More details emerge in $3-million DWP fraud case
The two Los Angeles city workers accused of defrauding the Department of Water and Power by inflating the cost of supplies and then pocketing the difference purchased furniture and other materials for the renovation of offices used by Mayor Antonio Villaraigosa's five-member DWP board, officials said Friday.
Over the last two years, the utility has obtained new furniture for executive offices on the 7th, 9th and 15th floors of DWP's downtown Los Angeles headquarters, as well as the room where the DWP commission holds its public meetings, said Joe Ramallo, a spokesman for the utility.
Ramallo said those purchases are among the transactions included in the felony fraud case against employees Akbar Fonooni, 55, and Anthony Carone, 49.
"It appears by our own review that furniture and materials purchased for use in the commission offices and board room was involved," he said.
Prosecutors allege that Fonooni and Carone engaged in a scheme over a six-year period in which they purchased at least $3 million worth of supplies for the DWP from dummy companies that marked up the cost by 10% or more. The two men, as well as a third defendant, Troy Mitchell Holt, 45, face felony charges of conspiracy, conflict of interest and misappropriation of public funds.
Although Ramallo did not have a cost estimate for the renovation of the DWP board room, prosecutors said the utility purchased $242,000 worth of furniture from March 2008 to November 2009 for various locations, including the executive floor of the DWP headquarters. Once the defendants marked up the cost of that furniture, the DWP wound up paying $399,000, said Seth Fogel, an investigator in Los Angeles County Dist. Atty. Steve Cooley's Public Integrity Division.
Adding to the intrigue, the invoices that were submitted to the DWP did not show furniture at all, but other kinds of equipment, Fogel said.
Among the purchases were 50 granite-top tables, which were bought by the DWP in May 2009. Investigators have found only one of the tables so far, Fogel said. "No one seems to really know where they are," he said.
The bill for those tables, originally valued at roughly $30,000, was charged to the DWP as roughly $40,000 worth of plumbing and fire protection equipment, Fogel said.
Fonooni and Carone made the purchases using roughly a dozen of the DWP's "P-cards," or purchasing cards, which had a monthly spending limit of $20,000. Because those cards did not allow a single expenditure to exceed $2,000, the defendants were forced to split purchase orders into smaller pieces, prosecutors said.
DWP officials said they already have responded to the district attorney's yearlong investigation by demanding more oversight of the utility's credit card purchases. Since search warrants were served at DWP offices in December, the agency has begun conducting random audits of purchases from its credit cards and requiring that purchases from the cards be reviewed by high-level managers, Ramallo said.
"The department is continuing its own internal investigation of this matter and earlier today requested the assistance of City Controller Wendy Greuel to conduct a full audit of the Purchasing Card program in order to identify additional improvements," Ramallo said in a statement.
-- David Zahniser at Los Angeles City Hall