Montebello officials say they've solved one financial mystery
Montebello officials said they have solved at least one of the city’s myriad financial mysteries.
Several months ago, Peter Cosentini, Montebello’s departing interim city manager, dropped a bombshell: He wrote in a publicly released memo to council members that one of two “off the books” city bank accounts discovered in February might have been used to double pay developer Hank Attina $1 million he was awarded in 1999 to develop a restaurant.
On Thursday, officials released a report with supporting bank records to show that the bond proceeds used to fund the project had flowed from a trustee account through a series of investment accounts -- including the Union Bank account, which was not reflected on Montebello’s financial statements -- before going to Attina’s company only once in 2000.
The Union Bank account, which was one of the two mystery accounts discovered in February, was a money market account set up for the project.
The allegation of double payment appeared to have stemmed from an error in which an account number was entered on the wrong line while transferring the funds from the trustee account to another investment account. Because of the error, the funds were bounced back and sent again.
Interim City Administrators Larry Kosmont and David Biggs wrote in their report to the council that there had been “lapses of management” in the handling of the bank accounts and it was unclear why they had not been recorded in the city’s ledgers.
But the investigation concluded that “no funds were double paid, misappropriated or mismanaged.”
Former City Administrator Richard Torres, who opened the Union Bank account, could not be reached for comment Thursday.
Attina said he was relieved to have the investigation concluded and called Cosentini “irresponsible” and “reckless” for making his suspicions public before he had all the facts.
“This thing has been a nightmare for me,” he said. “You don’t sit there and blab somebody’s name until you know what the bottom line is.”
The question of what happened to the funds in the off-the-books accounts led the Los Angeles County district attorney’s office’s public integrity unit to open an inquiry.
The city has other issues to worry about. The state controller’s office is auditing Montebello; the FBI is investigating the city’s use of federal funds; and the new management team is scrambling to get a loan before the city runs out of cash in the fall.
-- Abby Sewell
Photo: Montebello Mayor Art Barajas holds up a copy of a report about a Union Bank account at a City Council meeting earlier this year. Credit: Gary Friedman / Los Angeles Times