Metropolitan News-Enterprise


Friday, December 28, 2007


Page 3


C.A. Upholds Judgment in Suit Over San Bernardino Bribe Scheme


By a MetNews Staff Writer


A multimillion dollar judgment against several business operators who bribed San Bernardino County’s former chief administrative officer was affirmed yesterday by this district’s Court of Appeal.

Div. Six, in an opinion by Justice Steven Perren, rejected claims that San Bernardino County suffered no damages as a result of the bribery of its then-CAO James Hlawek in connection with the renewal of the county’s waste management contract with Norcal Water Systems, Inc. in 1994.

Norcal paid the county a settlement of more than $6.5 million in 2000 after former company vice president Kenneth Walsh and company consultant Harry Mays, who was himself the CAO when Norcal got the contract in 1989, entered negotiated guilty pleas in which they admitted bribing Hlawek.

Hlawek also entered a guilty plea and cooperated in the criminal case against Mays and Walsh. The three were co-defendants in the civil case, in which Ventura Superior Court Judge Vincent O’Neill Jr., following a 22-day bench trial, awarded $4,242,626.17 against Mays, Hlawek, Walsh, and Mays’ consulting firm, along with punitive damages of $1 million against Mays, $500,000 against Walsh, and $250,000 against Hlawek. 

In a separate scheme, the judge awarded damages of $3.8 million against  Oakridge Group Corporation, finding that the company had illegally acquired a billboard contract by bribing Hlawek and had unjustly profited by transferring the contract to Eller Media.

Perren rejected Walsh and Mays’ claim that the county suffered no damages as a result of the waste contract scheme because it was a good deal for the county.

“Apart from agreeing with the County that there is no such thing as harmless bribery or honest graft, there is substantial evidence to support the conclusion that the County lost millions of dollars,” the jurist wrote. “Norcal’s compensation increased from $18 million per year under the 1989 contract to more than $40 million per year under the 1995 contract and, between 1996 and 2000, the County paid Norcal more than $200 million including over $4 million that ended up in the pockets of Mays/Walsh.” 

The jurist also rejected claims that the punitive damage awards were unsupported by substantial evidence of the defendant’s ability to pay. He cited O’Neill’s findings that both men had “systematically and deceitfully manipulated and concealed [their] ill-gotten gains and [their] net worth,” and “provided knowingly false testimony” at trial concerning the extent of the wealth they obtained from the bribery scheme.

Perren elaborated:

“Specifically, based on unchallenged evidence offered by the County, Mays had hidden at least $3.7 million by opening an offshore ‘asset protection’ account in the Cayman Islands in 1998, and had deposited $600,000 into a private retirement plan.  There is also evidence that he bought a residence in Nevada for $249,000, paid a $200,000 down payment on another house on Lee Court in Carlsbad, transferred $340,000 to his spouse in their 2000 divorce while continuing to live with her, and gave his former wife their residence which was then sold for $825,000.  The court found that Mays retained use of the assets transferred to his wife after their stipulated divorce.”

Both men also were guaranteed judgment-proof retirement income, the justice noted.

The case is County of San Bernardino v. Walsh, 07 S.O.S. 7610.    


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