Solar project developer lined pockets with public dollars, City of Industry suit alleges

The company behind a failed solar project on Tres Hermanos Ranch was a “sham” set up to siphon public funds for personal use by its owners, a new lawsuit filed by the City of Industry alleges.

The litigation seeks to recover $20 million that the company, San Gabriel Valley Water and Power LLC, allegedly misappropriated under false pretenses, according to a complaint filed in the Los Angeles Superior Court. Industry claims SGVWP has refused to turn over proof showing that any work at all was performed.

SGVWP is hiding “evidence that taxpayers’ money was not used for studies, reports, analyses that were actually generated as required by the Lease, but instead simply lined the pockets of SGVWP’s members and its contractors,” wrote Jamie Casso, Industry’s city attorney, in the lawsuit.

Darcy Burke, the spokeswoman for SGVWP, did not return a request for comment.

The complaint alleges SGVWP, as well as members William Barkett, Robert Anselmo, Wade Hall and Anthony Barkett, defrauded the city, in violation of the False Claims Act, by submitting invoices for services that were either not performed or were completed at inflated prices.

Legal battles over project common

Industry entered into a lease agreement with SGVWP in May 2016. The two parties planned to build a 450-megawatt solar farm on a 2,500-acre ranch on the edges of Los Angeles, San Bernardino and Orange counties. Both Diamond Bar and Chino Hills, who have jurisdiction over the ranch land, opposed Industry’s efforts and the project never broke ground.

Industry’s council members eventually decided to back out and fired most of the city administrators responsible for the idea.

In a historic partnership, Diamond Bar, Chino Hills and Industry became joint owners of Tres Hermanos Ranch earlier this year, despite SGVWP’s protests.

The company recently sued, alleging the three-city partnership was brokered in secret in violation of California’s open-government laws.

After turning against the company, Industry attempted to force SGVWP to turn over its work through a legislative subpoena, a rarely used power that allows cities to demand the production of records related to city business. The company sued to block the subpoena. The case is still pending, though Industry is expected to rescind its legislative subpoenas, effectively making that litigation moot.

Instead, city officials will attempt to obtain the records through the latest lawsuit, which also alleges SVGWP breached its contract by not complying with the earlier document requests.

Questionable payments

Industry believes some of the solar project’s money was used to pay for advice and work performed on other projects SGVWP was pursuing.

The $20 million Industry lent to the LLC was intermingled with other funds, which were then used to pay for unrelated personal and business expenditures. A separate lawsuit filed against Barkett by his sister-in-law alleged he used money from the account to make payments on a $3.5 million debt to her family.

Several partially redacted entries in a ledger provided to the city indicated a total of $230,000 was “due to Wasco Investments LLC,” another company started by Barkett in 2004. Wasco proposed a Kern County shopping plaza that ended in a court battle, according to court records.

Hall, one of the principals at SGVWP, previously said the company did not need to segregate the city’s money.

“It is one of many accounts that does many things,” Hall said. “It is not an exclusive account for city funds.”

Some of the reimbursements were for work done by attorneys and consultants before the city entered into the lease agreement, the lawsuit alleges. Those and other payments were not within the scope of the lease agreement, according to Industry.

At least $2.1 million of the $20 million was supposedly paid to law firms, including a company offering “general corporate advice.” The lawsuit alleges SVGWP may be using the city’s own money to fight it in court.

Among the other questionable payments is $6,000 per month paid to Sonia Wolcott, Barkett’s long-time assistant. Invoices stated Wolcott provided services such as organizational filing, bookkeeping and tracking of permits. The project had no permits and had not requested any, Industry alleges.

Wolcott is an employee of Barkett’s separate investment firm, Merjan Financial.

“The City is informed and believes, and on that basis alleges, that SGVWP knowingly submitted invoices for the full amount of Wolcott’s salary while employed at Merjan, even though the majority of her duties and responsibilities were unrelated to the proposed solar project under the lease,” Casso wrote.

The company continued to send invoices to Industry even after the city terminated the lease in May 2018. The total due has grown to another $20 million, according to the lawsuit. SGVWP has argued that Industry did not have a right to terminate the lease and has attempted to persuade other cities, such as the City of Commerce, to step in and take over the project.