Audit Finds Calif. City Officials Mismanaged $50M

LOS ANGELES -- The scandal-plagued city of Bell mismanaged more than $50 million in bond money, levied illegal taxes and paid exorbitant salaries to its leaders and prosecutors said Wednesday corruption was so ingrained in the blue-collar suburb that almost anyone who could have blown the whistle was benefiting from it.

Eight current and former officials of the city of Bell appeared in shackles before a judge on Wednesday but did not enter pleas. Their arraignments were postponed until Oct. 21.

Former city manager Robert Rizzo was accused of being at the center of the scandal that went unchecked for years while he allegedly lent city money to himself, his assistant, City Council members, members of the police force and an array of city workers.

"The loans which are the basis of these charges were not publicly approved and the crimes were committed by persons who would otherwise have been responsible for reporting such conduct," according to a felony complaint charging the suspects with misappropriation of public funds and other charges.

Rizzo also was singled out in a state controller's audit that said city officials mismanaged more than $50 million in bond money, levied illegal taxes and paid exorbitant salaries to leaders.

Rizzo was being paid nearly $800,000 a year when he resigned earlier this year and had total control of city funds, the audit stated.

"Our audit found the city had almost no accounting controls, no checks or balances, and the general fund was run like a petty cash drawer," state Controller John Chiang said in a statement. "The city's purse-strings were tied to only one individual, resulting in a perfect breeding ground for fraudulent, wasteful spending."

The findings were "shocking and detail actions that are reprehensible beyond words," said Bell interim city manager Pedro Carrillo, who requested the state audit in July.

He called the audit an invaluable tool to correct the problems and to establish reforms to prevent more abuse in the city where one in six residents live in poverty.

All eight defendants made their first court appearances on Wednesday but gained little in their appeals to have high bail amounts slashed. Rizzo's bail was reduced to $2 million, down from the $3.2 million prosecutors had originally requested, but far more than the $100,000 his attorney had sought.

Prosecutors say the defendants, if found guilty, face between 10 and 58 years in prison

"The notice of the charges in this case allege very serious criminal activity," Superior Court Judge Michael E. Pastor said, adding it was not unreasonable to assume Rizzo and the others might flee if high bail amounts weren't required.

The loans and other allegations came to light after the Los Angeles Times revealed in July that Rizzo and other city officials were making huge salaries. The resulting scandal triggered nationwide outrage, turning the suburb of 40,000 people into a poster child for government abuse.