L.A. District Attorney’s Office Public Integrity Division Charges Palmdale Mayor, Two Consultants

The Los Angeles District Attorney’s Office announced last week that Palmdale Mayor Jim Ledford has been charged with illegally receiving more than $60,000 a year from local consultants Kimberly Anne Shaw and Susan Burgess Miller and failing to disclose the income on economic statements.[1] Ledford was charged with one count of conspiracy, one count of conflict of interest, and three counts of perjury. Shaw and Miller both face one count of conspiracy and one count each of embezzlement and misappropriation of public funds.

Shaw, of Yorba Linda, has been a consultant for the city of Palmdale for the past two decades. With the assistance of Miller, of Las Vegas, Shaw operated the AERO Institute, which receives more than $2 million annually from NASA. Miller ran Complex Culture Change Consulting and hired Ledford in 2009; over a four-year period, AERO Institute paid the consulting firm over $13,000. Prosecutors allege that Complex Consulting, among various shell companies, paid Ledford approximately $5,200 a month between August 1, 2009 and May 3, 2017 even though Ledford allegedly did not perform any substantive work for AERO Institute during that time period.

In January 2012, Palmdale City Council voted to increased Shaw’s consultant contract to an amount not to exceed $3.9 million over seven years. This increase was presumably due to the encouragement of Ledford, who failed to disclose he was indirectly receiving income from AERO Institute. AERO Institute has paid a $1 annual lease to the city of Palmdale since 2004.

Ledford is accused of not reporting the income he received from AERO Institute on his economic disclosure statements in 2015, 2016, and 2017. If convicted as charged, Ledford faces a possible maximum sentence of four years and eight months in state prison; Shaw and Miller face up to four years in prison.

Public Integrity Division

Deputy District Attorney Russell Moore of the Los Angeles District Attorney’s Office’s Public Integrity Division is prosecuting the case. The Public Integrity Division is responsible for investigating and prosecuting public officials and employees who commit crimes related to their official duties and for investigating and prosecuting violations of the Elections Code, the Political Reform Act, and the Brown Act.[2] One of a very few of such offices in both the state and the nation, the Public Integrity Division does not initiate investigations, acting instead on complaints from the public or pursuing allegations reported in the media. In the past few years, the division’s felony case filings have dropped from 39 at its height in 2011 to just 11 last year; it is unclear what has caused the 69% decrease in felony prosecutions since public complaints have only dropped by 28% over the last five years.[3]

One of the Public Integrity Division’s most notable cases was the 2010 Bell scandal, in which seven public officials were prosecuted and convicted of various charges relating to improper use of public funds.[4] Historically, however, the division appears to have struggled with complex prosecutions. Following reports from The Times in 2009, the Division launched an investigation into the granting of City of Industry contracts to ex-mayor David Perez’s family business. Two years later, prosecutors ended the investigation, citing no evidence of wrongdoing. In May 2015, KPMG auditors examined those same financial relationships as part of a city-commissioned review and found that Perez’s businesses had made $326 million from city contracts over 20 years. Moreover, the same review found that a Perez business had charged six times the market price for street cleaning and $28 million for vehicle rentals over 11 years when buying the same machinery would have cost a fraction of the price. This report triggered a new investigation which, almost two years later, remains “under review.”

As for the Palmdale matter, we will continue to monitor and provide updates as they become available.

[1] News Release, Palmdale Mayor, Two Consultants Charged in Public Corruption Case (June 21, 2017), http://da.co.la.ca.us/media/news/palmdale-mayor-two-consultants-charged-public-corruption-case

[2] Dave Demerjian, Presentation, Public Integrity Division, http://www.scwmf.org/Lunch_Demerjian_Short_wo_notes_071115.pdf

[3] Ben Poston & Kim Christensen, Los Angeles County D.A.’s Office Sees a Big Drop in the Number of Public Corruption Prosecutions, L.A. Times (Apr. 8, 2017), http://www.latimes.com/local/lanow/la-me-public-integrity-division-20170408-story.html

[4] For a more in-depth overview of the prosecution, see Nina Marino, The Accidental Defendant: Charges of Misappropriation of Public Funds Under Penal Code Sections 424, 503, or 504 are Necessarily Fact-Specific, 38 Los Angeles Lawyer 16 (Mar. 2015).

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