Agreement delays decisions on furlough days, benefits cuts
January 24, 2012 3:29 PM
Natasha Lindstrom, Staff Writer

VICTORVILLE • Three months after declaring an impasse, the Victor Valley Union High School District and its teachers union have struck a tentative agreement. (Click here to read the agreemment.)

But rather than resolve contentious compensation issues, the proposed deal essentially delays the hard decisions until negotiations resume in March for the 2012-13 school year.

District officials had been pushing to issue teachers eight furlough days, or unpaid days off, in the name of ensuring the district’s long-term financial stability. Union officials had protested the furloughs for slashing teacher pay by 4 to 7 percent and argued the district could instead pull from its healthy reserves.

Monday marked the third negotiation session led by an impartial state mediator, with several dozen teachers wearing bright red union shirts and signs like “Treat teachers fairly” while picketing outside all three meetings.

Under the tentative agreement reached Monday, existing teacher contract terms will remain in effect until at least June 30. The district could have opted to advance through the impasse process in an attempt to ultimately force furloughs on the teachers.

“It was very nice to see the district was working real well with the negotiating team,” VVTA President Jose Berrios said by phone Tuesday. “It was a real good meeting. It was a good positive step.”

The agreement states that salary and health and welfare benefits are “automatic reopeners” this spring when negotiations resume. It also requires both sides to “sunshine,” or disclose at a public meeting, their initial proposals for the 2012-13 school year by March 1.

“The District would like to thank VVTA and its negotiating team for their professionalism at the bargaining table and looks forward to productive bargaining session, commencing in March 2012,” states a district memo to all certificated staff from Steven Desist, assistant superintendent of human resources.

Desist did not return a Tuesday call for comment.

It’ll be up to union members to determine their next specific proposals, Berrios said, though it doesn’t seem likely they’ll be eager to swallow the concessions the district has wanted. Teachers are also waiting to see if Gov. Jerry Brown’s tax initiative will pass and improve the district’s fiscal situation.

“We still feel that there’s enough in the reserve that we can survive,” Berrios said.

The union membership now has 10 days to ratify the agreement with a vote before sending it to the district board for adoption.

If green-lighted by the union, the deal means it won’t be necessary for the district to take the next step to resolve an impasse called fact-finding, which would have involved a panel listening to arguments for both sides at an evidentiary hearing

Natasha Lindstrom may be reached at (760) 951-6232 or at NLindstrom@VVDailyPress.com.

Get complete stories every day with the “exactly as printed” Daily Press E-edition, only $5 per month! Click here to try it free for 7 days. To subscribe to the Daily Press in print or online, call (760) 241-7755, 1-800-553-2006 or click here

.

January 19, 2012 12:43 PM
Brooke Edwards Staggs, City Editor

VICTORVILLE • A recent default on debt payments triggered one of the top credit rating agencies to downgrade $51 million in Southern California Logistics Airport Authority bonds another two notches, with Moody’s Investor Services predicting the airport won’t catch up on debt payments until 2029.

Moody’s now rates the SCLAA bonds at a B3 on the agency’s scale of Aaa1 to C, with the junk bonds considered “speculative” and a “high credit risk” for investors (click here to read more about the SCLAA rating). That low rating can interfere with the city’s ability to seek new bonds or refinance its existing troubled debt.

“The B3 rating reflects the current defaulted status of the bonds, the likelihood of continuing future defaults and ultimate bondholders recovery estimated at 95 percent,” the New York-based rating agency said in a statement released Tuesday.

Victorville’s airport authority in December defaulted on a series of bonds taken out in 2007 and 2008. SCLAA missed a $535,000 payment after what Moody’s called a “defect” and “an apparent editing error” in the bond indenture prevented reserve funds from being used to cover principal.

Moody’s last dropped its SCLAA bond rating to a B1 in April, citing the fact that property tax values securing the debt had continued to plummet.

Assuming a 1 percent annual growth in property tax values if the economy improves, Moody’s estimates SCLAA revenues won’t cover debt payments again until 2022 and that it’ll be another seven years after that before the authority is current on payments.

Victorville officials said they could have made the payment due Dec. 1 by borrowing funds if the state hadn’t axed all redevelopment agencies. That legislation also contributed to downgrading the airport authority bonds, Moody’s stated, since it isn’t clear as to whether Victorville will be able to use future tax revenues to help right the defaulted debt.

With the uncertainty stemming from the RDA legislation, Moody’s on Tuesday also downgraded by one notch some $11.6 billion in debt owed on all California tax allocation bonds rated below Baa2 (click here to read more about the state downgrade here). However, that move didn’t affect the SCLAA bonds, since they were already rated below that level.

The airport bonds remain on review for possible further downgrade

Brooke Edwards Staggs may be reached at (760) 955-5358 or at bedwards@VVDailyPress.com.

Get complete stories every day with the “exactly as printed” Daily Press E-edition, only $5 per month! Click here to try it free for 7 days. To subscribe to the Daily Press in print or online, call (760) 241-7755, (800) 553-2006 or click here.

.

January 18, 2012 11:58 AM
Brooke Edwards Staggs

VICTORVILLE • Less than 12 hours after his contract was approved by the City Council, Victorville received notice that the man chosen to serve as deputy city manager overseeing finances had opted not to take the position.

“My family had serious concerns about the impact of the long commute on the family,” Valentine “Andy” Okoro, who has served as Norco’s deputy city manager, said in an email sent to the city Wednesday morning. “I had hoped that we (would) come to a resolution at the end. Unfortunately, that has not been the case.”

Okoro was chosen after a recruitment process to serve as deputy city manager in charge of administrative services. The contract included in Tuesday’s agenda called for Okoro to start at an annual salary of $80,153.

Councilwoman Angela Valles cast the sole vote against the new hire, stating she feels the city is already too management-heavy and financially strapped.

“He was well aware of financial challenges we are facing and was ready to take those on challenges,” City Manager Doug Robertson said in an email, attributing Okoro’s decision solely to the relocation issue.

Victorville hasn’t had a finance director since a round of layoffs two years ago. Robertson, who was serving as deputy city manager at that time, then took on overseeing the finance department. Since Robertson was promoted, Mayor Ryan McEachron had said it’s always been the city’s intention to fill that key position.

“I do not have another candidate I believe could fill the appropriate role at this time and will not be recommending another recruitment,” Robertson said. “I have some contingency plans that I prepared in the event we were unable to find a suitable candidate.”

Robertson said he wasn’t prepared to release details on those plans until he’d had a chance to discuss them with staff members who’ll be affected by the changes

Brooke Edwards Staggs may be reached at (760) 955-5358 or at bedwards@VVDailyPress.com.

Get complete stories every day with the “exactly as printed” Daily Press E-edition, only $5 per month! Click here to try it free for 7 days. To subscribe to the Daily Press in print or online, call (760) 241-7755, (800) 553-2006 or click here.

.

Airport, city separate legal entities but closely bound together
January 15, 2012 6:00 AM
Brooke Edwards Staggs

VICTORVILLE • With the city’s airport authority behind on debt payments, residents are left wondering whether basic city services such as public safety and road maintenance might pay the price.

“Could that possibly happen? I’m sure that’s possible,” Mayor Ryan McEachron said. “But there’s too many things that still have to work themselves out, which makes it difficult to say.”

In late December, Southern California Logistics Airport Authority received notice from Bank of New York Mellon that it had defaulted on two of its bonds after missing a $535,000 debt payment. Then Dec. 29, the California Supreme Court upheld a decision to dissolve redevelopment agencies, casting doubt on SCLAA’s future.

“None of this is related to the city or city finances,” City Manager Doug Robertson said via email. “They are separate legal entities.”

Councilman Jim Kennedy has been adamant about that point, taking to his public Facebook page to emphasize the distinction.

“These bonds (about $320M) are an obligation of the Airport authority, not the City of Victorville,” Kennedy posted on his wall. “They are secured only by the property tax increment flowing from the developments in the Airport project area.”

While that’s true, outside experts say the city will likely be affected by SCLAA’s woes given the interconnectivity of the two.

“I think for the airport authority it’s going to be a problem, but it’ll be a problem for the city, too,” said Robert Doty, president of American Governmental Financial Services Co., a Sacramento firm that provides municipal bond advice to local governments. Doty said “people aren’t going to forget” how entangled funds between the airport and the city have become, predicting taxpayers will “pay a price for several years” if Victorville needs to finance a new road or other city project.

SCLAA was formed in 1997 as a joint powers authority between the city of Victorville and its redevelopment agency.

For the first 14 years of the authority’s existence, Robertson said Victorville’s general fund — used to support basic services such as police, fire and roads — was also used to subsidize SCLA and keep the airport operating.

Victorville is under investigation by the Securities and Exchange Commission, which is eyeing how Victorville used airport bond funds for city projects.

To read entire story, click here.

January 08, 2012 3:14 PM
Brooke Edwards Staggs, City Editor

VICTORVILLE • Even before the state axed redevelopment agencies to bolster its budget, the viability of Victorville’s RDA was in question, according to an annual audit released this week.

A $5.3 million deficit in assets and millions more in interfund loans had caused the city’s RDA to have liquidity problems, which the auditor stated “raise substantial doubt about the agency’s ability to continue as a going concern.”

Victorville established its first redevelopment area 31 years ago to rehabilitate and develop some 1,686 acres along Bear Valley Road and Hook Boulevard. The city added a smaller RDA in 1998 to clean up the blighted Old Town area, using the additional tax revenue to buy up property and improve aesthetics.

In September and October of 2009, the city loaned a total of $11.8 million from its redevelopment agency to its Southern California Logistics Airport Authority. The funds were needed for activities at the airport and to make debt service on bonds taken out for improvements there.

With SCLAA carrying a $101 million deficit and recently hit with default notices for missing debt payments, the airport authority doesn’t appear to have means to pay back those loans in the foreseeable future. Still, City Manager Doug Robertson said Victorville had intended to temporarily loan another $7.5 million from its RDA to SCLAA to make debt service Dec. 1, but held off due to state legislation pending at the time.

Last summer, Gov. Jerry Brown decided to eliminate all RDAs and redirect their tax revenue to support schools and local services. On Dec. 29, the California Supreme Court up held that decision.

When asked Thursday how Victorville’s RDA could have loaned the money to cover SCLAA’s debt given the liquidity issues outlined in the audit, Robertson said the money actually would have been pulled from a pooled city account and paid back by April as new tax revenue came in.

To read entire story, click here.

Joe Nelson, Staff Writer
Posted: 01/07/2012 02:42:29 PM PST

Victorville City Manager Doug Robertson said the city’s November default on bond payments totaling $10.6 million has not prompted an inquiry from a federal agency that has been investigating the city’s bond debt for the last two years.

In an e-mail, Robertson said investigators from the Securities and Exchange Commission (SEC) has not made any inquiries about the defaults thus far, but he is expecting they will.

“We don’t believe we’ve done anything wrong so our biggest concern is the timely completion of their inquiry so we can move on,” Robertson said.

The city received a notice from the Bank of New York Mellon, dated Dec. 16, indicating it had failed to pay a total of $535,000 in principal payments that were due on Dec. 1. The bank, which holds the city’s reserve funds in trust, said reserve funds could not be used to make payments on the principal.

The city was, however, able to use the reserve funds to cover interest on the bonds totaling $1.3 million.

According to the notice, the bank could demand that the principal of all issued bonds and accrued interest be paid immediately.

In 2010, the SEC launched an investigation into the city’s bond debt and how it spent the money, and the investigation has now entered its third year.

On Dec. 1, debt service payments for seven bonds the Southern California Logistics Airport Authority, or SCLAA, took out came due. The SCLAA, of which Robertson serves as executive director, is the redevelopment agency that secures funding and oversees development of the 2,500-acre airport, formerly the George Air Force Base, which the city envisions as its future economic engine that will drive growth.

The bonds taken out by the SCLAA are secured by redevelopment tax increments, not city funds, and the state’s efforts to dissolve redevelopment agencies has thwarted Victorville’s ability to use its redevelopment funds to help pay its bond debt, according to a letter Robertson sent to bondholders dated Nov. 21.

Robertson believes the SCLAA will be able to make the payment once Victor Valley Economic Development Authority (VVEDA) property tax distributions are made, which typically occur in April.

Even under legislation eliminating redevelopment agencies, VVEDA will be entitled to receive property tax distributions for purposes of making debt service payments, Robertson said.

To read entire story, click here.

January 03, 2012 1:50 PM
Brooke Edwards Staggs, City Editor

VICTORVILLE • An attorney is seeking to recover more than $9 million in damages on behalf of 4,300 people who’ve received tickets from Victorville’s red light cameras, claiming the system is “unfair, unlawful, fraudulent and deceptive.”

Robert Conaway, a criminal defense attorney from Barstow, sent notice in early December to the city of Victorville and Redflex Traffic Systems that he intends to file a class action lawsuit unless changes are made with the way red light cameras are handled here. He updated that notice in late December, tacking on the calculated damages.

Conaway is seeking to recover more than $2 million for each of the $490 fines paid by convicted residents, $6 million for resulting higher insurance premiums, $215,000 for legal fees paid by those who tried to fight the tickets and $860,000 to cover lost wages for those forced to miss work to attend arraignments or trials.

Along with actual damages, Conaway states he hopes to recover up to three times that amount in punitive damages from Redflex, or up to $28.5 million.

The thrust of Conaway’s argument against the cameras is that they violate civil rights because the accused don’t have the opportunity to confront their accuser, with a private, for-profit company in charge of first processing the evidence against alleged red light runners.

Conaway said he hasn’t heard any response back from either the city or Redflex since he sent his initial claim dated Dec. 9. If the two parties don’t agree within 30 days from receiving that notice to stop issuing tickets or assign San Bernardino County Sheriff’s deputies to watch the live video feed and issue tickets as the violations occur, Conaway said he intends to file the class action lawsuit.

A spokesman for Redflex and the city’s attorney have both previously said they don’t believe there are grounds for a lawsuit.

Victorville’s next City Council meeting — where the group can discuss the claim in closed session and potentially vote on whether to reject or agree to Conaway’s demands — is scheduled for Jan. 17

Brooke Edwards Staggs may be reached at (760) 955-5358 or at bedwards@VVDailyPress.com.

Get complete stories every day with the “exactly as printed” Daily Press E-edition, only $5 per month! Click here to try it free for 7 days. To subscribe to the Daily Press in print or online, call (760) 241-7755, 1-800-553-2006 or click here.

.

Monday, January 2, 2012- 1045 a.m.

The fight over the future of Victor Valley Community Hospital (VVCH) has some interesting twists.

Dr. Prem Reddy, who operates Prime Healthcare Services, wants the bankrupt facility as part of his network of highly-profitable hospitals.

However, California Attorney General Kamala Harris wants a different owner because of Prime’s history of dumping less-profitable forms of insurance coverage, which has caused community access issues.

The hospital chain is also under scrutiny for alleged billing and patient care issues.

The hubbub comes after a tentative deal with KPC Global, owned by Dr. Kali P. Chaudhuri fell through over alleged problems with VVCH’s financials.

Chaudhuri and Reddy, according to sources, don’t care much for each other.

AG Harris has steadfastly refused to sign-off on the Prime acquisition of VVCH.

A legal requirement in California.

But this fact hasn’t stopped Reddy or the VVCH Board of Directors.

Prime has been the beneficiary of management contracts approved by the VVCH board, while at the same time being permitted to loan the facility funds to continue operations.

All with the backing of the U.S. Bankruptcy Court and a local Superior Court Judge.

In other words Reddy has been allowed a foothold.

What’s even more interesting is who sits on the VVCH board.

Assistant District Attorney Michael Fermin, the number two man in the DA operation,  is currently on the hospital board. Fermin’s family has been a part of VVCH for years.

Fermin has recently enjoyed a meteoric rise to his current position by vaulting from a Supervising Deputy District Attorney to Assistant DA in the blink of an eye.

Reddy has been a staunch financial backer of District Attorney Michael Ramos. And Fermin, who wants to be the next DA, knows this.

In another development, the latest news coming from sources at VVCH involves former San Bernardino County chief executive Mark Uffer.

Uffer who just stepped down from his role at Colorado River Medical Center in Needles is, according to sources, slated to join VVCH.

Uffer is to be charged with prepping the facility for a potential sale transfer.

The move brings Uffer closer to his home in Highland.

BY KIMBERLY PIERCEALL
STAFF WRITER
kpierceall@pe.com

Published: 30 December 2011 07:21 PM

Leaders with three Inland groups overhauling former military bases say legislation that would dissolve the state’s redevelopment agencies doesn’t apply to them.

The legislation was upheld by the state’s Supreme Court on Thursday.

The Inland Valley Development Agency, which is overseeing the reuse of San Bernardino’s Norton Air Force Base into San Bernardino International Airport, is not a redevelopment agency, officials said.

It just has the powers of one given to it through special state legislation, said interim executive director A.J. Wilson.

Victorville Councilman Mike Rothschild, who is among city leaders managing the conversion of George Air Force Base into the Southern California Logistics Airport, agreed.

And the executive director of the March Joint Powers Authority, Lori Stone, said work to revive former March Air Force Base land in Riverside County shouldn’t be considered the same as other redevelopment projects because the former federal land had been exempt from property taxes until the agency took it over.

Based on legal opinions Wilson said he has seen, the law that would dissolve redevelopment agencies only applies to those created by cities and counties. The IVDA wasn’t, he said.

In 1990, state legislation allowed the creation of the IVDA to manage a redevelopment area extending three miles from Norton’s boundaries, calling it a “redevelopment agency” throughout the statute in the state’s Redevelopment Law Section (number 33320.5 before it was renumbered to 33492.40).

The same legislation includes the development of an agency to oversee the reuse of George Air Force Base and an 8-mile area surrounding it, now the Victor Valley Economic Development Authority.

“It is the intent of the Legislature and the commitment of the local authorities to ensure that the existing airfields at both Norton Air Force Base and George Air Force Base are protected, developed, and enhanced as civil aviation public use airports,” the section states. “Therefore, the joint powers authorities authorized by this section should make every reasonable effort to guarantee that these vital airport facilities are retained for general aviation use now and into the future.”

Still, the IVDA voted to sell a flurry of bonds — more than $150 million worth — earlier this year to assure projects such as improvements to the agency’s new headquarters and surrounding road improvements would be paid for if the legislation was upheld.

“Right now, if anything, our greater problem for our projects would be when we were partnering with one of our member’s redevelopment agencies,” Wilson said. He added that he wasn’t aware of any current projects that would be adversely affected because of that, “not where we’re so far in that it’s going to blow up something.”

San Bernardino County Supervisor Neil Derry, who is among several local elected leaders to sit on the agency’s governing board, said that even if the agency fights the ruling legally or with legislation to argue for exemption for military reuse, he didn’t expect the agency to win.

“I don’t think that’s going to hold. I think this is going to impact us as well as Victorville,” he said.

To read entire story, click here.

Southern California Logistics Airport seen in Victorville Thursday, July 28, 2005./STAFF PHOTO

A technical payment mistake hits the city and the Southern California Logistics Airport
BY KIMBERLY PIERCEALL
STAFF WRITER
kpierceall@pe.com
Published: 28 December 2011 08:29 PM

Victorville has defaulted on two of several municipal bonds used to make improvements to the Southern California Logistics Airport, according to letters from the Bank of New York Mellon.

The city tried to pay $535,000 in principal payments by Dec. 1 with money held in a reserve account, an action the bank doesn’t allow which triggered the default, according to the bank’s letters.

The airport is the result of public and private efforts to redevelop 8,500 acres of the former George Air Force Base. Victorville owns the airport and the City Council oversees it as the Southern California Logistics Airport Authority.

The two bonds, issued in 2007 and 2008, are valued at $55.3 million not counting interest.

As first reported by the Daily Press in Victorville, a majority of bondholders could demand that the entire amount still owed — $173 million — be paid immediately. Other alternatives include litigation or amending the bond agreements, according to the letters.

To read entire story, click here.

December 27, 2011 6:15 PM
Brooke Edwards Staggs, City Editor

VICTORVILLE • The city has defaulted on two bonds after trying to use restricted funds for a $535,000 payment due Dec. 1, according to a notice from the Bank of New York Mellon.

As a result, if a majority of bondholders agree, the bank notice states they could demand full and immediate payment of the outstanding balance on $173 million in bonds taken out in 2007 and 2008 for improvements at Southern California Logistics Airport.

The bondholders could also sue for payment, or agree to allow Victorville to use the restricted funds — the more likely option, since the cash-strapped city clearly doesn’t have millions of dollars at its disposal.

Victorville owed a total of $10.6 million in interest and principal Dec. 1 for eight bonds its Southern California Logistics Airport Authority took out between 2005 and 2008. However, the city came up $7.5 million short, and officials said they were going to rely on funds deposited into a reserve account held by a trustee — the Bank of New York Mellon, in the case of the 2007 and 2008 bonds — to temporarily cover the shortfall.

But in a notice dated Dec. 16, the bank said SCLAA can’t use reserve funds to make principal payments, according to the agreement the city signed with bondholders when it issued the debt. As a result, the principal payment did not go through and Victorville defaulted on the bonds.

With SCLAA $101 million in the hole and tax revenues dwindling due to plummeting property values, the city in the past has relied on interfund borrowing to make the debt payments. However, this year redevelopment funds are frozen as the state works to dissolve those agencies.

The way Victorville spent its bond funds is also the focus of a lengthy investigation by the Securities and Exchange Commission.

The city first got a subpoena from the SEC in August 2010 demanding information about bond expenditures. City officials were slated for more interviews with the federal agency in November, and no report has been issued to date.

City Hall is closed until Jan. 2 and Mayor Ryan McEachron couldn’t be reached Tuesday for comment on the default.

Historically, SmartMoney.com reports fewer than one 1 percent of municipal bonds go into default — though many experts are predicting that percentage will balloon in 2012

Brooke Edwards Staggs may be reached at (760) 955-5358 or at bedwards@VVDailyPress.com.

Get complete stories every day with the “exactly as printed” Daily Press E-edition, only $5 per month! Click here to try it free for 7 days. To subscribe to the Daily Press in print or online, call (760) 241-7755, (800) 553-2006 or click here.

.

Atty. Gen. Kamala D. Harris in September killed the proposed takeover of a struggling Victorville hospital by a nonprofit arm of Prime Healthcare Corp., saying it was “not in the public interest.” (Paui Sakuma, Associated Press / December 13, 2011)

By Michael Hiltzik
December 28, 2011

In September, state Atty. Gen. Kamala D. Harris killed the proposed takeover of a struggling Victorville hospital by a nonprofit arm of Prime Healthcare Corp., saying it was “not in the public interest.”

Her ruling was anything but casual. Basing the decision on what she said was her own department’s investigation, as well as testimony at a marathon public hearing in August, Harris indicated that the takeover would result in the reduced availability of healthcare in the High Desert.

Her concerns included Prime’s “disturbing business model,” which includes canceling managed-care contracts at the hospitals it acquires, driving up costs for those payers and forcing many patients to travel long distances to find affordable care elsewhere.

One would have thought that was that. The attorney general has explicit jurisdiction over transfers of ownership of California nonprofit hospitals, such as the bankrupt 101-bed Victor Valley Community Hospital.

Yet the attorney general believes her order is being flouted. The hospital has gone ahead and signed two agreements with Prime, including one for a $6-million line of credit, that Harris says will give Prime effective control of Victor Valley over her objections. In a separate frontal attack on Harris’ authority, the hospital has asked a San Bernardino County Superior Court judge to overturn her veto.

What makes this more than just a dust-up in the desert is the involvement of Prime Healthcare, which owns 14 hospitals in California and one in Texas. In recent years, Prime has drawn the scrutiny of state and federal regulators over its patient treatment policies, its billings to government healthcare agencies and its employment practices.

Prime defends its record, but these concerns raise the question of whether even allowing Victor Valley to shut down might be preferable to turning it over to Prime.

For the community, that’s not a serious question. “No one in the High Desert wants this hospital to close,” says its interim chief executive, Edward Matthews. But it does underscore the excruciating choices involved in keeping it open.

If there’s a secret to making hospitals profitable, Prime seems to have found it. The creation of Dr. Prem Reddy, an India-born cardiologist who came to the U.S. in 1976, Prime has assembled a portfolio of institutional castoffs — “Every hospital I acquire, I acquire in bankruptcy,” Reddy once said of his corporate strategy.

The company earned nearly $248 million in 2010 on revenue of $1.6 billion, according to an income statement filed with the Securities and Exchange Commission. (The privately held Prime’s financial statements were filed by a publicly traded real estate investment trust that is financially dependent on its business.)

Prime achieves this in part by stripping low-margin or unprofitable medical services out of its hospitals. As The Times has reported, Prime closed more than half of Centinela Hospital’s operating rooms and cut back on chemotherapy and birthing services after taking over the institution in 2007.

The hospital, a healthcare linchpin for South Los Angeles, served 146,000 outpatients, including emergency room patients, in 2006, according to state records; last year the figure was 55,000. But Centinela swung from a $10-million loss in 2006 to a profit of nearly $11 million in 2010.

Prime has acknowledged in legal filings that it avoids contracting with managed-care insurance plans, or HMOs. That frees the company from the obligation to deliver emergency care to those plans’ members at a low contracted rate. Instead, it charges those patients or their health plans what the market will bear.

In 2008 and 2009, auditors from the state Department of Health Care Services caught the firm trying to stick the Medi-Cal program with more than $4 million in what the auditors considered inappropriate expenses, including $838,000 for a Beverly Hills home, more than $1.4 million for a helicopter and hundreds of thousands of dollars more for a company Bentley.

The agency has referred the expenses to the attorney general’s office for a possible fraud investigation. Prime said this week that it “came to agreements with Medi-Cal” on some of the disallowed items and appealed others, but did not give details on the outcome of the agreement.

To read entire story, click here.

December 23, 2011 1:41 PM
Brooke Edwards Staggs, City Editor

VICTORVILLE • A federal appeals office upheld the termination of Victorville’s EB-5 visa investor center, leaving the city with no option but to pursue a pricey lawsuit or say goodbye to millions in funding they’d hoped to borrow through the program.

City officials got the news Thursday afternoon, with plans to discuss next steps during the Jan. 17 city council meeting.

U.S. Citizenship and Immigration Services approved Victorville’s Regional Center in 2009, allowing foreign nationals to supply at-risk loans to the city so long as that money helped create 10 local jobs. Investors would then be granted U.S. visas and the loans would have to be paid back five years later with interest.

Nineteen people gave Victorville $500,000 each under the program, and the city intended to use that money to pay back restricted funds borrowed from its water department to build the struggling wastewater plant at Southern California Logistics Airport.

Then, in a precedent-setting move, USCIS terminated Victorville’s program in October 2010 due to “material factual discrepancies” in related financial reports.

Victorville sent USCIS additional information and appealed to that office to overturn the decision, but was turned down in May. The city then filed a lawsuit in Washington, D.C. District Court against USCIS, the Department of Homeland Security and several top officials with those agencies, but agreed to pause that civil case as it waited on word from USCIS’s Administrative Appeals Office.

In a letter dated Dec. 21, the AAO affirmed the decision to terminate Victorville’s program.

The appeals office pointed out several fatal flaws in the EB-5 center here, including apparent contradictions between information provided by Councilman Mike Rothschild and the city’s attorneys, conflicts in the timeline of when the city loaned funds versus when it told USCIS they were needed and more.

To read entire story, click here.

December 15, 2011 1:21 PM
Natasha Lindstrom, Staff Writer

VICTORVILLE • Victor Valley College’s board members have voted themselves a 60 percent raise, increasing their monthly stipend from $250 to $400.

The VVC Board of Trustees approved the hike at Tuesday night’s meeting. The increase is retroactive back to July 1, according to college spokesman Bill Greulich.

The stipend increase was justified because of the college’s increasing full-time equivalency rate, Greulich said. Community colleges get reimbursed based on full-time equivalency, or FTE, which can equate to one student taking 12 units, three students each taking a four-unit course, or another combination adding up to 12 units.

The move to up the stipends came after a review of board policy found that California Education Code allows for an increase in board member stipends when FTE surpasses a certain level. The board voted 4-1 to adjust the stipends accordingly, with trustee Michael Krause opposing.

“I cannot see giving myself more money — even though (Education) Code states that board members will get that amount over 10,000 FTE — when we are cutting employees and cutting classes,” Krause said in a statement Thursday. “I support the board’s decision and respect each board member’s vote.”

The latest estimates show the number of students enrolled in VVC during fall 2011 fell by 9 percent from fall 2010, but the college’s full-time equivalency rate was up 7.2 percent.

The full-time equivalency figure for fall was 4,146 compared to 3,867 in 2010, data shows. Meanwhile, there are 1,286 fewer students enrolled this fall compared to fall 2010, with the current head count at about 12,366.

Neither Board President Dennis Henderson nor Vice President Joe Range could immediately be reached for comment

Natasha Lindstrom may be reached at (760) 951-6232 or at NLindstrom@VVDailyPress.com.

Get complete stories every day with the “exactly as printed” Daily Press E-edition, only $5 per month! Click here to try it free for 7 days. To subscribe to the Daily Press in print or online, call (760) 241-7755, 1-800-553-2006 or click here.

.

Protesters pack Victorville City Hall
December 15, 2011 8:45 AM
Brooke Edwards Staggs, City Editor

VICTORVILLE • Residents packed City Hall on Wednesday night, carrying signs and giving impassioned speeches against a Walmart Supercenter that’s planned near the entrance to Spring Valley Lake.

However, a Planning Commission decision on the project was delayed until January because there was a technical error with the way the item was agendized, according to Bill Webb, director of development for the city.

The item has been continued to the next Planning Commission meeting Jan. 11. At that meeting, Webb said Walmart will respond to comments and questions, and the commission will decide whether to recommend that the City Council ultimately approve or deny the project.

The delay didn’t stop residents from letting commissioners know how they feel about the store that’s slated to anchor Tamarisk Market Place, along Bear Valley Road between Tamarisk and Ridgecrest roads.

With signs that said “wrong location,” “students before shoppers” and “schools not Walmart,” residents of Spring Valley Lake and surrounding areas shared their concerns over the project’s proximity to schools and churches, how it will impact traffic congestion and their fears for its impact on area crime.

“When I even consider the location of a 24/7 big box store adjacent to our college and to the entrance to Spring Valley Lake, I get rather emotional,” resident Jim Carr said. “And when I get emotional, I may say something that you’d escort me out of here, so I’m going to read a statement tonight.”

Carr was met with laughter and loud applause before he went on to share concerns about the project.

“From the city’s standpoint, the only merit that I can see is tax money,” he said. “From the viewpoint of the rest of this area, there are no positive merits, only a major increase in traffic congestion, an increase in air pollution affecting everyone’s health and an increase in crime rate.”

The general manager for Spring Valley Lake Country Club also expressed concern for how the project will impact drainage issues, since the site is “upstream” from the golf course and the lake.

Some of these issues were also raised in the project’s Environmental Impact Review, though city staff recommended the project for approval.

After the Planning Commission’s Jan. 11 vote, the store could come back to the City Council for final approval as soon as Jan. 17

Brooke Edwards Staggs may be reached at (760) 955-5358 or at BEdwards@VVDailyPress.com.

Get the complete story every day with the “exactly as printed” Daily Press E-edition, only $5 per month! Click here to try it free for 7 days. To subscribe to the Daily Press in print or online, call (760) 241-7755, 1-800-553-2006 or click here.

.

Split City Council approves first COLA hikes in three years
December 07, 2011 4:59 PM
Brooke Edwards Staggs, City Editor

VICTORVILLE • The Victorville City Council approved 3 percent pay raises for all employees starting Jan. 1, with Councilwoman Angela Valles protesting the perk in light of the city’s rocky finances.

“After three years of layoffs and defaulting on debt service obligations and needing police and fire and roads, I just can’t justify raises at this time,” Valles said during Tuesday night’s meeting.

The rest of the City Council defended the cost-of-living salary hikes, with Councilman Jim Kennedy first to say they were deserved after staff helped slash Victorville’s deficit from a high of $14 million in 2009.

“My gosh, giving them a small reward for that does not seem unreasonable to me,” Kennedy said.

Mayor Ryan McEachron and Mayor Pro Tem Rudy Cabriales agreed, with Councilman Mike Rothschild adding, “We’re at a point now where we can give a little bit back.”

The raises will cost Victorville $358,144 this year, a staff report states, with $166,627 coming out of the city’s general fund and the other $191,517 coming out of “other funds.”

When Valles asked City Manager Doug Robertson to identify those other funds, he said it could be from “hundreds if not thousands” of available sources, including redevelopment, airport or water funds.

Adelanto approved a 3 percent cost-of-living increase effective July 1. However, the raise only impacted non-management employees, City Manager Jim Hart said.

Apple Valley has frozen salaries for all employees since July 2008, while Hesperia’s last cost-of-living raise was July 2009. Only employees who were promoted or have changed positions have received raises since that time.

Victorville has lost one-third of its staff over the last three years through layoffs, retirements and resignations, as staff has grappled with pay cuts, demotions and drops to benefits. The city is down from 16 or 17 department heads to two, Robertson said, with remaining workers doing “more for less.”

Less than two weeks before the vote, Victorville notified bondholders that it was $7.5 million short on a debt payment due Dec. 1. The payment was made using funds borrowed out of a trust account, with the city counting on a change in state legislation to repay that loan.

Brooke Edwards Staggs may be reached at (760) 955-5358 or at bedwards@VVDailyPress.com.

Get complete stories every day with the “exactly as printed” Daily Press E-edition, only $5 per month! Click here to try it free for 7 days. To subscribe to the Daily Press in print or online, call (760) 241-7755, 1-800-553-2006 or click here.

San Bernardino County District Attorney Michael Ramos

By Mark Gutglueck
Friday, December 2, 2011

Federal prosecutors have horned in on an unprecedented number of high profile political corruption cases that would otherwise be handled by the district attorney’s office in San Bernardino County. In some matters, the U.S. Attorney’s Office has wrested from district attorney Mike Ramos prosecutorial authority or has opened with the FBI parallel investigations into issues Ramos or the San Bernardino County Grand Jury have delved into without reaching a successful conclusion. In at least three matters, federal prosecutors and investigators have taken on probes or investigations of elected officials or political donors with whom Ramos was politically aligned.

In total, five matters in which current or former elected officials are alleged or suspected to have engaged in bribery or some other form of wrongdoing are being prosecuted by the U.S. Attorney or being reviewed for their prosecutorial potential by the FBI.

The U.S. Attorney’s Office in February and March 2011 obtained from a federal grand jury indictments in the Upland corruption case, in which former mayor John Pomierski, his appointee to the Upland Housing Authority, John Hennes, and their associates Anthony Orlando Sanchez and Jason Roy Crebs have been charged with participation in a bribery and extortion scheme allegedly involving using Pomierski’s authority at City Hall to shake down businessman with permit applications pending before the city. Pomierski and Ramos were political allies. Ramos endorsed Pomierski in his successful runs for mayor in 2004 and 2008. In 2010, Pomierski endorsed Ramos in his run for reelection for district attorney. Two days after Ramos held back two challengers in the June 8, 2010 election, the FBI and IRS served search warrants at Pomierski’s home and at Upland City Hall, seizing documents and other evidence used to convince a federal grand jury in Los Angeles to indict him a little less than nine months later. Part of the formula Pomierski and Hennes were allegedly able to apply in extorting money from their victims was the claim that Pomierski functioned under an umbrella of protection provided by the district attorney’s office. And indeed, Pomierski had enjoyed an uncommon degree of tolerance from San Bernardino County’s highest law enforcement authority in perpetuating his alleged depredations. Despite widespread whisperings heard as early as 2006 that Pomierski was on the take, Ramos went out of his way to endorse him in his electoral effort against councilman Ray Musser in 2008.

In addition to accusations that Ramos deliberately obstructed justice in curtailing the investigative and prosecutorial processes from running their course with regard to his political ally Pomierski, there is further information to suggest that Ramos acted to prevent the wheels of justice from churning through several top county officials who had been accused of bastardizing the function of the county hospital, which is intended to provide care for the county’s indigent population. Located in Colton and known as Arrowhead Regional Medical Center, the county hospital has allegedly been exploited by current and former hospital officials for their own personal and financial benefit, as well as by elected officials, who used their position of authority over the hospital’s administrators to obtain free medical care.

As early as 2007, Ramos, his public integrity unit and the grand jury were informed of a circumstance which involved the city of Colton in a highly questionable acquisition of an eleven acre parcel from Retail Development Group, an outfit owned by Gary Schafer. The $3.65 million purchase was championed by then-Colton assistant city manager Mark Nuaimi, who justified the acquisition as a strategic move that would satisfy the U.S. Fish & Wildlife’s requirements that habitat for the endangered Delhi Sands Flower Loving fly be preserved, and thereby allow other development in the area to proceed. But the property Colton acquired from Schafer was not prime Delhi fly habitat. Nor did the city do an adequate appraisal of the property, as was legally required, and instead, Nuaimi substituted a $3.8 million offer on the property, which was of unsubstantiated provenance, as justification for the sum paid. It would later turn out that the property was coveted by Dr. Dev GnanaDev, Arrowhead Regional’s medical director, who was looking to have the city of Colton write down the cost of the property and sell it to him so he could house his own surgical group’s operations there.

Dr. GnanaDev, who in addition to being the medical director at Arrowhead Regional, owns and controls Arrowhead Regional Surgical Group, Inc., with which the county hospital has a $1.343 million annual contract for the provision of administrative, supervision, secretarial and directorship services for the hospital’s general surgery division, including the trauma, otolarynology, burn surgery, oral surgery, neurological surgery, plastic surgery, opthalmologic surgery and transplant surgery departments.

GnanaDev’s actions in his capacities as both medical director and provider of service to the hospital, like his involvement in the questionable land deal involving the city of Colton and Schafer, was widely perceived by doctors working at the hospital as improper, involving a conflict of interest they felt compromised the quality of medical care and patient safety at the institution. Like the land deal, that conflict became the subject of complaints to the district attorney’s office’s public integrity unit and the county grand jury.

According to doctors and other staff members at the hospital, Dr. GnanaDev not only wrote the contract for his own surgical group, he has his own medical billing company which he utilizes to divert large amounts of money from the operations at the institution into his own accounts. Some of those doctors maintain that GnanaDev improperly used his status as medical director and his domination of the man who is supposed to oversee his function for the county, Arrowhead Regional executive director Patrick Petre, to punish doctors who refuse to use his billing company by having those doctors’ contracts with the hospital terminated.

Doctors and other medical professionals allege that in his rush to enrich himself, GnanaDev compromised the quality of care, and his policies resulted in scores of lapses in professionalism and medicine jeopardizing the well being of the patients at the facility. On multiple occasions, that negligence and malpractice resulted in severe injury and death, they say.

A report consisting of a “stack” of 40 to 50 cases was prepared by several doctors at Arrowhead Regional and delivered to Petre, in which specific acts of medical malpractice involving the action of several doctors including those in the obstetrician unit and Dr Guillermo Valenzuela, the head of the ObGyn department, were alleged. Petre then turned the information over to Dr. GnanaDev, who, according to several doctors, attacked the doctors who had prepared the report. At least four of the cases involved patient deaths. After Petre took the matter no further, several of the doctors went to the district attorney’s office and the grand jury with the report.

Those doctors were frustrated in their quest, however, when the district attorney’s office and the grand jury, which is advised by a prosecutor from the district attorney’s office, took no action.

Doctors and other professionals at the hospital have pointed out that Dr. GnanaDev uses some of the proceeds from his business and work for lobbying and making sizeable contributions both directly and through others to members of the board of supervisors as a means of compromising them.

According to Arrowhead Regional personnel, high ranking county officials, including members of the board of supervisors and former county administrative officer Mark Uffer, who prior to being elevated to the senior administrative position in the county had served as the hospital director, received treatment at the hospital to which they should not have been entitled. Both Petre and GnanaDev facilitated this or allowed it to take place to ingratiate themselves with the county’s decision makers and benefit themselves and the institution, those doctors alleged.

According to those doctors, GnanaDev bent or broke hospital rules, protocol and the law when he provided free care to former supervisor Paul Biane, current board of supervisors chairwoman Josie Gonzales and Uffer and at least one other member of Uffer’s family. In addition, those doctors have alleged, GnanaDev instructed hospital personnel to generate no records with regard to this specialized treatment and no bills were sent. The treatment included MRIs and surgeries, the doctors said.

According to doctors, GnanaDev, who was president of the California Medical Association from October 2008 to October 2009, arranged to have Petre remove a clause from the contracts of full time physicians working at Arrowhead Regional which prohibited those doctors from working at other hospitals. While president of the California Medical Association, Dr. GnanaDev maintained his role as medical director and chief of surgery while spending no more than three to four days per month at the hospital, those doctors said. He delegated very few of his responsibilities to others, physicians reported, reducing oversight of the doctors working at Arrowhead Regional to a dangerously low level.

By allowing a large number of the physicians who were the heads of the various medical groups at Arrowhead Regional to work at other sites, doctors report, GnanaDev facilitated them in receiving hospital subsidy money directly. Those heads of the individual groups were then able to pay lesser-experienced physicians who work for them bottom dollar for their services, increasing the profitability of the head physicians, the doctors reported to the grand jury and district attorney, leading to an absence of physician presence and an absence of quality physicians at the county hospital. In this way, the doctors alleged, GnanaDev had shirked his responsibility as medical director to audit the work of the groups the hospital contracts with to ensure the hospital’s operating funds are properly dispersed and that the hospital was getting the quality of care taxpayers were paying for. This has led to a situation at Arrowhead Regional, the doctors alleged, where it is common for respiratory therapists, nurses, and other personnel to function like physicians throughout the hospital, practicing, on a daily basis medicine without a license. In some cases, the doctors charged, the unlicensed staff members were teaching the student and resident physicians how to take care of patients.

It was also alleged that Dr. GnanaDev allowed the doctors employed by his surgical group to monopolize most of Arrowhead Regional’s 19 operating suites, such that a large backlog of orthopedic and urology patients developed, so they had to wait months for their surgeries. This led to the state citing the hospital for the backlog of orthopedic patients awaiting surgery.

Doctors who complained to the district attorney and grand jury about GnanaDev were also critical of his policy of accepting all trauma patients even though Arrowhead is not equipped to handle pediatric and major chest trauma. Doctors said they had witnessed incidents in which Dr. GnanaDev, who is recognized as a surgeon of considerable skill, perform surgeries on children less than two years of age using adult laparoscopic equipment and on other occasions using adult equipment on very small children. Doctors said that GnanaDev resisted transferring pediatric patients to other hospitals that were better equipped to operate on them because he was seeking to enhance the earnings of his own surgical group. Having pediatric patients in Arrowhead Regional’s intensive care unit in many cases resulted in injury or damage to patients through improper management and improper care, doctors reported, and in some cases children with severe brain injuries or other trauma who were improperly treated at Arrowhead died.

Between 2004 and 2010, at least 95 complaints pertaining to Arrowhead Regional were filed with state regulators, of which 28 were determined to be substantiated.

Jorge Valencia, the official spokesperson for Arrowhead Regional, said attacks on Dr. GnanaDev alleging he puts profit above safety, utilizes equipment that is not suitable for the operations he or others are performing or does not adhere to professional medical standards are unfounded. Reports that GnanaDev is involved in any form of conflict of interest or being investigated along those lines is also inaccurate, Valencia asserted. Valencia further denied any relationship between Arrowhead Regional and GnanaDev’s billing company. And though Valencia did not dispute that a number of deaths had occurred at the county hospital, he insisted that “concerns regarding patient care are handled by the medical staff through the peer review process. He said that the review was “comprehensive” and “governed by the bylaws of the medical staff and various other rules and regulations.”

But in the perception of many of the medical professionals working under GnanaDev, there had been inexcusable deviations from medical standards driven by the profit motive that had resulted in deaths and injuries and crossed the line into criminal conduct.

It is believed by at least some of those knowledgeable about the situation that Ramos was reluctant to act with regard to these issues because one of those implicated in the scandal at Arrowhead Regional is supervisor Josie Gonzales, a key Ramos supporter on the board of supervisors.

In the late winter of 2010, after the San Bernardino County district attorney’s office had failed to take action on the matter, doctors approached the FBI, passing along much of the same information to the federal agents that had been provided to the district attorney’s office and the grand jury. On November 4, 2010, a team of FBI agents, armed with search warrants, swooped down upon the county hospital, seizing documents relating to its operation and GnanaDev’s role in overseeing the 456-bed facility, in particular.

As of this week, no charges have been filed in that matter.

In November 2006, after litigation between the Rancho Cucamonga-based development company Colonies Partners and the county over flood control issues at the company’s Colonies at San Antonio development in Upland had dragged on for four years, a three member majority of the board of supervisors – then supervisors Bill Postmus and Paul Biane and supervisor Gary Ovitt – voted to settle the case by conferring a $102 million payment on the company.

More than three years later, in February 2010, the district attorney’s office joined with the California attorney general’s office in obtaining an indictment against Postmus and his one-time political associate, Jim Erwin, which alleged a criminal conspiracy involving an effort by Colonies Partners’ managing principals Jeff Burum and Dan Richards to first extort Postmus and Biane, and then bribe them to obtain the settlement. Prosecutors alleged that Ovitt’s chief of staff, Mark Kirk, was also bribed. While Postmus and Erwin were criminally charged, Burum, Richards, Kirk, Biane and the Colonies Partners’ public relations consultant, Patrick O’Reilly, were identified as unnamed and unindicted co-conspirators.

In May of this year, less than two months after Postmus pleaded guilty as charged and then testified in April and early May along with 44 others before a specially-impaneled grand jury, Burum, Kirk, and Biane were indicted, along with Erwin, who was reindicted. That indictment alleged that separate $100,000 contributions Burum and Richards made in 2007 to each of three political action committees founded, controlled or secretly controlled by Erwin, Biane and Kirk were bribes, and two $50,000 contributions made to political action committees controlled by Postmus also constituted bribes made in return for the settlement vote. Burum, according to the indictment, had served as an aider and abettor in the delivery of the bribes.

At once, the timing of the indictments fell under question. The original case against Postmus and Erwin had not been filed for more than three years after the November 2006 vote. And the superseding indictment came nearly four-and-a-half years after the vote. A major technical legal issue in the case was the elapsing of the statute of limitations, an issue seized upon by the lawyer for Burum, former U.S. District Court Judge Stephen Larson, who pointed out in court papers that “the prosecution is improperly attempting to charge Mr. Burum under conspiracy and aider and abettor theories because the statute of limitations had run on direct charges of bribery,” which Larson pointed out, “if timely brought would not have been precluded under the allegations of this indictment.”

Thus, the more than four-year delay in obtaining the indictment against Burum appeared to be a trap door built into the charges that in time will bring about the collapse of the case.

While the district attorney’s office’s temporizing appeared inexplicable to many, an examination of Ramos’s campaign financing records provided a possible explanation of the delay which appeared to be a fatal flaw in the case. Burum, over the first six years Ramos was district attorney, was a major contributor to Ramos’s electioneering fund. On May 14, 2003, a little more than four months after Ramos became district attorney, one of Burum’s companies, Jeffrey Burum Enterprises, provided Ramos with a relatively modest $1,500. On September 10, 2003, Burum provided Ramos with another $1,000. On November 22, 2005, another of Burum’s companies, Diversified Pacific, donated $10,000 to Ramos’s political war chest. On July 13, 2007, Diversified Pacific endowed Ramos’s campaign fund with another $5,000. On May 27, 2008, Diversified Pacific provided Ramos with $7,000.

In addition, over the last eight years, the Colonies partners and Burum donated over $400,000 to the political action committee controlled by SEBA, the San Bernardino County Safety Employees Benefit Association, which serves as the union for San Bernardino County’s sheriff’s deputies and district attorney’s office investigators. In 2010, the SEBA PAC gave Ramos $42,947.41 toward his election effort that year.

Unwilling to simply allow Ramos’s office and the state attorney general to usher what was increasingly viewed as a flawed case through state courts, the U.S. Attorney’s Office in September obtained search warrants that targeted the offices and/or homes of Burum, Kirk, Biane, Erwin, and O’Reilly, as well as the home and office of former state assemblyman and state senator Jim Brulte, a Colonies Partners consultant whose aggressive lobbying of Postmus and Biane and other county officials in an effort to obtain the settlement had been overlooked by Ramos’s investigators. Those warrants were served on September 15, signaling that federal authorities are now second guessing the district attorney’s office and the state attorney general’s office with regard to the Colonies settlement case.

In Victorville, a series of actions widely characterized as mis- or malfeasance by public officials has garnered the attention of citizens for some time. In response to citizen complaints, the 2009-10 first took up a probe of that city’s handling of its finances, along with the mismanagement of an effort to build an electrical generating plant, the misapplication of sequestered project funds, securities fraud, and improprieties with regard to a foreign investment program. When the 2009-10 grand jury concluded its session without taking any action with regard to Victorville or delivering a report about its investigation, the 2010-11 grand jury took that matter up where its predecessor had left off. But at the conclusion of its term on June 30 of this year, the 2010-11 grand jury had not come to closure on any of the Victorville issues. Likewise, the district attorney’s public integrity unit, which had also been vectored into Victorville to look at the situation there, took no action. On October 31, 2011, Ted Burgnon, the foreman of the 2011-12 San Bernardino County Grand Jury, in writing informed Victorville city officials the current grand jury is extending the two-year running probe into city finances and actions.

Well before Burgnon’s announcement, however, it was known around Victorville City Hall that federal officials have taken an interest in reports of violations of the public trust that have allegedly occurred within its confines.
Victorville delayed for two years an audit pertaining to its 2007 operations, leading to suggestions that city officials were seeking to hide information that was embarrassing, incriminating or both. Upon release, that audit showed the city had mounting financial problems. Another audit, completed by the firm of Mayer Hoffman McCann and released in March of this year, indicated those problems had worsened, and its authors expressed “substantial doubt about the city’s ability to continue as a going concern.” According to Mayer Hoffman McCann, it uncovered tens of millions of dollars in internal loans that were never approved, three funds that were $180 million in the hole and dwindling cash reserves.

As of March 2011, Victorville’s utility fund was $78 million upside down, while cash in the water district had dropped from $15 million in 2009 to $8 million as of June 30, 2010 despite a $20 million loan made to the district from the Southern California Logistics Airport Authority, the entity that oversees the effort to convert the former George Air Force Base into a civilian airport.

City officials have now reluctantly acknowledged that Victorville has lost an amount approaching $200 million on two abandoned power plants, an outgrowth of the city’s effort to create an electrical utility division, the Victorville Municipal Power Authority.

The Foxborough power station, which the city initiated in 2004 as what was supposed to be a $22 million, 14-megawatt electrical generating plant that would bypass the state power grid to provide affordable energy to industrial users and thus attract employers to the city and spur economic growth, has cost the city a whopping $126 million without being completed. Mismanagement of the project came in multiple stages, first at the hands of community services director Richard Bunnell; then deputy city manager Doug Robertson; followed by Wayne Campbell, who was hired as the plant manager in 2005; and then Glen Casanova, who was hired to replace Campbell as municipal utilities director in 2007.

By October 2006 the price tag for the project had escalated to over $54 million.

Construction delays and changes in state law that mandated that at least 20 percent of all energy produced in California by 2010 come from renewable sources resulted in the city jettisoning earlier plans for gas-fired combustion turbines, the pricey components for which were already purchased, and substituting in even more costly generators capable of running on biodiesel. The unused original equipment had to be sold at a substantial loss.

In addition to the initial and then follow-on equipment acquisition and construction costs, the utility division in 2005 incurred an operating deficit for the plant of $4.5 million. That hemorrhaging of red ink increased each year thereafter such that it had reached an annual operating deficit of $8 million by fiscal 2007-08. By 2007, the city began borrowing from its general fund to shore up the project. The city council, as quietly as it could get away with, issued $90 million in bonds to cover the entire cost of Foxborough. By May 2008, all of the bond money had been eaten up by the Foxborough power plant project and another $5 million beyond that was consumed, bringing the total cost on the facility to $95 million even before the facility’s permanent turbines had begun to generate electricity. At that point the city abandoned its initial intention of having the plant bypass the state power grid and avoid the imposition of a ten percent energy delivery fee being tacked onto the price of the power. Instead, the project was then scheduled to be hooked up to the state power system, canceling in the process the delivery of low cost energy, which had been the justification for the project in the first place.

Seven years after the project was undertaken, the city has failed to see that project through to fruition and the city council abandoned it altogether, after having sunk $126 million into the project.

The city is currently in default on an $83 million bond for Foxborough.

The city was simultaneously pursuing the development of another, much larger power plant, dubbed Victorville 2. The city was assisted in developing that plant by Newport Beach-based Inland Energy, which had successfully developed the 830-megawatt High Desert Power Plant with Baltimore-based Constellation Energy Group a decade ago. The High Desert Power Plant is now referred to as Victorville 1. Inland Energy had also served as a consultant with regard to the development of the Foxborough plant.

In November 2007 the Victorville city council authorized a $173 million purchase of natural gas-fired turbines from General Electric for the 563-megawatt Victorville 2 plant.

The city, which owed $126 million to General Electric for equipment for the Victorville 2 power project, fell into arrears on its payments to General Electric and in May 2010, simply surrendered a $50 million deposit it had made with the company for components. The Victorville 2 project was originally scheduled to include a 513-megawatt natural gas-fired generating plant on 133 acres coupled with an adjohining 250-acre solar power field capable of producing 50 megawatts of electricity. The solar component of the project has since been entirely abandoned and the remainder of Victorville 2 shelved, although in recent months some discussion has taken place between the city and Massachusetts-based QGEN about that company taking on the completion of the project.

Robertson has since been promoted to Victorville city manager.

In the summer of 2010, the Securities and Exchange Commission opened an investigation focusing on Victorville’s issuance of bonds and how that bond funding was spent. In May of 2010, the board of supervisors acceded to a grand jury request that the county retain the forensic auditing firm of Kessler International to review the city’s finances. The board did so, authorizing $195,000 for that audit. Kessler has not said whether the audit is yet concluded.

In making his announcement on October 31, grand jury foreman Burgnon indicated the grand jury has retained the independent San Francisco-based auditing firm of Harvey M. Rose Associates to go over both the city’s books and those of the Victor Valley Economic Development Authority, a joint powers authority involving the county, Victorville, Apple Valley, Hesperia and Adelanto which is involved in the provision of infrastructure to support Southern California Logistics Airport. It is not clear to what extent the ground covered by Kessler will be revisited by Harvey M. Rose.

It is known is that more than $80 million of the $300 million in outstanding bonds floated specifically for airport operations actually funded city of Victorville operations or projects off Southern California Logistics Airport property, including $1.8 million utilized to acquire land for a city library. According to Mayer Hoffman McCann, at least $21.8 million was not spent in accordance with the bond covenants. Other airport money was used toward work on the Victorville 2 power plant. The city also loaned $20 million in 2007 airport bond proceeds to the water district to help build a wastewater treatment plant. Those expenditures were made without informing or getting the consent of the bonds’ insurer, Radian.

The Southern California Logistics Airport Authority (SCLAA) has accumulated debt of $102 million, twice the burden it had in 2009-10.

Mayer Hoffman McCann reported that Victorville officials have not properly documented and sought city council approval for the city’s numerous interfund loans. The city had nearly $90 million in outstanding interfund loans as of last June. But only $30 million in loans had been formally approved by the council, according to the audit report.

Another issue dogging Victorville is its now-dormant EB-5 program. The EB-5 program is a federal one that allows entities such as cities or redevelopment agencies to arrange for the provision of visas for foreigners who invest at least $500,000 in projects pre-qualified by the federal government. In April 2008, the city entered into a relationship with CMB Export, LLC to manage an EB-5 program for Victorville at and around Southern California Logistics Airport. The city, however, abrogated that contract in June 2008 and in December 2008 CMB filed a $33 million lawsuit against the city claiming breach of contract, fraud, unfair competition and business interference. CMB refiled the claim in February 2009, including charges of misrepresentation and fraud by former city manager Jon Roberts and former mayor Terry Caldwell.

In April 2010, the city settled that lawsuit with CMB for $200,000. The following month, however, the U.S. Citizenship and Immigration Service suspended Victorville’s EB-5 program, stating that city officials had misrepresented the projects to be funded by the investment program. It was the first time the federal government had moved to terminate an entity’s EB-5 authority.

The U.S. Attorney’s office, alarmed at the wholesale squandering of financial resources in Victorville’s municipal operations as well as blunders with regard to federal law governing securities and its foreign investment programs and further dismayed by the inability of the local district attorney’s office and grand jury to take action, leapt into the breach and has now assigned FBI agents to examine Victorville with a scrupulously mean eye.

On September 21, 2011 the FBI served as the lead agency in serving search warrants at the headquarters of the San Bernardino International Airport Authority [SBIAA] and the Inland Valley Development Authority [IVDA], the joint powers agencies involving the county and the cities of San Bernardino, Colton, Loma Linda and Highland in the conversion of the former Norton Air Force Base into a civilian airport and the redevelopment of the surrounding property. Warrants were also served at the offices of the San Bernardino Million Air Franchise; three hangars, including Hangar 763, where two companies affiliated with the airport’s contract developer, Scot Spencer, Norton Aircraft Maintenance Services and SBAM Technics, are located. According to the search warrants, the authorities were seeking information regarding suspected misuse of federal funds, bribery, mail fraud, wire fraud and conspiracy.

Of interest to investigators were Spencer; SBIAA executive director Donald L. Rogers, who has since resigned; assistant SBIAA executive director Michael Burrows; aviation director Bill Ingraham; former SBIAA and IVDA director and current SBIAA and IVDA consultant T. Milford Harrison; San Bernardino International Airport Authority counsel Tim Sabo; San Bernardino mayor and SBIAA and IVDA board member Pat Morris; county supervisor and SBIAA and IVDA board member Josie Gonzales.

Spencer entered into the agreement with SBIAA and the Inland Valley Development Authority to oversee what was supposed to be a $38 million renovation of the airport’s passenger terminal and a $7 million development of its concourse. Spencer undertook that appoinment amid confident predictions that upon completion of those assignments the airport would attract at least one passenger carrier and as many as a half dozen airlines. The cost of the passenger terminal and the concourse escalated to $142 million and the airport has yet to host any commercial airlines, although corporate jets and other private pilots have been landing at the Million Air corporate aviation facility, for which Spencer is the franchisee, since last year.

The cost overruns for the terminal project, the failure of San Bernardino Airport to attract commercial airlines and Spencer’s relationship with Rogers, Harrison and SBIAA and IVDA counsel Timothy Sabo have raised eyebrows and brought SBIAA and IVDA under increasingly critical scrutiny.

On June 30, the San Bernardino County 2010-11 Grand Jury delivered a report that questioned several elements of Spencer’s performance and that of Rogers, calling into question what was characterized as lax oversight of the airport’s operations and favorable treatment accorded Spencer with regard to leasing arrangements.

Spencer’s influence over operations at the airport, where several companies he owns are housed, is increasingly perceived as being in conflict with and counterproductive to the goal of bringing in aeronautics oriented companies interested in remaining at the airport for the long term. In some cases, Spencer’s pursuit of his own imperatives conflicted with the corporate aims of others companies functioning at the airport, resulting in those companies departing.

Spencer now owes the county more than $604,000 in unpaid taxes on property and equipment at the airport since 2005. The county had made no effective effort to collect on those unpaid taxes until three weeks after the September 21 FBI raid.

The FBI’s action at the airport was taken as yet another indication of federal prosecutors’ lack of confidence in the San Bernardino County district attorney’s ability, willingness and resolve to aggressively act with regard to issues involving malfeasance on the part of local governmental officials.

At the San Bernardino County district attorney’s office, Ramos and other officials were reticent about what the federal government’s active interest in local political and public agency corruption cases signifies. “That sounds like a question for the FBI,” district attorney’s office spokesman Christopher Lee told the Sentinel. “We’re not going to speak about another agency’s handling of cases in our county.”

Lee said he could not say whether information churned up by the FBI will be used exclusively by the U.S. Attorney’s Office in any criminal cases it elects to pursue or whether the information might be provided to his office for potential prosecutions in state court.
“I don’t have that knowledge,” he said.

Memo claims city is violating worker agreements
December 01, 2011 8:47 AM
Brooke Edwards Staggs, City Editor

VICTORVILLE • The city continues to clash with employees of the water districts it absorbed in 2007, with workers looking to protect their health benefits while Victorville aims to cut costs.

Steve Borrowman, who used to work for the Victor Valley Water District but now serves as assistant director for the city’s water district, said in an internal memo that Victorville is not standing by agreements it made to some 49 retired and vested employees. The move has left Victorville open to litigation, the memo states, with a group of former VVWD and Baldy Mesa Water District workers still weighing their options.

However, Victorville City Manager Doug Robertson said the city has maintained benefits for retirees of the districts as required, in spite of the cost being nearly double what they had been told to expect.

When Victorville took over Victor Valley and Baldy Mesa water districts in 2007, agreements stated workers would continue to receive the same level of health benefits they had always had.

“During the transition, all water district employees were made city employees with the same benefits offered to all city employees,” Robertson said in an emailed response.

Benefits for all city employees have been reduced several times over the last few years, though, in light of Victorville’s financial struggles. Borrowman states those benefits are now “significantly lower” than what workers had through the independent water districts.

In April, Victorville offered to pay out-ofstate former employees $5,753 each if they agreed to waive their benefits. Former VVWD human resources director Amy Lyn De Zwat balked at the offer, saying it would only cover roughly a year’s worth of benefits.

“Three of four decided to take a buy out,” Robertson said Wednesday. “We found the fourth an out-of-state plan through our group insurance coverage.”

However, Borrowman’s memo states that offer wasn’t authorized by the water district’s board of directors and claims that it violated the agreedupon resolution and federal accounting laws.

Borrowman also raised concerns over the fact that Victorville hasn’t established an irrevocable trust to administer the benefits, setting aside money to make sure they’d be funded.

Though the former Victor Valley Water District board adopted a resolution to set aside $5 million for retirement health benefits, Robertson said the completed actuarial estimated that liability to be approximately $9.8 million — and that Victorville’s City Council never agreed to set those funds aside.

Robertson said federal accounting laws only require that cities recognize future liabilities, not that they fund them up front. He said Victorville is currently covering all future liabilities on an annual basis, with benefits being paid to 22 existing retirees as promised.

Borrowman had filed a complaint against the city in August 2010, stating he’d been retaliated against for notifying authorities about potential fraud and other financial problems. However, no lawsuit has been filed in San Bernardino County, according to court records.

Get complete stories every day with the “exactly as printed” Daily Press E-edition, only $5 per month! Click here to try it free for 7 days. To subscribe to the Daily Press in print or online, call (760) 241-7755, 1-800-553-2006 or click here.

Friday, November 25, 2011 – 10:30 a.m.

Victorville can’t pay its debt service payments, while some of the city’s leaders want area voters to place them into higher office.

Laugh out loud!

The city is short $7 million for a debt payment due December 1. If the city can’t come up with the dough for the Southern California Logistics Airport bonds it will be in default.

The problem?

Victorville’s books are under scrutiny and the city can’t illegally shift money from other restricted accounts to cover the shortfall.

A method used by the city in the past.

Now the city is under scrutiny from the U.S. Securities and Exchange Commission, Federal Bureau of Investigation and the San Bernardino County Grand Jury.

The focus? City finances, and that of the Southern California Logistics Airport Authority.

Which brings us to the focus of the story.

Victorville Mayor Ryan McEachron and Council Member Angela Valles, both republicans, want a seat in Congress, in particular CD-8, and have announced their respective candidacies.

Valles is puzzling. She’s new to the council and has done a great job at standing up to the good ole boy network controlled by Orange County businessman William “Buck” Johns.

Johns owns Inland Energy. A company that will undoubtedly emerge in the story of the city’s financial collapse.

City officials have done everything possible to cut off Valles’ access to city staffers and documents.

The city needs Valles and she should stay where she’s at. There will be more opportunities for her later if she maintains her scruples.

McEachron, on the other hand, is a different story.

The mayor started off pretty much identical to Valles. He ran an anti-establishment campaign and won.

He did stand up to former Mayor Terry Caldwell and company for a brief time.

Then, whether it was due to pressure or something else, he aligned himself with Johns and the good ole boys and now he’s apart of the problem.

Being tagged in mail hit pieces as helping run Victorville into the ground is on the radar for both Valles and McEachron.

For McEachron it’s because he’s now a apart of the problem.

For Valles it’s simply because she’s there and trying to jump ship.

Both should think again.

November 23, 2011 6:17 PM
Brooke Edwards Staggs

VICTORVILLE • The city is $7.5 million short to make its annual debt payment due Dec. 1 — a shortfall that could trigger default and further downgrades on the already precarious bonds.

Victorville owes $10.6 million for eight Southern California Logistics Airport bonds, which date back to 2005 and carry some $330 million in outstanding balances.

With SCLA $101 million in the hole and tax revenues dwindling due to plummeting property values, the city in the past has relied on interfund borrowing to make the debt payment. However, this year redevelopment funds are frozen as the state works to dissolve those agencies.

The city had to deposit a year’s worth of payments into a trust account when it took out the bonds, Mayor Ryan McEachron said by phone Wednesday evening. And so those funds will be used to cover the shortfall until the city receives a scheduled tax increment distribution in March and is able to repay the trustee.

“Obviously this is going to be concerning to bondholders. There’s no way it shouldn’t be,” McEachron said. “It’s unfortunate but we’re going to work through it.”

Victorville quietly disclosed the shortfall to bondholders on its website Wednesday. Then staff was out of the office early for the Thanksgiving holiday, unavailable for comment until Monday.

McEachron said the City Council was advised by its attorneys not to comment further on the issue, with Victorville open to potential litigation from bondholders.

Get complete stories every day with the “exactly as printed” Daily Press E-edition, only $5 per month! Click here to try it free for 7 days. To subscribe to the Daily Press in print or online, call (760) 241-7755, 1-800-553-2006 or click here.

Brooke Edwards Staggs may be reached at (760) 955-5358 or at bedwards@VVDailyPress.com.

November 23, 2011 2:36 PM
Tomoya Shimura
Staff Writer

VICTORVILLE • A Victorville judge on Wednesday denied the California Attorney General’s attempt to prevent Prime Healthcare Services from helping keep bankrupt Victor Valley Community Hospital open.

Attorney General Kamala Harris filed a motion in Victorville Superior Court to impose a preliminary injunction against a $6 million financing and consulting agreement between VVCH and Prime. VVCH officials said loans from Prime will allow the hospital to stay open.

Harris claimed in a brief that the agreement was intended for the hospital to avoid her oversight and transfer its governance to Prime.

But Victorville Superior Court Judge Steve Malone dismissed her argument Wednesday, saying VVCH hired Prime as an independent contractor and its major decisions still require the hospital board’s approval.

VVCH, which filed for Chapter 11 bankruptcy, has been looking for a buyer since last year. Prime offered to buy the hospital for $35 million, but Harris denied the deal stating it’s “not in the public interest.”

Harris argued in the brief that the agreement would put two Victorville hospitals — Desert Valley Hospital and VVCH — under the control of Prime, which she claims has the practice of canceling HMO contracts. The AG further alleged that the loans from Prime will keep potential buyers away from VVCH.

However, Malone said the AG lacked evidence to prove such claims.

To read entire story, click here.

Members of Occupy Wall Street-inspired groups from throughout region will protest together today as Occupy Inland Empire for the first time in a rally in San Bernardino.

The group plans to march on sidewalks in front of City Hall and downtown banks in in what they call a “visibility action” from 9 a.m. to 2 p.m. near the intersection of Third and D streets.

The event also will be the first time “Occupy San Bernardino” is meeting as a group.

Participants locally and throughout the nation say they are unhappy about what they call corporate greed and want to bring attention to increasing poverty and wealth disparity in the nation. The movement began when protesters began meeting in New York City several weeks ago as part of Occupy Wall Street.

“This Saturday will be our first general assembly meeting,” said Hector Guzman, a San Bernardino Valley College student who helps maintain the new Occupy San Bernardino Facebook page. “San Bernardino needs the support of all from the Inland Empire because it has been (economically) hit the hardest in all the nation. That’s why we feel San Bernardino is a very important place to launch the first action for Occupy Inland Empire.”

Members of Occupy groups in Fontana, Redlands, Riverside, Victorville, and Rialto recently agreed at a meeting in Riverside last Sunday to meet as a consolidated Occupy Inland Empire group for events as a way to help bring greater awareness for their cause.

Tommy Purvis of Occupy Fontana will be attending the San Bernardino event.

“I’m very optimistic about it because, for the first time, I know the Inland Empire is working beyond County lines and Congressional District lines,” Purvis said. “We’ve been divided in the past, but we’re coming together now.”

In addition to the formation of Occupy San Bernardino, Occupy Rialto also met for the first time in recent days. Jesse Beruman, also a student at San Bernardino Valley College, is with Occupy Rialto, which plans to participate in today’s Occupy Inland Empire, as well as a joint meeting with Occupy Fontana on the corner of Sierra and Seville avenues at noon on Sunday.

To read entire story, click here.

City expects decision on appeal of EB-5 termination Dec. 2
November 07, 2011 7:23 PM
Brooke Edwards Staggs
City Editor

VICTORVILLE • A judge has agreed to pause Victorville’s lawsuit against the federal government, waiting to see if the city first succeeds in overturning the termination of its EB-5 visa investor program through an administrative appeals process.

U.S. Citizenship and Immigration Services approved Victorville’s EB-5 regional center in 2009, allowing the city to solicit loans from foreign citizens in exchange for green cards, so long as the loans helped create 10 local jobs. Then, in a precedent-setting move, USCIS terminated Victorville’s program in October 2010 due to “material factual discrepancies” in related financial reports.

Victorville expects to hear back Dec. 2 from USCIS’ Administrative Appeals Office, but appears ready to move forward with suing the federal agency if the termination is upheld.

“What we care most about is keeping the regional center and being able to use it at a future date for some future project,” Mayor Ryan McEachron said Monday.

The city built its wastewater treatment plant primarily using interfund loans, pledging to pay them back in part with EB-5 funds. McEachron said they’ve accepted that’s not going to happen in light of the termination, with all $9.5 million in loans Victorville had collected now refunded to investors.

Now the city is hedging its bets on plans to sell the plant to the regional Victor Valley Wastewater Treatment Authority. So far, that deal has stalled based on a substantial gap between what the city wants to get for the plant and what VVWRA is willing to pay.

Still, Victorville wants to use EB-5 funds for future projects at Southern California Logistics Airport. And so a split City Council voted in June to sue the federal government over the program’s termination.

For more about the city’s battle with USCIS, read the full story in Tuesday’s Daily Press. Get complete stories every day with the “exactly as printed” Daily Press E-edition, only $5 per month! Click here to try it free for 7 days. To subscribe to the Daily Press in print or online, call (760) 241-7755, 1-800-553-2006 or click here.

Brooke Edwards Staggs may be reached at (760) 955-5358 or at BEdwards@VVDailyPress.com.

RIVERSIDE – After nearly an hour and a half of group discussion in the human microphone fashion, members of several Occupy Wall Street movements in the Inland Empire raised their hands, wiggled their fingers and a consensus was reached – a committee will be formed to propose future activities bringing all their movements together.

The group, which included members from movements in Riverside, Redlands, Fontana and Victorville, met in downtown Riverside on Sunday to hold their first general assembly representing all of the Occupy movements throughout the region.

“I think when we first formulated the meeting it was more of just an exploratory meeting and it’s actually gotten more done than that even,” said Sean McDuffee, one of the founders of the Occupy Redlands movement. “I think the goal was to explore and to see the intentions that the other occupies had in combining resources and efforts.”

The committee will propose ideas for group demonstrations or protests at each movement’s general assemblies.

“I suppose if I was going to speculate, and this is purely speculation – I think what we’re looking at is a centralized occupy zone or location and individual occupies to continue to function with their own demonstrations or protests,” McDuffee said.

The joint meeting also served to help facilitate newly forming Occupy movements, including, Colton, Ontario and San Bernardino.

“So if we have this centralized core of ideas that we can exchange through all of them and support each other that way,” McDuffee said.

The meeting was facilitated by Adam Webster of Ontario, who has been involved with the Riverside movement, which officially started Oct. 15 in downtown.

The impact of the movement has been mixed so far, he said.

To read entire story, click here.

San Francisco auditor to investigate
November 01, 2011 5:45 PM
Brooke Edwards Staggs
Timeline of grand jury investigation:

VICTORVILLE • The new grand jury has picked up a probe into Victorville spanning more than two years, hiring an independent firm to audit the city’s operations, accounts and records.

San Francisco-based Harvey M. Rose Associates will also review records for the Victor Valley Economic Development Authority, a regional redevelopment group that’s been headed by Victorville for 20 years — with controversy during the last two.

Victorville received the news Monday in a letter from Edward Burgnon, foreman of the 2011-12 San Bernardino County Grand Jury. It’s the first indication the city has had that the current watchdog group plans to continue an investigation into city finances and practices first launched by the 2009-10 grand jury.

Burgnon said the new audit is intended to “complement” a year-long forensic review of city books conducted by New York-based Kessler International.

“Inasmuch as the investigation was never concluded we are hopeful the work to be done by Harvey M. Rose Associates, LLC and the 2011-2012 San Bernardino County Grand Jury will finally conclude this investigation with a public report,” the city said in a statement released Tuesday afternoon. “The city and its employees stand ready to fully participate and assist in any way in the completion of this investigation.”

To read more about the investigation, see the full story in Wednesday’s Daily Press. Get complete stories every day with the “exactly as printed” Daily Press E-edition, only $5 per month! Click here to try it free for 7 days. To subscribe to the Daily Press in print or online, call (760) 241-7755, 1-800-553-2006 or click here.

October 31, 2011 4:24 PM
DOUG SAUNDERS

VICTORVILLE • Victor Valley Community Hospital won a reprieve Monday when a judge rejected the state Attorney General’s attempt to block a stopgap financing plan that would keep the bankrupt hospital running, at least in the short term.

San Bernardino County Superior Court Judge Steve Malone denied the state Attorney General’s attempt to halt a $6 million financing and consulting agreement between Victor Valley hospital and Prime Healthcare Services. The two sides are set to return to Malone’s court Nov. 22 to debate a permanent order.

Also on Monday, U.S. Bankruptcy Judge Catherine Bauer approved the same financing and consulting plan that the hospital filed to save VVCH from being forced to close its doors.

“It is a great day,” said Lovella Sullivan, Victor Valley hospital spokeswoman. “It’s a very good thing not only for the hospital, but for the community as well.”

In 2010, Victor Valley Community Hospital filed for Chapter 11 bankruptcy protection from the more than $20 million of debt owed. On Oct. 20 Bauer approved the offer that the state attorney general’s office sought to end in Judge Malone’s courtroom Monday.

“The Attorney General’s office hasn’t come up with sufficient proof that shows a temporary restraining order is warranted in this case,” said Malone.

Monday, October 31, 2011 – 03:30 p.m.

As predicted the U.S. Department of Justice has a task force examining the financial situation of Victorville, California.

The Daily Press, in a late morning story, is reporting the existence of a Joint Task Force involving at least the Federal Bureau of Investigation (FBI), the U.S. Securities and Exchange Commission (SEC) and the San Bernardino County Grand Jury.

The article also says the focus extends as far back as former city manager Jon Roberts.

Expect the examination of Roberts to spread to former Mayor Terry Caldwell, who abruptly decided to not seek reelection last year, and William “Buck” Johns, chief executive officer of Newport Beach-based Inland Energy.

Johns has been enjoying the cover and counsel of Tustin-based political consultant David Ellis.

Ellis, who operates under the name Delta Partners LLC, is a close friend and political advisor to San Bernardino County District Attorney Michael A. Ramos.

The Victorville nows joins other FBI probes of San Bernardino County, San Bernardino International Airport, Arrowhead Regional Medical Center and the City of Upland.

Developing…

Attorney general nixes option to keep hospital open
October 29, 2011 9:15 PM
Don Holland, Editor

VICTORVILLE • The state Attorney General’s office is seeking to block a stop-gap financing plan for beleaguered Victor Valley Community Hospital — a move hospital officials say puts 500 local jobs on the line and more than one-third of hospital beds on the brink of closure.

Attorney General Kamala Harris filed a request Friday night for a temporary restraining order (click here to read the order and here to read the complaint) to prevent the hospital from moving forward with a financing plan and consulting agreement by Prime Healthcare Services to help VVCH remain open.

Hospital officials have said they are running out of money and Prime’s offer is the only viable option currently on the table.

On Oct. 20, U.S. Bankruptcy Judge Catherine Bauer tentatively approved the same offer the state is now trying to halt. Several federal health-care agencies have likewise backed Prime’s plan to provide temporary financing to keep the hospital afloat. Prime would also serve as a management consultant but would have no ownership or management role.

VVCH CEO Catherine Pelley said Saturday the hospital doesn’t have enough money to stay open past Thanksgiving and the state is trying to block the only remaining option to keep the hospital open.

“We’ve reached the point where it really is critical because if something doesn’t happen here, the hospital is going to close,” Pelley said. “And that would be tragic.”

With the federal bankruptcy judge and several federal agencies supporting Prime’s stop-gap offer, the reason for the state’s opposition remains unclear. The attorney general has not explained her opposition to VVCH, Pelley said. And when the federal bankruptcy judge asked the attorney general to explain her opposition, a state attorney declined, Pelley said.

The hospital has previously received financing from Prime — without objection from the attorney general. Pelley added that nothing in the law requires state approval for such temporary financing plans.

Officials with the state Attorney General’s office were not available for comment Saturday.

In her campaign for attorney general last year, Harris received the endorsement and substantial political contributions from the Service Employees International Union. SEIU has tried to unionize Prime Healthcare facilities. The union has also lobbied government agencies to pressure Prime and has pitched anti-Prime Healthcare stories to the news media.

“I don’t understand how our 101-bed hospital in Victorville, Calif., has become such a political hotbed,” Pelley said. “Because it does seem like it’s all politics.”

VVCH is one of only three hospitals in the Victor Valley. If it does close, Pelley said, the effects will be felt across the High Desert.

“Where are those folks going to go?” Pelley asked. “Where are you and I going to go in January when the two hospitals that might be left are full, the emergency rooms are packed to the gills and the only choice is to go down the hill?”

Don Holland may be reached at DHolland@VVDailyPress.com.

Get the complete story every day with the “exactly as printed” Daily Press E-edition, only $5 per month! Click here to try it free for 7 days. To subscribe to the Daily Press in print or online, call (760) 241-7755, 1-800-553-2006 or click here.

Valles

Victorville, Hesperia leaders make fourth, fifth to announce for new seat
October 24, 2011 2:46 PM
Beau Yarbrough
Staff Writer
Related stories:

A former mayor of Hesperia and a current member of the Victorville City Council are the fourth and fifth people to formally announce their candidacy for the newly created 8th District Congressional seat.

Bill Jensen, a former Hesperia City Councilman and current planning commissioner, announced in a High Desert Tea Party’s Tea Party News-Advocate email newsletter his intent to run.

Victorville City Councilwoman Angela Valles officially announced her intentions in a press release issued Sunday.

The pair joins former Democratic congressional candidate Jackie Conaway, Victorville Mayor Ryan McEachron and Gregg Imus, former chief of staff to Assemblyman Tim Donnelly, in declaring bids for the seat — though McEachron has said he will only run if the current High Desert congressman, Rep. Jerry Lewis, does not.

Lewis, R-Redlands, has not yet said if he intends to run for the 8th District Congressional seat. He could instead choose to run for the 31st District, where he lives, or step down from Congress after 17 terms.

“I’m in no matter what,” Valles said Monday. “I will not be the keeper of the status quo. I will stand up for the people. I will fight for them in D.C. … I came from nothing to where I am today, and I did it without anybody’s help, just hard work, and that’s what I believe in.”

Jensen said he think he’s the “No. 1 candidate,” citing both his experience with the local Tea Party organization, his work in real estate and his past military experience. The only candidate who might dissuade him is Lewis, should he choose to run in the 8th district rather than the more Democratic-leaning 31st.

“Jerry’s obviously a formidable opponent,” Jensen said. “How do you run against someone who’s got $2 million in his war chest?”

San Bernardino County 1st District Supervisor Brad Mitzelfelt and Assemblyman Paul Cook, R-Yucca Valley, have both also said they would run for the 8th District if Lewis does not.

Lewis is no stranger to districts changing beneath him, having previously served in the 40th, 35th and 37th districts. His current district, the 41st, had its boundaries redrawn earlier this year.

Beau Yarbrough may be reached at (760) 956-7108 or at beau@HesperiaStar.com. Follow us on Facebook at Facebook.com/Hesperia.Star.

Get the complete story every day with the “exactly as printed” Daily Press E-edition, only $5 per month! Click here to try it free for 7 days. To subscribe to the Daily Press in print or online, call (760) 241-7755, 1-800-553-2006 or click here.

RIVERSIDE • A federal bankruptcy court judge has agreed to allow Prime Healthcare Services to provide financial assistance to Victor Valley Community Hospital, which has been on the brink of shutting down amid dire financial straits.

CEO Catherine Pelley of VVCH said last month the hospital was expected to run out of cash no later than Nov. 24. She had said if the hospital didn’t find a buyer by Thanksgiving, it would have to shut down.

U.S. District Judge Catherine Bauer’s interim order on Thursday means the hospital won’t run out of money by that estimated deadline. Prime used to be the debtor in possession of VVCH before KPC Global outbid Prime in a November auction.

“Prime will be giving us the funding so that we can continue doing what we do while searching for the next step,” VVCH spokeswoman Lovella Sullivan said.

The Riverside judge’s order enables Prime to provide debtor-in-possession financing and operational consulting services under the direction of the VVCH Board of Directors. The final order is expected to be issued Oct. 31 and take effect Nov. 1, the hospital said in a statement Friday.

The judge had approved Prime’s purchase of VVCH in July, but California Attorney General Kamala Harris denied the deal last month.

“The Attorney General’s decision to deny the sale of VVCH to Prime Healthcare Services Foundation placed the hospital in a dire situation,” the hospital stated. “From that moment, all available options to keep the hospital open were focused upon and Prime Healthcare Services was the answer. … This is good news for the hospital, all of its constituents and the community.”

Sullivan said Friday she didn’t know about the possible options or potential offers the board is considering.

For more about VVCH, read the full story in Saturday’s Daily Press. Get the complete story every day with the “exactly as printed” Daily Press E-edition, only $5 per month! Click here to try it free for 7 days. To subscribe to the Daily Press in print or online, call (760) 241-7755, 1-800-553-2006 or click here.

Tomoya Shimura may be reached at (760) 955-5368 or TShimura@VVDailyPress.com. Follow Tomoya on Facebook at facebook.com/ShimuraTomoya.