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Central Basin GM Discovers Over $1.5 Million in Unreported Revenue & $700,000 in Overstated Expenses

Did they know about the revenue and expenses? From (l-r) former Director of Finance Andrew Hamilton, who was recalled from City Council in Lake Forest, Ca. located in southern Orange County, and who’s budget underreported revenue and over reported expenses, Assembly Speaker Rendon, Assemblywoman Cristina Garcia, and Rendon’s attorney Alf Brandt, who helped Garcia pass a 2016 bill aimed at Central Basin.

 

BY BRIAN HEWS • October 3, 2020

The battle to take over Commerce-based Central Basin Municipal Water (CB), led on the outside by Assemblywoman Cristina Garcia (D-Bell Gardens), Speaker Anthony Rendon (D-Lakewood), and Rendon’s attorney Alf Brandt, and on the inside by former employee Andrew Hamilton, failed miserably despite a last minute effort from Rendon, who went behind Senate pro tem Tony Atkins’ back, sending a letter to Senate Governance and Finance Chair Mike McGuire to asking to move the bill.

 

Asm. Speaker Rendon Went Around Senate Pro Tem Atkins to Push Passage of Bill

 

 

The outright privatization attempt, using Garcia’s gut and amend SB 625, was supported by several local competing water companies that a Hews Media Group-Cerritos News investigation found had given thousands to Rendon, Garcia, Assembly Minority Leader Ian Calderon, and the bill’s sponsor Steve Bradford.

 

 

Asm. Cristina Garcia Took Thousands From Companies Who Thirst for Central Basin Water Receivership

 

One, San Gabriel Valley Water Company, gave $16,900 to Garcia; SGVW was the employer of one of Garcia’s appointed directors Dan Arrighi, who recently resigned under pressure from his boss and, according to sources, the Calderons.

 

 

BREAKING: HMG Article Results in Resignation of Central Basin Director Dan Arrighi

 

SGVW also gave Rendon $5,600 from 2014-2016 and gave Ian Calderon $6,500 from 2014-2018.

Three PAC’s were also beneficiaries of the SGVW, Downey’s Liberty/Park Water, and Whittier’s Cadway Water donations: the California Water Association, the California Association of Mutual Water Companies and Consumers for Clean Water.

All three pushed for the passing of SB 625.

The CWA was the biggest recipient, garnering over $58,000 in donations; second was CCW who took in  $21,600 from Cadway and $22,100 from SGVW. Last was CAMWC, who took in $25,900 from the apparent cash-cow Cadway.

PAC’s Donations to Candidates

The CWA, flush with money donated by water purveyors who have a clear conflict of interest, donated to all the major players involved with SB 625. The donations are total numbers:

$7,500 to Garcia (2012, ’14, ’16, ’18)

$5,000 to Rendon (2014)

$5,800 to Calderon (2012, ’16,’18)

$9,000 to Bradford (2012, ’16)

And in what looks like pay-to-play, CWA gave Bradford, who was carrying the bill and who is up for re-election in November, $3,000 this year.

The exposé put a dent in their armor, but Garcia and Rendon had someone on the inside who was working just as hard for the takeover attempt, former Finance Director Andrew Hamilton.

Hamilton, who earned $207,000 annually, and other managers had been questionably promised jobs by elected officials when the bill passed, even though Hamilton had illegally paid a vendor, locked all the elected and appointed directors out of the building in March, and was refusing to provide financial document and public records requests.

But when the time came for the board to study CB’s annual budget, Hamilton enthusiastically presented the budget to the board showing a $3 million loss.

That was enough for CB Director Bob Apodaca, who, along with Director John Oskoui, were holding up the vote on the budget.

Apodaca finally voted to pass the budget, hire a law firm, and most importantly, hire new GM Alex Rojas.

The board then immediately moved CB into profitability, reorganizing the agency and implementing a sweeping freeze of positions, including Andrew Hamilton’s, letting fourteen people go effective Monday August 17.

 

Central Basin Board Works Together to Reorganize Agency Into Profitability

 

 

With the cuts, the budget went from a multi-million dollar deficit to a $113,000 profit, immediately placing the agency in compliance with debt coverage ratios, something that has not been achieved in years.

Proponents of Central Basin will be quick to point out that a biennial election expense of $1.7 million is included in the ’20-’21 budget expenses.

Now free to look at CB’s financials, a new budget was formulated by Rojas.

And what Rojas and the board found will send shockwaves all the way up to Sacramento bringing into question Garcia, Rendon, and Alf Brandt’s motives for the takeover into question, while also exposing Hamilton’s actions to possible SEC charges.

HMG-CN has learned from examining online documents that Hamilton’s original budget underreported CB revenue by a $1.5 million.

Sources are telling HMG-CN that the unreported income could be as much as $3 million.

In addition to the $1.5 million in revenue, the budget also over stated expenses by $700,000; that is $2.2 million that drops directly to the bottom line profit of the agency.

With his questionable budget in hand, Hamilton took it upon himself to communicate the information to Moody’s Rating, which triggered a downgrade of the district’s $24.1 million senior lien obligations and $19.4 million subordinate lien obligations outstanding; the downgrade will raise the cost of borrowing and interests payments for the agency.

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hamilton email to moodys

Email showing Hamilton questionably communicating with a Moody’s representative, none of the CB Board Members were aware he was communicating with Moody’s.

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moody's central basin

Moody’s downgrade on July 20,2020. In the rating rationale portion, the description is very similar to the letters  written by CB Director John Oskoui and Rendon’s Attorney Alf Brandt.

 

 

 

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Hamilton’s apparent hiding of revenues coupled with inflating expenses to aid the takeover will put him squarely in the sights of the Securities and Exchange Commission.

The downgrade also generated widespread negative press which Garcia and Rendon took advantage of in their final push to take over the agency.

Their moves beg the questions, what did the three know, when did they know it, and were they manipulating Hamilton?

Texts and emails to the three were not returned.

Central Basin GM Alex Rojas told HMG-CN, “We are unsure as to why the $1.5 million in operating margin was not communicated to the board because it is reflected in the financial system as of June 30, 2020.”

Rojas continued, “We did notice significant over projection in budget expenditures for the 2021 fiscal year based on a review of our unaudited actuals for the 2020 fiscal year.  We addressed it in the revised 2021 budget which is now projected to cover all costs and meet the District’s debt service requirement.  Our auditors will begin our annual audit in October and they should provide some clarity.”

 

 

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4 Responses to Central Basin GM Discovers Over $1.5 Million in Unreported Revenue & $700,000 in Overstated Expenses

  1. Pingback: Assemblywoman Cristina Garcia Paying Century City Rates for Field Office in Downtown Downey | La Mirada Lamplighter

  2. Pingback: Central Basin GM Discovers Over $1.5 Million in Unreported Revenue & $700,000 in Overstated Expenses - 2UrbanGirls

  3. Pingback: Financial Revelations Stop Further Credit Downgrades for Central Basin – Agency Eyes Future Upgrades – Cerritos Community News – Finance Eidos

  4. Pingback: Financial Revelations Stop Further Credit Downgrades for Central Basin – Agency Eyes Future Upgrades – Cerritos Community News – The Black Chronicle

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