City of Bell scandal
The Bell scandal involved the misappropriation of public funds in Bell, California, United States, over a period of several years in the late 2000s. In July 2010, the Los Angeles Times published an investigative article on possible malfeasance in the neighboring city of Maywood, revealing that the city officials of Bell received salaries that were reported as the highest in the nation. Subsequent investigations found atypically high property tax rates, allegations of voter fraud in municipal elections and other irregularities which heightened the ensuing scandal. These and other reports led to widespread criticism and a demand for city officials to resign.
On August 10, 2010, Standard & Poor's lowered Bell's general obligation and pension bond ratings to BB, two notches below investment grade, and placed the ratings on a watchlist for potential further downgrade. S&P credit analyst Michael Taylor said, "We believe that the recent resignation of the city manager and finance director, and reports that the assets purchased with the unrated series 2007 lease-secured debt have decreased in value, have created uncertainty as to the city's future actions."
Eventually, seven Bell city officials, including former mayor Oscar Hernandez, former city administrator Robert Rizzo, assistant city administrator Angela Spaccia, and four city council members were convicted on graft and corruption charges, and were given sentences ranging from probation to twelve years in prison.
Rizzo was sentenced to twelve years' imprisonment for his role in Bell and to 33 months' imprisonment in a separate income tax evasion case. Spaccia was sentenced to eleven years and eight months' imprisonment. Both were also ordered to repay millions of dollars in restitution.
Spaccia was resentenced in October 2017 after an appeals court reversed five counts of misappropriating funds from the city. Judge Ronald S. Coen handed down a new sentence of ten years on the remaining charges of which she was convicted and the amount of money she was ordered to repay in restitution remained the same, which her lawyers planned to appeal, "contending that she was being told to repay money related to crimes which she no longer stands convicted of."
Community
, California, is a small suburb of Los Angeles that covers, with a population of approximately 38,000. It is one of the poorer cities in Los Angeles County, with almost one-sixth of residents living below the poverty line. In 2009, Bell's per capita income was about $24,800 and 90% of its residents were Hispanic or Latino. In 2010, only 43.3% held a high school degree or equivalent, and just 6.0% held a post-secondary degree. Small businesses, such as auto shops, markets, butcher shops, and bakeries dominated Bell's streets. The city's unemployment rate at the time was 16%. Bell's local elections are officially nonpartisan.Charter votes and irregularities
In 2005, a measure approved by Bell voters exempted the city from a state law enacted earlier that year which limited the salary of council members of general-law cities—cities without a charter of their own. All five members of the Bell City Council signed a statement in favor of the "little-noticed city ballot measure", which converted Bell into a charter city and was "billed as one that would give the city more control," yet failed to mention that Bell became exempted from the salary regulations. The measure passed, 336 votes in favor and 54 against.The salaries and pensions scandal in Bell also brought into question the issue of voter fraud. In the 2005 election, fewer than 400 votes were cast to clear the way for the aforementioned legislation allowing city officials to dramatically boost their own salaries. In that election, more than half the votes cast were absentee ballots, the most vulnerable method to manipulate fraudulent votes.
One resident of Bell, on condition of anonymity, told the Los Angeles Times that he was assigned the chore of retrieving absentee ballots: "Our objective was to collect absentee ballots, and if they were not filled out, instruct them how to fill it out, and if not, fill it out for them", he said. It is estimated that less than 1% of registered voters actually showed up to cast their ballot. It has been reported that some residents went to the polling place, only to find that their votes had already been cast.
Voter fraud led to scandal
Assertions about discrepancies in the 2009 election were also examined by the FBI and California's Secretary of State. A source at the FBI confirmed that they were aware of the accusations. In the police report were listed the names of 19 voters who allegedly were either living in Lebanon, or were deceased at the time that their votes were cast.As L.A. prosecutors investigated potential voter fraud, several citizens allegedly told the Times that city officials encouraged them to fill out absentee ballots in a manner that election experts said has significantly raised the possibility that state law had been violated.
"Under state law, this is not to be done unless someone is ill or disabled. If, in fact, the election itself has been tainted by improper electioneering or other violations of state law, then that involves civil—maybe even criminal—penalties, and in some circumstances, you can overturn the election itself", Attorney General Jerry Brown said. "If met in a back room and said, 'How can we run an election where nobody shows up so we can then fatten our own salaries and pensions...that could constitute a violation that would bring into question the entire election."
Scandal
A series of investigative articles published by the Times in July 2010 revealed that several city officials in Bell were being paid salaries significantly higher than those in other cities. The two main reporters involved in the investigations were Ruben Vives and Jeff Gottlieb, and Kimi Yoshino was the guiding editor.In a press release issued through the Bell City Clerk's office, Mayor Oscar Hernandez claimed that "salaries of the City Manager and other top city staff have been in line with similar positions over the period of their tenure. He then accused the Times of having a "skewed view of the facts." Hernandez later apologized for what he called the city's "indefensible administrative salaries". He was later recalled, arrested, and indicted for fraud and other charges.
Bell City Council members later voted to reduce their pay to that of what one councilman, Lorenzo Velez, was being paid: $8,076 a year. Prior to that meeting, all of the other council members were making at least ten times that figure. State Controller John Chiang said that the salaries in Bell had been "outrageous and unjustifiable" and a voter fraud hotline was set up.
Documents released to the Times revealed that the California Public Employees' Retirement System knew four years previously that city administrator Robert Rizzo had received a 47% pay increase to $442,000. Then-California Attorney General Jerry Brown maintained that such a large increase should have aroused suspicion from CalPERS. "These outrageous salaries in Bell are shocking and beyond belief," said Brown. "With record deficits and painful budget cuts facing California cities, astronomical local government salaries raise serious questions and demand a thorough investigation."
The California legislature's law-making season ended in August 2010. The bill that would have strictly regulated elected officials' income levels died while in the California State Senate. All the related bills were vetoed by Governor Arnold Schwarzenegger. Legislation that had passed before the legislature's deadline, AB1987, would have put an end to the public employee practice of pension "spiking"—the accumulation of vacation and sick time until the end of their tenure so their retirement benefit is increased, sometimes by tens of thousands of dollars per year; this bill was also vetoed by Governor Schwarzenegger.
"Frankly, Bell residents need to know if their city is solvent", said Supervisor Gloria Molina, who chairs the board and whose district includes Bell. Molina said the audit, expected to cost about $100,000, was paid for out of her office's discretionary fund, at no cost to the city.
Marcia Fritz, who heads the California Foundation for Fiscal Responsibility stated that at age 62, when Rizzo could have begun receiving Social Security payments, his annual pension and benefits would have risen to $976,771, topping $1 million two years later. "This guy would be our first seven-figure retiree", said Fritz. The million-dollar pension Rizzo was expecting has been reduced to about $100,000 per year. The other seven city council members arrested for misappropriating funds received similar pension cuts.
Governor Brown proceeded to sue, and a week later Rizzo and six of the other seven people named in his suit were charged in criminal court with plundering $5.5 million from Bell. More secreted funds containing millions of dollars were discovered in April 2011. Judge Ralph W. Dau ruled that the parts of the lawsuit accusing Rizzo and the others of "conflict of interest, squandering public funds and putting their own interests ahead of Bell's" could move forward. When Brown announced the lawsuit, he said he hoped to recoup hundreds of thousands of dollars for residents. He acknowledged it was a "novel legal approach" but said he was "confident his office had the authority."
The city of Bell had a difficult time restoring some semblance of normality in the year following the salary scandal. Residents voted in a completely new city council, and Bell's interim city manager stabilized the shaky financial position by implementing a balanced budget that eliminated several high-ranking administrative and police positions, uses federal grant money to pay some police officers' salaries, and makes other cuts. On August 12, 2011, the city announced that Arne Croce would serve as yet another interim city manager. He started at a weekly salary of $3,230 with no medical or retirement benefits, replacing interim city manager Kenneth Hampian.
As Governor, Jerry Brown made it more difficult for city council members to dishonestly pad their paychecks. Brown signed into law Assemblyman Cameron Smyth 's legislation, AB 23, which requires city officials to publicize when they are holding concurrent or consecutive meetings, and how much the meeting attendees will receive in salaries. "The intent is to discourage the potential abuses by making public how much officials are being paid," Smyth said.