutes them all, concluding that any incorrect statements or misstatements made in the lawsuit were not consciously false and thus don’t constitute criminal perjury, at least nothing that they can prosecute.
Apparently lying under oath isn’t necessarily perjury, if the alleged liar believes the statement(s) to be true at the time they were made. And any false statements must be “material” or relevant to the claims being made, which most of these were not.
IWMA’s Formation, Practices Questioned
The third Knudson report that the DA focused on had to do with the IWMA, it’s original organization, and hiring practices, claiming that hiring the GM, lawyer and accounting firm were supposed to be done under a competitive bidding process but didn’t appear to have been.
The report shoots down each of these claims using documents and meeting minutes dating back to the very start of the IWMA in 1994-95.
The report points out that the IWMA’s Executive Committee was called for in the original JPA documents that were signed by the County Supervisors, each incorporated city in SLO County and the special districts, too.
Former-GM Worrell was hired through an extensive recruitment process conducted by the County Personnel Department and included advertising the position — originally called a “program manager” — in industry trade journals and newspapers across the U.S. Such advertising practices are common for department head level positions.
IWMA January 1995 meeting minutes outlined the process that was undertaken to fill the GM position, as well as the lawyer and accounting jobs.
IN 2006, the IWMA hired attorney, Raymond Biering, who had been a former legal counsel for IWMA while working in the office of the County Counsel. Such professional contracts are not subject to required competitive bidding, as they are contracts for specialty services, like legal advise.
IWMA had also hired its accountant this way, as in 1995 they replaced their prior CPA firm with Glenn Burdette Certified Public Accountants. Knudson claimed Burdette’s hiring in 1995 should have been a competitive bidding process. The D.A. cited the California Government Code (Section 53060) as allowing IWMA to enter no-bid contracts for “Services, and advice in financial, economic, accounting, engineering, legal or administrative matters.”
Education Manager’s Hiring
Knudson’s reports also challenged the IWMA’s hiring of its education program manager, Mike Di Milo in 1997. Di Milo apparently worked for the previous education contractor and sought the contract after that person had given it up. Di Milo had annual contracts until 2001 when the IWMA changed his status to “continue until terminated.”
It’s unclear if the education program manager contract should have been put out for bids, but the DA said since 25 years have passed, the statute of limitations is up anyway.
The DA also said that every year, Di Milo has submitted a budget for board review and inclusion in the overall IWMA annual budgets, further evidence that no crimes had been committed.
The claims by Knudson included that Worrell and the IWMA had not fully produced records he sought with regards to payments made to Tenborg’s companies, prior to 2013. He had asked for records back to 2009 but only got incomplete records.
Worrell reportedly sent him a letter stating that they had destroyed the older records as part of a regular purge and the official records are kept by the County Auditor-Controller’s Office.
Worrell also told the DA that they had destroyed records from FY 2011-12 because they were contaminated with black mold after apparently not being stored properly in a Seatrain container (they got wet). They’d also shredded other records in August 2017.
The Auditor-Controller’s Office disagreed and described itself as a merely a “bank” for IWMA, paying out approved invoices but were responsible only for keeping those records.
The report concludes there is a “conflict of sorts between the two agencies with respect to which agency was responsible for maintaining records.”
According to Worrell, the report said, “the Auditor’s Office was responsible for maintaining the IWMA’s official records; according to the Auditor-Controller’s Office, it would store digital copies of whatever the IWMA submitted, but only what had been submitted.”
Also, Worrell said he didn’t personally handle these invoices but that it was Goodrich’s job to handle IWMA’s finances.
Fraud Charges Filed
Though it appears the former GM will not be charged with any crimes, the agency secretary, Goodrich, is facing 10 felonies some in connection with improper use of a company credit card mainly to pay her phone bills. The felony accusations are:
• Embezzlement in 2014 of $3,120 spent for personal AT&T bills;
• Embezzlement of $2,749 in 2015 in personal AT&T bills;
• Embezzlement of $3,624 in 2016 for personal AT&T bills;
• Embezzlement of $3,951 in 2017 for personal AT&S bills;
• Embezzlement of $737 from January-March 2018 in personal AT&T bills;
• Embezzlement in 2015 to purchase a Turbo Tax program for personal use;
• Embezzlement in 2017 to buy a Turbo Tax Program for personal use;
• Embezzlement from April 2014 to March 2018 to purchase items at Lowe’s Home Improvement for personal use;
• Embezzlement between January 2015 and April 2018 to buy online services Truthfinders, Peoplefinder, and Pacer.gov; and,
• Destruction of public records in August 2018.
Goodrich is out on bail and her next court date for a further preliminary hearing is Nov. 8.
Supes Are Outta Here
IWMA may have had its issues in the past but it faces a rocky future too, after a split County Board of Supervisors voted 3-2 to end the County’s involvement in the Joint Powers Authority.
Supervisors voted Sept. 14 on a Resolution to formally withdraw from the IWMA. That document follows an Aug. 10 report from Public Works on what leaving the IWMA is going to cost the County.
A consultant, MSW Consultants was brought in to do a cost-benefits analysis on what would essentially be a divorce, which was broken down into three parts — list the financial assets the County would take over; establish the number of County employees needed; and establish the amount of revenue needed to do what IWMA does.
MSW calculated that 25.2% of all waste tonnage produced in SLO County comes from unincorporated towns under County governance.
IWMA takes in some $498,000 a year from the county towns and assets to the County would total some $1.07 million.
MSW said the County would need a total of five more employees to provide the service — one program manager I; three solid waste coordinator IIs; and, one solid waste coordinator I.
The County would also need to recover a share of IWMA’s revenues, which garbage customers would continue to subsidize. The County would need an additional $1.6 million to $2.3 million, which translates to garbage rate hikes of $4.75 a month for residential customers, $27.50 a month for commercial customers; and $35.34 per load for roll off dumpster customers.
County Should Stick With IWMA
The Public Works report recommended against divorcing from the IWMA, as viable alternatives were available.
“Staff believes this section of the JPA can be expanded upon to provide clarity and strength to the Agreement. Viable solutions could range from the explicit removal of ordinance power for the IWMA, to limiting future ordinance implementation to only the individual agencies that support the ordinance,” the report said.
“Given the high estimated cost and staffing requirements of leaving the IWMA, staff believes it is warranted to attempt re-negotiation of the JPA before pursuing withdrawal. Staff would return to your Board in three months to provide an update on status of these negotiations.”
But a majority of Supervisors decided to leave the JPA, a process that is still being worked through.