Grand jury questions Victorville, Calif., officials
Roberts added as defendant in lawsuit against former employer
April 22, 2009
Steamboat Springs — City Manager Jon Roberts said Tuesday he has not been contacted by a California grand jury that has questioned officials in Victorville, Calif., the city Roberts led for 10 years before coming to Steamboat Springs in February.
Roberts also said he has not yet been notified that he and a Victorville City Council member are now personally named in a $33 million lawsuit originally brought against only the city of Victorville and two development entities it controls. Roberts said the lawsuit is “baseless.”
City spokeswoman Yvonne Hester confirmed that numerous Victorville officials have been interviewed by the San Bernardino County Grand Jury. They are Mayor Rudy Cabriales, Councilman Ryan McEachron, new City Manager Jim Cox, Finance Director John Sullivan, City Attorney Andre de Bortnowsky and Economic Development Director Keith Metzler.
“There were questions relative to the audit, and that’s all I know. That was the subject matter with which they made the appointments,” Hester said. “Given that we don’t know where it’s going, we’re looking to the grand jury and what they will disclose. : I know each of (the officials interviewed) were told not to discuss the matter.”
In an audit presented in March for the fiscal year ended June 30, 2007, a California auditing firm alleged inadequate “internal control and accounting records” in Victorville city government. Roberts and some Victorville City Council members disagree with the firm’s conclusions.
California grand juries are composed of 19 or 23 citizen members who serve one-year terms. They are mandated to investigate and report on criminal and civil matters within the county, but civil government oversight is their primary function. Grand juries meet in secret but submit a final report on June 30 each year to the county superior court judge and the entities investigated. The final report and any interim reports issued by a grand jury are public documents.
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The 2008-09 San Bernardino County Grand Jury has issued two interim reports, neither of which concerns the city of Victorville. Victorville Councilman Mike Rothschild, a critic of the audit and its findings, said he doesn’t know why the grand jury is questioning city officials.
“There is nothing there for the grand jury to look at, at all,” he said. “Nobody has broken the law.”
Victorville Councilman Terry Caldwell, another audit critic, said questioning by a grand jury does not necessarily suggest that jurors suspect wrongdoing. Roberts agreed.
“It’s not unusual for them to interview cities,” Roberts said.
Caldwell said juries typically look for inefficiencies in government and ways to improve operations, and he said it’s not out of the ordinary for them to offer suggestions for improvement.
“I am not aware of anyone suggesting there has been any wrongdoing,” Caldwell said. “There’s nothing in the audit that suggests there was any loss of money or anybody with their hands in the cookie jar.”
The San Bernardino County District Attorney’s Office has no active cases against the city of Victorville. An official in the office said Tuesday that the district attorney could not comment on actions of the grand jury and would await the findings and recommendations of its report.
McEachron, the only Victorville official interviewed by the grand jury who was successfully contacted by the Steamboat Pilot & Today, said it was “too problematic” for him to comment.
The city of Victorville responded last month to a $33 million lawsuit brought by a business alleging fraud, breach of contract, unfair competition and more, stemming from the city’s plans to raise as much as $200 million from foreign investors.
In an effort to have the case dismissed, Victorville argued governmental immunity from some of the claims made by CMB Export and CMB Infrastructure Investment Group. The city also argues that the other claims are not valid because individual city officials do not have the power to bind the city, and the appropriate legislative bodies did not approve the agreements in question.
CMB responded last week by amending their suit and adding Roberts and Caldwell as defendants. Like Roberts, Caldwell also said Tuesday he has not been notified that he is now a defendant.
“I think the whole lawsuit is frivolous and unfounded,” Caldwell said.
A hearing on the legal sufficiency of the case is scheduled for later this year in San Bernardino County Superior Court.
CMB serves as a go-between for foreign investors and entities that want to take advantage of U.S. Citizenship and Immigrations Services’ EB-5 investor visa program. CMB is authorized by the federal government to offer investment opportunities to immigrant investors for projects within the boundaries of CMB’s “regional center.” CMB’s center includes several closed military bases in California, including the former George Air Force Base that now is Victorville’s Southern California Logistics Airport.
Last year, the city of Victorville began talks with CMB regarding the program and securing investors for a public works project at the former Air Force base. In February 2008, Caldwell, then mayor, wrote a letter authorizing CMB to raise capital for the project. In April 2008, CMB and Victorville officials, including Roberts, traveled to China and South Korea to market the program and recruit investors, and Caldwell signed a memorandum of understanding with CMB.
The city later signaled to CMB that it had no intention to work with the company and instead intends to pursue its own designation as a regional center to recruit foreign investors on its own.
CMB alleges that the city “never intended to abide by either the MOU or their other representations. : Instead, plaintiffs are informed and believe that the negotiation of the MOU, and its subsequent execution, were nothing more than a phase of an ongoing and continuing fraudulent scheme : to gain access to CMB’s business model, know-how, key contacts and other confidential information – and use those assets and information to improperly and unfairly compete against” CMB.
The amended suit further alleges that Roberts and Caldwell “were motivated by corruption” and hoped to “mask the poor decisions (they had) previously made that had threatened the financial viability of” Victorville.
Although the city’s filing does not attempt a comprehensive refutation of CMB’s claims, it does argue “the facts of the matter are far different from those pled, that the plaintiffs made numerous unsupported representations themselves and that the entire scenario is a classic case of a business venture that ends before it begins.”
Contacted Tuesday, CMB owner Pat Hogan declined to comment.
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