LAWFUEL – Law, crime, legal, attorney, law firm newsThe former mayor of Lynwood, California was arrested this morning on federal corruption charges for allegedly orchestrating a scheme to defraud his former constituents of their right to his “honest services” by funneling city business, including exorbitant no-bid contracts, to a “consulting company” he and members of his family owned and operated.
Paul H. Richards II, a 48-year-old resident of Lynwood who is also known as “Petey,” was arrested without incident at his home this morning. Richards served as Lynwood city councilman, which included seven stints as mayor, from 1986 until he was recalled in a special election in September 2003. Special Agents with the Federal Bureau of Investigation and IRS-Criminal Investigation Division arrested Richards, who is expected to make his initial court appearance this afternoon in United States District Court in downtown Los Angeles.
Richards was arrested pursuant to a 31-count indictment returned last Thursday by a federal grand jury in Los Angeles. The indictment details a scheme in which Richards set up a consulting firm, ostensibly owned by his sister, that was awarded a series of “unnecessary and exorbitant” consulting contracts that had the potential to cause the City of Lynwood to lose more than $2.5 million.
“Those elected to every municipal, state and federal office have the highest responsibility to protect their constituents, as well as the trust placed in them,” said United States Attorney Debra W. Yang. “Those who abuse their positions of trust deserve to be prosecuted and, if appropriate, incarcerated to punish their behavior and to demonstrate the Justice Department’s commitment to protect the integrity of our governmental bodies.”
In addition to Richards, the indictment charges:
* Richards’ sister, Paula Cameo Harris, a 55-year-old Altadena resident, who purportedly served as the “president and owner” of Allied Government Services (AGS), the company Richards set up to obtain consulting contracts with Lynwood;
* Bevan Atlee Thomas, a 55-year-old resident of Anaheim, a former consultant to Lynwood, who allegedly obtained a $25,000 per month consulting contract with Lynwood, which he secretly subcontracted to AGS; and
* David N. Smith, a 64-year-old resident of Palmdale, who was a lobbyist retained by Regency Outdoor Advertising, Inc. and who allegedly bribed Richards and laundered funds from Regency to give to Richards as campaign contributions.
* Thomas and Smith were also arrested this morning. They are also expected to make their initial court appearances this afternoon. Harris will be allowed to surrender to federal authorities tomorrow.
* Richard Garcia, the FBI Assistant Director in Charge of the Los Angeles Field Office, stated: “Today’s arrests exemplify the FBI’s determination in rooting out corruption by public officials – individuals whose trustworthiness should never come into question – and in restoring a well-deserved honest government to the people of Lynwood.”
* Richards, Harris, Thomas, and a fourth person who was not indicted, allegedly participated in a scheme to defraud the citizens of Lynwood of their right to Richards’ honest services. AGS’s primary source of revenue was three lucrative contracts initiated and approved by Richards
* In the first contract, Thomas obtained a “nuisance abatement” consulting contract in 1999. Under this contract, Thomas would be paid up to $25,000 per month for performing consulting services and nuisance abatement work for the City. However, according to the indictment, Thomas secretly subcontracted his work to AGS, which then subcontracted to other friends of Richards, including his personal gardener. Lynwood taxpayers ended up paying five times what they should have for the work performed.
* In the second contract, the indictment alleges that Richards forced the city’s trolley operator, Commuter Bus Lines (CBL), to retain AGS as a “transportation consultant” in exchange for receiving a five-year extension of CBL’s contract with Lynwood. CBL had agreed to hire its own consultant and to pay for the cost. But when the city insisted that CBL hire AGS at $7,500 per month, CBL objected and demanded increased fees to pay AGS. The city, led by Richards, agreed. Although AGS performed little or no work for CBL under the agreement, the city authorized CBL to pay AGS over $60,000.
* In the third contract, the indictment alleges that Richards orchestrated a deal between Lynwood and AGS in which AGS became the city’s exclusive representative to negotiate the construction of billboards along the Century Freeway (I-105). In exchange for representing the city, AGS would be paid a 20 percent contingency fee, and the city would pay all of its expenses. Before AGS received this contract, Richards allegedly had already discussed a multi-million dollar billboard project with Regency. Because the billboard deal was largely pre-negotiated by Richards, AGS stood to earn $960,000 for doing very little work except hiring one of Richards’ friends as its attorney. AGS sought no competing bids for the billboard project.
* The indictment goes on to allege that Richards, with the help of his co-schemers, violated his duties to the City by, among other ways, failing to disclose his interest in decisions benefitting AGS and Thomas. Specifically, the indictment alleges that Richards benefitted in the following ways:
* AGS and Thomas satisfied debts for campaign literature for Richards’s political campaign and the campaigns of allies;
* AGS and Thomas gave contributions to a political action committee set up by Richards’ sister and nephew, with that money being used to fund political campaigns of Richards’ allies in Compton, who supported a real estate development Richards was pursuing in Compton;
* AGS paid for an improvement on a Richards home in Cerritos;
* AGS paid a salary to Harris, who distributed the funds to other members of Richards’ family; and
* AGS paid a salary to Richards’ nephew, who performed personal projects for Richards while on the AGS payroll.
* The indictment charges Richards with 18 counts of mail fraud. He is also charged with conspiring to extort a city contractor (CBL), money laundering and making false statements to federal investigators.
* Harris is charged with 13 counts of mail fraud and perjury for lying to a federal grand jury.
* Thomas is charged with 13 counts of mail fraud and two counts of bribery.
* Smith is charged with five counts of bribery and perjury for lying to the grand jury.
* The mail fraud charges carry a maximum potential penalty of 20 years in federal prison, as does the extortion conspiracy charge against Richards. The bribery and money laundering counts each carry up to 10 years in prison. The perjury and false statement charges each carry a statutory maximum penalty of five years in prison.
* An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven.
* This case was investigated by the Los Angeles Field Office of the Federal Bureau of Investigation and IRS – Criminal Investigation Division in Los Angeles.