Metropolitan News-Enterprise


Monday, December 3, 2007


Page 1


C.A. Throws Out Conflict-of-Interest Claim in South Gate Scandal

Private Parties Cannot Be Sued for Conspiracy to Violate Government Code Sec. 1090, Panel Says




A private party cannot be held liable for conspiring with a public official to violate a conflict-of-interest statute, the Court of Appeal for this district ruled Friday.

Div. Three, in an opinion by Justice Patti S. Kitching, said Michael Klistoff Jr. and his waste hauling company, All City Services, could not be held liable for conspiring with former South Gate Treasurer Albert Robles to violate Government Code Sec. 1090, which prohibits a public official or employee from acting on a contract in which that person has an interest.

“We conclude that because only public officials or employees can violate section 1090, Klistoff and who are not public officials or employees, cannot be held liable for conspiracy to violate section 1090,” Kitching wrote.

Robles to Prison

Robles last year drew a 10-year prison term on charges of taking more than $1 million from businesses in exchange for steering city contracts to them. The government’s case focused, in part, on a scheme in which Robles promised to steer a 10-year, $48 million contract to another Klistoff company, Klistoff & Sons, in exchange for All City’s hiring of a Robles associate, George Garrido, as a consultant.

All City and K&S are now out of business. Klistoff negotiated a deal with federal prosecutors, testified against Robles and Garrido, and was sentenced to six months’ imprisonment plus six months home detention.

Garrido drew a sentence of more than four years in prison for his role in the scheme.

With Robles and his allies no longer in control of city government, South Gate sued a number of his associates and related defendants, including Klistoff and All City, who demurred to the cause of action for conspiracy to violate Sec. 1090. Los Angeles Superior Court Judge Raul H. Sahagun overruled the demurrer, but the Court of Appeal Friday said it should have been sustained.

Legally Incapable

Kitching explained that under California law, a coconspirator must be legally capable of committing the tort. Since Klistoff and his company, being neither public officials nor public employees, could not violate Sec. 1090, they cannot be held liable for an alleged conspiracy to violate that section, the justice said.

The justice went on to acknowledge that under Sec. 1092, a private entity that receives public money as a result of a violation of Sec. 1090 may be sued for disgorgement of those funds. But neither Klistoff nor All City may be held liable under that provision, Kitching concluded. 

The allegations of the complaint, she explained, are that Klistoff’s other company, K&S—not Klistoff personally or All City—received public funds under a contract in which Robles had an interest, so only K&S can be held liable under Sec. 1092.

Klistoff v. Superior Court (City of South Gate), B195454.


Copyright 2007, Metropolitan News Company