D.A. to Investigate Montebello City Bank Accounts

Messy finances turning up ‘question marks’ for current city officials.

By Elizabeth Hsing-Huei Chou, EGP Staff Writer

Responding to complaints about unexplained municipal accounts discovered in Montebello, a high-ranking investigator has announced that they have opened an inquiry into the finances of the city.

David Demerjian, the Director of the Public Integrity Division for the District Attorney, will be investigating complaints of corruption.

“We have opened an investigation regarding the allegations of misappropriation of public funds in Montebello,” Jennifer Lentz Snyder, Assist. Head Deputy of the Public Integrity Division told EGP on Wednesday.

State Controller John Chiang’s office has also confirmed it has received complaints related to Montebello’s mysterious bank accounts.

Montebello city officials last week found themselves locked out of a long-lost bank account that at one time contained nearly $1 million.

The only people who have access to the account no longer work for the city, leaving current officials in the dark as to the account’s origins and why there is only $5,000 left in it.

“As far as I have been told, a statement appeared on top of the Director of Finance’s desk that should be looked into,” said City Councilwoman Christina Cortez.

An employee in the finance department happened upon a statement from the previously unknown bank account, according to Interim City Administrator Peter Cosentini.

What they do know is that the account was opened ten years ago in the city’s name at Union Bank, and it once contained as much as $900,000.
Councilman Alberto Perez said the sudden appearance of this previously unknown account “raises a question mark” for the city.

But when officials called the bank to find out more, they were told only three signatories have access to the account. One is former City Administrator Richard Torres, who retired in 2009.

The bank refused to release the names of the other two, Cosentini said.
It is unusual to have someone like Torres, the city administrator at the time, serve as the signatory, he said. Usually the city treasurer is assigned the role.

“This was set up inconsistent with city practices,” Consentini said, but added that “it could be something very innocent.”

But this is the second bank account to pop out of nowhere for city officials.

The first was discovered when representatives of a local bank, Banco Popular, alerted the city to an account containing $240,000 that had lain dormant for several years.

Cosentini explained the two accounts were not part of the general ledger used by the city and that finance staff knew nothing about them previously.

After learning about the Banco Popular account, city officials ordered a search for more accounts like these.

Councilman Frank Gomez said it is very “disturbing” that there are accounts that are not on the city’s main ledger. “We’re going to get to the bottom of it. This is very disconcerting it’s not good for Montebello,” he said Friday.

The only way to gain access to these bank accounts is for the city council to vote to transfer signatories to current officials.

They have already transfered signatory status for the Banco Popular account to current officials, and staff is currently requesting and reviewing the details of that account.

Last night the city council was expected to consider the transfering authority over the Union Bank account to current officials.

In the meantime, Cosentini said last Friday he has “traded voicemail” messages with Torres and planned on getting in touch with him. They had already been in contact once regarding the Banco Popular account, he said.

Torres told EGP on Friday that because he has no access to the files at city hall, he knows as little as anyone else about the account and could only speculate. He was unsure on Friday which account was discovered.

The accounts in question could have been been set up for investments, he said. In the case of the Banco Popular account, it could have been for a HUD loan program.

“I’m just guessing at this point. The records will speak for themselves,” he said.

There are some suspicions that the money in the Union Bank account went missing, but Torres said “it’s not missing, I’m certain of that.”

If the city wants him to “run to the bank and sign for it, I’d be happy to do it,” he said.

The discovery of these accounts received widespread media coverage last Friday, but some officials say Montebello is getting underserved negative attention.

Current city council members say they inherited a city government with serious problems, financial and otherwise, but they are working to change things.

“I don’t want to be compared with Bell. This is a different situation. This council is trying to fix Montebello,” said Mayor Art Barajas.

Four out of the five current city council members in Montebello were voted in about a year ago during a contentious election season that involved a recall.

Many of the department heads, and the current interim city administrator, are also recent arrivals.

Former Montebello City Treasurer Gerri Guzman was contacted for comment last Friday, but has not responded. Torres said she may have been the treasurer when the Union Bank account was opened. Guzman is currently a school board member of the Montebello Unified School District.

The most recent City Treasurer was Norma Lopez, but she resigned this year in January. The city council opted to leave the seat vacant until the next regular city election this November.

To read more about Montebello’s financial issues, enter “Montebello” in the search box on the EGPNews.com home page.

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February 24, 2011  Copyright © 2012 Eastern Group Publications, Inc.

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