HMG-CN EXCLUSIVE: City of Montebello Handed Out $500,000 in No-Bid Contracts While Fabricating Competing Bids From Sham Companies

By Brian Hews

A Hews Media Group-Community News investigation has found that the City of Montebello has paid almost $500,000 from 2013 to 2016 to an obscure construction company, JCS Construction (JCS), using sole source no-bid contracts – while fabricating documents using sham companies with false names and addresses and suspended state contractors licenses – so JCS could win the lucrative jobs.

The revelation violates many federal and state statutes including the City’s Municipal Code and the State’s Public Contracts Code and could lead to a criminal investigation.

JCS is a sole proprietorship based out of a home in Hacienda Heights owned by David Magallanes who is the pastor of Scattering Seeds Fellowship in Whittier.

The business does not have a website or a social media presence.

The company cannot be found on L.A. County’s business name registration page, “DBA,” or in the state’s database of corporations.

And the “Agreement Log” provided by the City did not list JCS as a contractor.

In spite of this, the City paid JCS $53,000 in 2013-14, $121,000 in 2014-15, and $320,000 in 2015-16.

Even more suspect, some of the bids JCS submitted to the City contained numerous grammatical errors and misspelling of very simple words, yet the company still won the contracts.

Three bids submitted to the City in 2015 examined by HMG-CN revealed several questionable discrepancies.

 First Bid

The first bid submitted in July was for the EDD Office marked as “urgent and necessary work to remove old furniture and repairs for office space for HR and IT.

JCS submitted a bid of $23,898, along with two other companies, Brown Construction (Brown), $29,100, and CAT Construction (CAT), $30,240. No other bids were submitted.

JCS’s bid document for EDD, note the many misspelled words. Click on image to view larger document.

Sham Company-1

Brown Construction listed their address as 1491 W. Whittier, La Habra, CA., with a phone number of 714-606-9707.

HMG-CN visited that address and found that a TutorZone children’s tutor company franchise occupied that address.

Calling the 714-606-9707 number confirmed it was a TutorZone.

Shockingly, a visit to the TutorZone website reveals that the manager is Brian Magallanes.

Brian is the son of David Magallanes, the owner of JCS.

Further, the Brown bid listed their State Contractor’s identification number as 887440.

Research on the Department of Consumer Affairs State Contractors License website revealed that the number had been suspended since June 2015.

In addition, the address was different than the bid submitted the City.

The state listed Brown’s address as 1791 Orr Avenue, Simi Valley, CA 93065 with a business phone number of 805-404-2468.

HMG-CN drove out to the Orr Avenue address and spoke to Brown’s wife and daughter. Scott Brown, the owner of Brown construction, “was ill and could not come to the door.”

The two were adamant that Brown did not bid on any jobs for the city of Montebello and were very surprised to hear about the bids submitted to the City.

Brown Construction bid showing contractor’s number and Whittier Blvd. address. The contractor’s number was suspended in 2015, and the Whittier Blvd. address was a TutorZone and not Brown Construction. Click on image to view larger document.

Picture of TutorZone and the Brown Construction address on their bid document. Top right is Brian Magallanes, who manages the TutorZone. Brian is the son of David Magallanes, the owner of JCS Construction. Click on image to view larger document.

Sham Company-2

HMG-CN then researched CAT Construction and found similar alarming discrepancies.

CAT listed its State Contractor’s License number as 916301.

Research on the state’s website showed that number belonging to AM&G Electric 7325 Norwalk Blvd #3 Whittier, Ca., 90606 with a business phone number of 323-304-6777.

HMG-CN called AM&G and talked to a representative who said, “we have never done any work for Montebello, I am an electrical contractor, not a general contractor I can’t even bid on that project.”

HMG-CN subsequently called the number on the CAT Construction invoice listed as 323-314-2418 and talked to the owner Felix about the bidding process and contracts.

A very surprised Felix told HMG-CN, “My buddy from JCS called me to submit a ‘blind bid’ to him for a project.”

A blind bid is just that, a bid given without visiting the actual project site.

Felix said, “I sent an email to JCS with the bid, but that was it, I never got a call back.”

“I never sent a bid or anything to Montebello, what you are showing me, that’s not even my letterhead or my contractors number. The bid is not close to what I send out to customers.”

“I have never sent anything to Montebello, period end of story.”

CAT Construction bid document. CAT’s State Contractor’s License number is 916301 and belongs to AM&G Electric 7325 Norwalk Blvd #3 Whittier, Ca., 90606 with a business phone number of 323-304-6777. Click on image to view larger document.

Second Bid

The second bid submitted in October was for the City Hall Data Center.

Once again, only JCS, Brown, and CAT submitted bids.

JCS submitted the winning bid of $41,798; Brown, $48,336; and CAT, $47,123.

As in the previous bid, JCS’ bid contained numerous misspellings.

An examination of CAT’s bid document showed almost a carbon copy of the first bid submitted for the EDD project.

Only the amount and name of job changed, the remaining 95% of the document contained the same wording as CAT’s July EDD bid.

JCS’ winning bid document for the City Data Center, note the many misspellings in yellow. Click on image to view larger document.

CAT’s bid document only changed the amount and name of job, the remaining 95% of the document contained the same wording as CAT’s July EDD bid.

Third Bid

The third bid submitted in December was for the Transit Department Data Center, once again by the same three companies.

JCS submitted a winning bid of $46,893; with Brown’s at $49,789; and CAT’s at $53,700. No other bids were submitted.

JCS’ winning bid for Transit Data, note the misspellings once again. Click on image to view larger document.

Brown Construction’s “losing bid.” Click on image to view larger document.

CAT Construction’s “losing bid.” Note only 5% of the wording changed from CAT’s two other bids. Click on image to view larger document.

42 Checks to JCS from 2013-2016

Seeing the discrepancies, HMG-CN subsequently requested all checks paid to JCS from 2013 to June of 2016.

The documents showed that JCS received $53,000 in 2013-14, $121,000 in 2014-15, and $320,000 in 2015-16 even though there were no written contracts with JCS.

Over $53,000 in checks paid to JCS 2013-2014. Click on image to view larger document.

Over $121,000 in checks paid to JCS 2014-2015. Click on image to view larger document.

Over $319,000 in checks paid to JCS 2015-2016. Click on image to view larger document.

“City unable to locate documents”

When asked about the discrepancies and if there were any back-up documents, Steve Kwon, Director of Finance for the City and Danilo Batson, Director of Public Works indicated that, “Unfortunately, we were unable to locate some of the bid documents as the building repairs and maintenance was managed by the former building maintenance supervisor who resigned to work for the City of Vernon over a year ago.”

Further emails into Kwon, Baston went unreturned.

 Francesca Tucker-Schuyler

HMG-CN emailed City Manager Francesca Tucker-Schuyler Tuesday Oct. 11 at 3:57 asking questions about JCS.

Three hours later Tucker-Schuyler replied, “I am out of town till tomorrow afternoon. If you are requesting copies of invoices, staff can provide them to you. I get back later tomorrow (Oct 12). I can discuss with staff upon return, if you’d like to wait.”

Tucker-Schuyler has not responded as of the time of publication, Oct 13.

When HMG-CN asked Montebello City Treasurer Charles Pell about the made-up and fake quotes, he said, “I can’t believe the audacity of the City administration to pay half a million dollars to one contractor, without any written signed contracts and no legitimate bids or quotes.  Such questionable conduct is probably the reason why the City has experienced serious financial problems at present and during the last several years.   It seems so wrong, and as a City of Montebello elected official and long-time resident, I’m personally offended by it.”