Money

An audit finds that former City of Industry Mayor Dave Perez and his relatives financially benefited from city contracts.

By Frank Shyong and Ruben Vives
April 27, 2015

A 20-year jackpot of City of Industry contracts that included $4.9 million for lawn mower rentals and street cleaning fees billed at six times a competitor’s rate has enriched a handful of companies owned by the tiny town’s former mayor and his family by more than $326 million, an audit has found.

The review of the city’s finances showed that Dave Perez and his relatives held sway over the City of Industry — population 400 — much as they would a mom-and-pop shop, except that the returns to the family’s bottom lines were corporate-sized, averaging about $16 million a year for the last two decades.

Completed this month, the audit comes 5 1/2 years after a Times investigation laid out the lucrative relationship between the Perez clan and City Hall. An inquiry by the district attorney’s office that began in 2009 was closed in 2011 without the filing of any charges.

A district attorney’s spokeswoman said there is no current inquiry underway.

Ordered by city officials sometime after Perez stepped down as mayor in 2012, the audit by the firm KPMG concluded that the outlays to the family companies were accompanied by invoices that lacked detailed descriptions, raising the question of whether the municipality was consistently overcharged for basic services.

The audit said “it is nearly impossible to determine with absolute certainty” that the billings were “reasonable, accurate and commensurate with the work performed.”

The money flowed from the annual revenue the city took in mostly from the 2,500 businesses that give the place its name. Among the audit’s findings:

The city paid one company, Zerep Management, $28 million for vehicle and equipment rentals over 11 years. That was enough to buy an entire fleet of the same vehicles “many times over,” the audit said. The rental of lawn mowers cost the city nearly $450,000 a year. And in at least one instance, Zerep (Perez spelled backward) charged the city a rental fee for a tractor the city owned, according to the audit. Speaking for the company, Perez’s nephew, also named David, said that never happened.

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