Beaumont Staff Commit Fraud to Embezzle $5 Million From CFDs

City Manager Warne and Public Works Director/Engineer Amer Jakher Claim Fire Station, Recycled Water Facility, and TUMF Roads were Built.

2016-09-01c

Agenda City Council Meeting September 6, 2016

Item 01 – Repayment of $5,069,508.69 advance to the Wastewater enterprise Fund and Funding of City: http://www.ci.beaumont.ca.us/DocumentCenter/View/28276

Staff Report written by City Manager Richard Warne, and Marc Livinson and John Knox from the Law Firm of Orrick, Herrington, and Sutcliff

The City had acquired three (3) Sewer Bonds to build a Recycled Water Facility, the last of which was the 2001 Wastewater Bond for $9,790,000

Bond Trustee Union Bank also held the Letter of Credit for the 2001 Wastewater Bond. It was a Conflict of Interest for Union Bank to be the Trustee of a Bond for which they hold the letter of credit.

In December, 2014, Union Bank canceled their Letter of Credit, which forced the City pay off the 2001 Bond.

The City transferred money from the following District Bond Fund Accounts to pay off the Wastewater Bond:

1994AB $927,015.36

2004A $53,693.59

2004B $70,725.67

2004C $91,332.00

2004D $245,414.95

2005A $194,419.75

2005B $171,046.56

2005C $197,875.70

2006A $155.96

2006B $8,723.33

2007A $1,339,274.84

2007B $332,433.10

2007C $1,437,398.06

TOTAL $5,069,508.87

Although all of the Bonds are acquired by the same Beaumont Staff and Council; the Wastewater Bond was acquired by the ‘Utility Authority’ and the CFD Bonds were acquired by the ‘Community Facilities District’. These are two separate Agencies, which made the transfer of money out of the CFD District Bonds to pay the Authority Bond a Misappropriation of Funds.

Agenda Item 1 authorizes the transfer of $5 Million from the Wastewater Enterprise Fund, but instead of Repaying the CFDs the City wants to transfer the money to the City’s General Fund.

The Staff Report Contains the following incorrect Statements:

“.. to repay the advance to the Authority..”

The money belongs to the Community Facility District (CFD), not the Finance Authority. The procedure in Beaumont is that the Finance Authority purchased the bonds then sells them to the CFD District, which was a procedure created in order for the bond Profiteers to collect Fees twice for the same bond.

“… which is a lawful purpose of the Authority.”

No, it’s not. The ‘Finance Authority’ has nothing to do with the transaction; it was between the District and the Enterprise. The ‘Utility Authority’ has no say to the use of the CFD money.

“The City must determine that all of the facilities and improvements which were intended to the funded with the affected series of Bonds have in fact been completed. The Director of Public Works and the City Manager have surveyed these projects and have filed a certificate to that effect.”

The Director of Public Works and the City Manager have determined that the Facilities have been built?

Every Bond lists the Facilities to be built with the Bond Money.

1994AB 447 Houses in Area 1, Commercial Center in Area 2,571 Houses in Area 4, 1,167 houses in Area 5

2004A Westside Fire Station

2004B TUMF, Westside Fire Station

2004D Recycled Water System

2005B Recycled Water Facilities, Sewer Transmission and Treatment Facility

2006A TUMF, Sewage Treatment Facilities, Recycled Water Facilities

2006B TUMF, Regional Park, Sewage Treatment, Recycled Water

2007A Domestic Water, Wastewater Treatment

Fiscal Impact: Reduce Cash Balance of Water Enterprise Fund by $5,069,508.87, Reduce General Fund Deficit.

The Report also contains the Thirty-Second Supplemental Indenture of Trust between the Beaumont Financing Authority and MUFG Union Bank dated September 1, 2016.

“the Indenture may be modified or amended from time to time and at any time by an indenture or indentures supplemental thereto, without the consent of any Bond Owners, as to any modification or amendment does not materially adversely affect the interest of the Bond Owners”

This transaction will materially adversely affect the interest of the Bond Owners.

This transaction further demonstrates that the City Staff and Council are continuing to Forge Government Documents, Misappropriate Funds, and have no intention of every building Fire Stations, a Recycled Water Facility, or adequate Roadways, which is the proper use of the Funds and the only legal use of the Funds.

TO THIS DAY the City can not produce a List of Bond Owners which the City is required by State and Federal Law to maintain.

Memo from John Knox of the Law Firm of Orrick, Herrington, and Sutcliff

“Amounts in the Residual Accounts are generally available for any lawful purpose of the Authority assuming that the Bonds are fully services, but some of the Supplemental Indentures under which the Bonds were issued called for these amounts to be used for completion of the projects for which the Bonds were issued.”

“In order to accomplish these transactions, the following steps are required:

  1. “The City must determine that all of the facilities and improvements which were intended to [be] funded with the affected series of Bonds have in fact been completed.”

There is no Westside Fire Station, the City has never even purchased any land to build a Westside Fire Station or for the other two (2) needed Fire Stations.

There is no Recycled Water Facility. All the money was embezzled and the facility was never built, which makes the bond worthless, which is why Union Bank Called the Bond; to grab their money while they could.

There is no Regional Park. TO THIS DAY the City collects Regional Park Mitigation Fees that should allocated to the Beaumont-Cherry Valley Parks and Recreation District.

TUMF was transferred from the Bond Fund Accounts to the City and ‘Council Approved’ the money be used to pay for lawyers, consultants, parties, and parades. The City has until October 10, 2016 to formulate a plan to repay the Western Riverside Council of Governments over $60 Million.

“The Director of Pubic Works and the City Manager have surveyed these projects and have filed a certificate to that effect.”

Forging Government Documents is a State Felony. Forging Government Documents for the purpose of stealing Federal Municipal Bond Money is a Federal Felony.

The Document submitted by Public Works Director/Engineer Amer Jakher and City Manager Richard Warne is a forged Document. It is not possible that Jakher and Warne verified the completion of the Westside Fire Station because the Facility Does Not Exist.

It has already been proven in a Civil Court that the City Staff and Council stole the TUMF Money. The Riverside D.A.s Office has Indicted Six former Staff Members for Fraud and Embezzlement of the TUMF money.

Beaumont Staff and Council didn’t just steal the $42 Million from the County; they then spent the money instead of building the roads for which the money was allocated, effectively stealing it a second time from the Beaumont Taxpayers.