State controller orders audit of city of Montebello, saying there's evidence of false financial reports

The state controller took the unusual step Thursday of ordering an outside audit of the struggling city of Montebello, saying there is evidence the city produced false financial reports dating back several years.

The action, which marks the first time officials have launched a full city audit since examining wrongdoing in Bell last year, marks an ominous turn for Montebello, which is in danger of running out of money later this year.

The working-class city east of downtown L.A. has been mired in budget problems and allegations of mismanagement and missing money for months. Last week, the city manager brought in to clean up the mess abruptly resigned. Peter Cosentini warned councilmembers that former city officials for years had used accounting tricks to hide the true nature of the city’s financial picture, making it seem as though the city had more money than it actually did.

Montebello officials discovered more than $1 million in two off-the-book bank accounts. That prompted a probe by Los Angeles County prosecutors that is still ongoing. Last month, Montebello officials said they solved the mystery, claiming the money went to a local developer as part of a complex loan to build a restaurant in the city.

In a letter to Montebello announcing the audit, state Controller John Chiang said the city was out of compliance with state laws because it had not submitted annual audits and financial reports to the state. Chiang also cited comments made by several city officials to The Times and others that financial reports might be inaccurate and included false information.

“I have concluded that there is reason to believe that the Annual Report of Financial Transactions … [is] false, incomplete or incorrect,” Chiang wrote.

Montebello Councilwoman Christina Cortez, a critic of the city’s past financial dealings, said she welcomed the audit.

“It’s unfortunate that nobody in the city understood the severity and seriousness of all the illegal activities that have been going on,” she said. “I’m glad we are finally getting a third party to investigate.”

RELATED:

Montebello seeks 'missing' bank accounts

Montebello city manager abruptly resigns

Cash-strapped Montebello may have trouble paying employees, bills

-- Hector Becerra and Jessica Garrison

Photo: Councilwoman Christina Cortez at her Montebello home on Feb. 18, 2011. Credit: Anne Cusack / Los Angeles Times

Comments

[jack johnson]

Go Johnny Go

[Re-Lax]

You're goin' down, Glasman!

[amiskuli]

Wow i say and people love big government... theres a great example.....

[bernie miller]

They may want to investigate Los Angeles one of these days.. You will find a whole lot...

[Joseph Taylor]

What about the City of L.A.? Please? Please? Start an investigation on L.A..

[JustSayin]

Now I know where Hank got the money to rebuild his restaurant for what, the seventh time or so?

[watchitgo]

Unincorporated areas always get on the bandwagon to become a "city". Little do they know the burden and costs of setting up a city with competent leaders and financial systems that can be monitored. New cities and old are finding that the best interests of the city and the residents take a backseat to lies, cheating, stealing and bankruptcy follows. It doesn't stop with the city level either, as our once incredible state is battling much of the same and so is our country. I am not saying all the public employees fall under this cloud, but it only takes a few to cause a downfall.

[Matt E]

Bell #2 ?

[solidarity]

How about our glorious city of Los Angeles and our joke of a mayor? "It’s unfortunate that nobody in the city understood the severity and seriousness of all the illegal activities that have been going on,” she said. “I’m glad we are finally getting a third party to investigate" referred to Montebello... how about L.A.?

[MR in MTB]

Can I just say...FINALLY!!! This along with other "shenanigans" have been going on for years and years in Montebello...it's about time for an investigation from top to bottom!

[pvtjoker]

Baldwin Park, your turn is coming!

[Michael Boyd]

I am truly shocked that the possibility of false records existing in the State of California unless this has been fueled by the Horn o' Plenty mentality.

That is, endless DOD contracts since WWI, world-class agriculture, entertainment (movies and/or music), tourism, and other means.

Got houses?

[Start with Attina]

There are 3 people involved in all of this - Hank Attina; Arnold Glasman and Bill Molinari. As developer, city attorney and mayor - these 3 have presided over the decline of Montebello for the past 25 years. Montebello was a beautiful suburb once, now it is a slum thanks to these 3 who have made themselves very rich by taking Montebello to the poor house.

Again - another Latino city in Gloria Molina's district thrown to hell by non-Latinos. How gullible can these Latino elected officials be?

[Dangermouse]

Where's his picture ?

[New to LA]

Is John Chiang the only person actually competent in Sacramento? He's like the male version of Elizabeth Warren.

California has a population greater than many nation states and yet, it seems to be run by people unqualified to be dog catcher. I'm sure Montebello, like Bell, is not the only fiefdom around.

[Ruthless]

What about Los Angeles.

[James Andrews]

The only answer is to vote for higher taxes. Government has already cut everything they can. Next they will lose their slush funds, or redevelopment funds, or insane pensions. etc...etc....etc...

[Ruthless]

Please do Los Angeles.

[outdoor guy]

Where was Chaing and Brown before the last election? They were responsible for the oversight of Bell, Montebello, LA community college bonds, unpaid loans to State employees, correction officer union ripoffs, and who knows what else. These guys aren't suddenly "doing their jobs" and responding to this corruption, they've been negligent for years covering up for the democratic party and their union supporters. Keep up the good work L.A. Times reporters, maybe someday the Times Editorial Board will read the paper and respond to whats really going on in this State.

[John Citizen]

The problems are just beginning. Now they are hiring an LAPD Captain castoff as Chief of Police who had the reputation for coming to work late or not at all. Good luck Montebello. You will need it.

[Tim]

I think lots of cities were cooking the books. It was "normal". Now that hard times are here cities are being caught. You know L.A is to. Im mean wall street is doing it, banks are doing, huge corporations are doing it. Its just apart of our system.

[Mateo]

Every city should have to post online their budgets & expenditures. I think if all schools would teach city management & how the city is run we would all know what is being done. & who does what.With these 'executive boards' & closed door sessions its hard to know what is really going on. The councilmans offices' all have slush funds that they can spend as they want....we should be able to see how its spent. But the process is so difficult to see what 'they' are doing.....and we all get blamed for 'well you voted them in' but we can't see what they are doing until its to late.

[Hank A Crook]

Nowhere to run Hank. You burned the little guys for the last time. Have a shot of Agave?

[Robert]

When is State Controller John Chiang going to audit LOS ANGELES???? We've been waiting. We all know about the abuse of tax payer dollars and it continues. What do we have to do to bring it to his attention?? Just look at CRA millions being hidden and transferred so Gov. Brown doesn't get at it.