Eight Bell city officials arrested Tuesday morning as part of an investigation into that city's salary scandal made their first court appearance on Wednesday, facing charges of misappropriating more than $5.5 million in public funds.
Around 5:30 p.m. Thursday Bell City Council members Teresa Jacobo and Luis Artiga posted bond. Around 11 p.m. former Bell City Councilman George Cole made bail and was released from jail. The other three --including Robert Rizzo -- ramained in custody.
City Manager Robert Rizzo was among the eight people arrested. Rizzo was taken into custody Tuesday morning at his Huntington Beach home.
All eight, wearing jail jumpsuits and shackled at the waist, appeared before Superior Court Judge Hilleri G. Merritt, who continued their arraignments until Oct. 21 at the request of their attorneys.
The defendants 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.
"The notice of the charges in this case allege very serious criminal activity,'' said Superior Court Judge Michael E. Pastor, adding it was not unreasonable to assume Rizzo and the others might flee if high bail amounts weren't required.
The court appearance came on the same day the state controller's office released an audit of the city's finances. The audit shows the city mismanaged more than $50 million in bond money and suggests that Rizzo and other employees used city funds to line their pockets.
The audit concluded that the scandal-ridden Los Angeles suburb lacked any checks and balances on its finances. The audit says the lack of oversight resulted in illegal taxes, mismanaged bond funds, inappropriate salaries for its leaders, and more than $15 million on questionable contracts and land purchases.
The allegations against Rizzo and his colleagues involve corruption, misuse of public funds and voter fraud.
"This, needless to say, is corruption on steroids," DA Steve Cooley said at a Tuesday news conference in Los Angeles.
The LA County District Attorney and state and federal authorities have been investigating the salary scandal in Bell for about two months. Cooley has said his office is examining whether the various financial transactions in Bell amounted to thefts of public funds. The office also is looking into allegations of voter fraud and whether the high salaries earned by the former city manager and others were legal.
Last week, California Attorney General Jerry Brown filed a lawsuit against current and former Bell city leaders demanding that their pay contracts be nullified and that they pay back some of their salaries and pension benefits.
Cooley said city officials misappropriated about $5.5 million. He said Rizzo was personally responsible for $4.3 million of the city's losses.
He faces 53 counts of misappropriation of public funds and conflict of interest.
The current and former council members bilked the city out of about $1.2 million, largely by being paid for meetings that never occurred, Cooley said.
"This was calculated greed and theft, accomplished by deceit and secrecy," said DA Steve Cooley.
The suspects were booked Tuesday into county facilities and will be kept away from other inmates for their protection, Los Angeles County sheriff's spokesman Steve Whitmore said. All are charged with misappropriation with public funds.
A look at the charges:
- Former City Manager Robert Rizzo, 56, is charged with 53 felony counts, including 44 counts of misappropriation of public funds between July 1, 2005, and July 22, 2010; six counts of falsification of public records by an official custodian; and three counts of conflict of interest. The charges include an allegation that he "took, damaged and destroyed property of a value exceeding $2.5 million."
- Mayor Oscar Hernandez, 63, is charged with 21 felony counts of misappropriation of public funds between Jan. 1, 2006, and July 26, 2010. The criminal complaint alleges that he took more than $262,000.
- Vice Mayor Teresa Jacobo, 52, is charged with 20 felony counts of misappropriation of public funds between Jan. 1, 2006, and July 26, 2010. The criminal complaint alleges that more than $262,000 was taken.
- City Councilman George Mirabal, 60, is charged with 20 felony counts of misappropriation of public funds between Jan. 1, 2006, and July 26, 2010, along with the allegation that more than $262,000 was taken.
- City Councilman Luis Artiga, 49, is charged with 13 felony counts of misappropriation of public funds between June 1, 2008, and July 26, 2010, and is accused of taking just over $129,000.
- Former City Councilman Victor Bello, 51, is charged with 16 felony counts of misappropriation of public funds between Jan. 1, 2006, and Dec. 31, 2009. The criminal complaint alleges that he took more than $193,000.
- Former City Councilman George Cole, 60, is charged with 12 felony counts of misappropriation of public funds between Jan. 1, 2006, and Dec. 31, 2008. He is accused of taking more than $133,000.
- Former Assistant City Manager Angela Spaccia, 52, is charged with four felony counts of misappropriation of public funds between July 1, 2005, and July 22, 2010. The criminal complaint alleges that she took more than $1.3 million.
Attorneys for Artiga and Cole siad their clients were prepared to post bond.
The defendants in this case face an added challenge when it comes to meeting bail requirements. Prosecutors insist that the officials must prove their bail money is not coming from ill-gotten income.
It's a restriction typically applied in organized crime cases.
Audit: City Used Public Funds to Pay Off Rizzo Loans
The arrests come after Monday's report in the LA Times that the city used $95,000 in public funds to pay off loans its then-city manager made to himself. A draft state audit obtained by the Times on Monday said that the small city south of Los Angeles put money in Robert Rizzo's retirement accounts. Experts told the Times that activity could amount to "a classic case of federal wire fraud."
The audit found that City Council members didn't know about the repayments, which occurred in 2008 and 2009.
Auditors said the city had no system of internal control and all financial activities and transactions revolved around Rizzo, who had "complete control and discretion" over city funds. State law does not allow a city to provide public funds for private benefit.
Rizzo's attorney said he did nothing wrong.
"Mr. Rizzo was paying off his own loans with his own money, he was not using public funds," attorney James Spertus told the Times. "I do know, and I confirmed with Mr. Rizzo, the loans were paid with salary and declared as income on his taxes, and it was done with city approval."
Rizzo and other city officials resigned in July after the Times report exposed the city's salary situation.