County Counsel Tries to Bury Schicker’s MWH/Ogren Complaint

Warren Jensen’s belated response to Lisa Schicker’s MWH/Ogren complaint paves the way for MWH to move forward, without legal impediments, in the design-build phase of the wastewater project as No. 1 contractor on the County’s handpicked short lists for both collection and treatment. At the same time, Counsel’s disclaimer shields the board. Schicker’s reaction...

It was four months in the making but didn’t waste any ink getting to the point.

It only took two pages for County Counsel Warren Jensen to dismiss former LOCSD board president Lisa Schicker’s complaint against Montgomery Watson Harza (MWH) for bid-rigging and Public Works Director Paavo Ogren for conflict of interest involving MWH.

Schicker was disappointed but, having heard Jensen and Supervisor Gibson’s earlier public dismissals, not surprised by Jensen’s response, or lack of one. "I think Jensen's response was hasty, premature and prompted by public pressure and the upcoming Board meeting to certify the faulty EIR and Coastal permit,” she told The Rock. “The main points of the complaint appear to be purposely ignored and the responses carefully crafted to avoid including anything of substance, especially all the evidence submitted after April 30, 2009.”

After Schicker first raised her complaint on April 7, followed by a promised response from Counsel—followed by months of silence on the serious allegations— Jensen’s August 18 “Preliminary Legal Evaluation of Materials Submitted by Lisa Schicker Regarding Paavo Ogren, Montgomery Watson Harza, and Related Matters” was little more than a wholesale, cursory dismissal of all allegations.

Jensen acknowledges in his posted legal opinion that time constraints played a major role in both delaying and limiting his response. “Time does not permit detailed discussion at this point. In the interest of releasing this preliminary evaluation without further delay…,” he issued what amounted to a pardon in advance, clearing a path for MWH to dominate design-build and for Ogren to continue heading the project without the appearance of wrongdoing shadowing him.

Jensen’s inability to provide a complete review of all the material submitted by Schicker, he says, was “due to staffing constraints and an increase in competing demands on our time beginning in early May.” A few of Jensen’s “competing demands” were the Edge/Wilcox scandal and their subsequent firings, settlements and potential lawsuits, a closed session leak, a corruption outbreak in Public Works road maintenance, a budgeting crunch crisis, and the siege of Sunny Acres.

It wasn’t just time and circumstances that held back his report. Schicker’s expanding evidence file was “now in excess of 1,300 pages,” stated Jensen. It kept growing. “As time permits, or as the Board directs, we will complete our review of the remaining materials and announce our conclusions.”

The Board should “absolutely” direct Jensen to complete his review and then announce his conclusions, said Schicker. “Many important facts have been completely ignored. Focusing on my cover emails is an excuse not to investigate.”

Jensen missed a lot, Schicker contends, and Jensen’s statement confirms that. By his own admission, his evaluation did not include any material submitted after April 30, when the bulk of material was submitted after May. That material is not included and remains unevaluated in Jensen’s August 18 opinion. He plainly acknowledges that his review is incomplete, inconclusive, that he hasn’t had time to read everything, or anymore than he’s already read—the amount of which isn’t clear¬—and won’t unless the Board of Supervisors so directs him.

At the same time, Counsel’s response shields the board from a host of liabilities. To further protect them, Jensen will not call for the board to investigate itself, nor seek an independent investigator to do it. He will not assist Schicker in proving her claims again his client, the County.

To the contrary, he has officially dismissed Schicker claims, laying the legal groundwork for rejection of her claims by any local judge. Schicker can hire as attorney to represent her complaint to the Board in legalese, but that hardly guarantees the Board of Supervisors will pay any more attention to Schicker’s attorney that they did to her, and a lawsuit against the County or MWH has a citizen’s chance in hell of succeeding in the politically sealed courts of San Luis Obispo County.

The Tribune trumpeted news of Jensen’s delayed “findings” under the headline, “Conflict-of-interest charges dismissed.” Said Schicker about the finality of the word ‘dismissed’ in the headline, “The report was clearly labeled as ‘preliminary.’ It is incomplete and most of the evidence that was referenced in the April cover letters was submitted in May, in order to assist Jensen because he told me he was 'swamped with work'—which turned out to the Edge/Wilcox corruption scandal and the Public Works theft scandal."

Schicker noted that Jensen apparently didn’t let the facts get in the way of his opinion. “For example,” she said. “it is a fact that Ogren was hired by the LOCSD in 1999, and as interim general manager he requested that new manager-to-be Bruce Buel backdate a contract with MWH, which was determined that falsification of records, such as the backdating of a contract, is a felony, according to the DA. Evidence was provided.

“It is a fact,” Schicker continued, “that MWH is suing the LOCSD and that both Carollo and Ogren hired them in 2006 and 2007, without the required legal waivers. It is a fact that Ogren did not disclose his long history and prior business relationships with Lou Carella and the Wallace group, both as an employee, a paid consultant, and a public employee with authority to let contracts and spend taxpayer money.

“It is a fact that Lou Carella and Wallace Group sat on the interview panel and shortlisted their prior business partner, MWH. It is a fact that Lou Carella conducted all the phone interviews and reference checks , then added those scores to all five panel members who shortlisted the teams for the project.

“It is a fact that Warren Jensen, Gail Wilcox and Paavo Ogren crafted the County's needs for AB 2701 that allowed the County to sole source large engineering contracts without any competitive bidding, as is normally required for any project over $10,000.

Finally, said Schicker, "The statements made by Jensen regarding hearsay and opinion were unfounded, each and every one of them. It is apparent that the County did not conduct any investigation of their own. ... Jensen was given his ‘marching orders’…”

While the quality of Jensen’s response to the allegations is intentionally underwhelming in its brevity and lack of specifics, the intent is quite clear. It is MWH’s ticket to move forward, without legal impediments, in the design-build phase of the wastewater project as top contractor on the short lists for both collection and treatment. It keeps Ogren in the driver’s seat of the MWH juggernaut, and substantially defends a troublesome point of attack for gravity collection opponents.

Schicker hasn’t decided how she will proceed with her complaint at this point. “If the County is unwilling to dig into the reasons behind the latest $7 million spending fiasco—money spent on sole sourced contracts—then this complaint and others like it need to go forward to the Department of Justice and the stimulus funding people,” she said.

“There are many of us who are interested in getting justice for the citizens of Los Osos. We have been abused by government for too long, and we have paid too much in our tax bills for County government mistakes over the years. Our taxes have been collected, but where are our parks, why are our roads and drainage in such a disastrous state and where is our infrastructure? All ignored over the past 30-plus years.

“Instead,” Schicker said, “our taxes went to inflated County salaries of many corrupt and/or unethical employees while the Los Osos infrastructure has rotted from years of neglect and lack of funding. It’s time for SLO County to come clean with Los Osos. No more rip-offs, lies, coverups and excuses."

In an August 18 email response from Jensen to Santa Margarita blogger Ron Crawford (http://sewerwatch.blogspot.com), who questioned, among other points, Jensen’s legal criteria for determining conflict of interest, Jensen responded:
 
 “… Even if Mr. Ogren did everything you cite, that would not amount to a legally cognizable "conflict of interest.” To have a legally cognizable conflict of interest, Mr. Ogren would have to have (1) a financial interest in MWH, or (2) a common law conflict of interest. There is no indication in Ms. Schicker's materials that Mr. Ogren has a financial interest in MWH (i.e., that he has an ownership interest in the company or that he receives financial benefits in the form of income, loans, or gifts). Nor is there any indication in Ms. Schicker's materials of anything that would amount to a common law conflict of interest. The facts you cite do not raise (sic) to that level, in my opinion. … In no case does Ms. Schicker set forth facts that show either a financial conflict of the type I described above, or facts that show a common law conflict of interest.”

In other words, unless Schicker produces a photo or video of a MWH bagman handing Paavo an envelope that says “Payoff Money,” with thousand dollar bills sticking out of it, even then … no matter what Schicker says, the Big Sewer Show must go on.

—Ed Ochs

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Preliminary Legal Evaluation of Materials Submitted by Lisa Schicker Regarding  Paavo Ogren, Montgomery Watson Harza, and Related Matters

Prepared by Warren R. Jensen, County Counsel, San Luis Obispo County
August 18, 2009

Materials Evaluated. Ms. Schicker submitted materials to the Board of Supervisors and/or County Counsel beginning on about April 7, 2009. Due to staffing constraints, and an increase in competing demands on our time beginning in early May, County Counsel has not been able to complete review of all of the materials submitted, which are now in excess of 1,300 pages. This evaluation is based on complete review of the materials submitted in April, 2009 and some of the other materials subsequently submitted. As time permits, or as the Board directs, we will complete our review of the remaining materials and announce our conclusions.
 
General Evaluation of the Materials. A variety of materials has been submitted by Ms. Schicker. Few of the documents evaluated so far are original source documents and few of the documents come from impartial sources. Many of the pages reviewed were authored by Ms. Schicker or others who have staked out partisan positions that are consistently at odds with County staff. Many of these documents would not be admissible in a civil action because they are inadmissible hearsay, and/or they are lay opinions without foundation, and/or they simply are not probative. Perhaps the materials submitted beginning in May 2009 will prove to be different, but a sampling indicates that they are not significantly different in character.

Preliminary Conclusions. Based on my review of the materials submitted before May 2009, and a sampling of some of the materials submitted thereafter, my preliminary conclusions are as follows:

1. No Conflict of Interest Proven for Paavo Ogren. Although Ms. Schicker repeatedly asserts her opinion that Mr. Ogren has various conflicts of interest, she does not provide specific identification of those conflicts or reliable evidence of such conflicts. The “evidence” she submitted consists almost exclusively of her personal opinions, without corroborating details or documentation. Such “evidence” would be inadmissible in court and does not seem substantial enough to warrant further consideration.

2. No Illegal Contract Proven Between LOCSD and MWH. Ms. Schicker has not provided all of the relevant original source documents, at least in the materials reviewed to date. If we accept the secondary materials that Ms. Schicker submitted at face value, the most that she has shown about the contract between LOCSD and MWH is that there was a procedural defect in the manner in which it was executed. Ms. Schicker’s materials completely fail to deal with the possibility that any such defect was subsequently cured by ratification of the contract. Such ratification is implicit in the LOCSD Board’s repeated subsequent payment of invoices submitted by MWH, including one invoice that expressly seeks payment for services provided before the September 1, 1999 effective date. In addition, the LOCSD Board repeatedly amended that contract, each time implicitly endorsing the original contract. Moreover, Ms. Schicker’s written materials completely ignore the concept of promissory estoppel, under which a government entity can be required to pay for services that are rendered prior to the execution of a written contract where the entity induced the contractor to provide those services based on unwritten assurances that the work would be covered by a future contract. That appears to be exactly what happened according to the memo prepared by Bruce Buel, and included in the materials submitted by Ms. Schicker.

3. No Negative Inferences Justifiable, based on Pendency of Investigations. Ms. Schicker refers to various pending investigations and seems to draw the conclusion that the mere pendency of these investigations is a reason to avoid dealing with MWH. Logically, this makes no sense because anyone can trigger an investigation and therefore the mere pendency of an investigation means nothing about the validity of the triggering complaint. Only when a neutral investigative body has reached a conclusion is there a reasonable basis for negative inferences.

4. No Negative Inferences Justifiable, based on Cape Coral Situation. Ms. Schicker refers to a controversy involving a wastewater project constructed by MWH in Cape Coral, Florida. She submitted newspaper coverage reporting on allegedly excessive costs incurred and she submitted newspaper coverage of an Attorney General opinion criticizing the City of Cape Coral. No original source documents were included in the materials evaluated. Newspaper articles are not admissible evidence in court and are not substantial enough to warrant further investigation. Perhaps there are original source documents in the materials that have not yet been reviewed. If so, they will be considered. At this point, however, no negative inferences can reasonably be drawn from the materials evaluated.

5. No Negative Inferences Justifiable, based on MWH Filing of Bankruptcy Claims or Other Litigation. Ms. Schicker refers to the fact that MWH has filed a claim against the LOCSD in the Bankruptcy filed by the LOCSD and seems to draw the conclusion that the mere filing of a claim was improper. This is completely illogical. Two other creditors of LOCSD also filed claims against LOCSD. Were their claims improper too? The actual outcome of those claims, after arbitration, was that these two creditors had valid claims for $10 million.

6. No Other Negative Inferences Warranted. Numerous other claims of impropriety are advanced by Ms. Schicker in the materials reviewed. Time does not permit detailed discussion at this point. In the interest of releasing this preliminary evaluation without further delay, suffice it to say that the materials evaluated did not support any other inferences of impropriety in the County’s efforts pursuant to AB 2701.

Respectfully submitted,

WARREN R. JENSEN
County Counsel