Rio Hondo College still contracting with firm charged in corruption scandal

An aggrieved general contractor is calling out Rio Hondo College’s Board of Trustees for continuing to contract with a construction management firm accused of corruption last year by the Los Angeles County District Attorney’s Office.

The District Attorney’s Office charged Luis Rojas, the head of the firm Del Terra, and former Bassett Unified School District Superintendent Alex Rojas in August 2022, with money laundering, bribery and embezzlement for an alleged scheme to take more than $1.4 million in public funds from the school district.

Both men, who are not related, have pleaded not guilty and denied the allegations through their attorneys.

Despite the allegations against the firm, Rio Hondo’s board unanimously approved a nearly $1.8 million contract with Del Terra in April to continue managing bond-funded renovations at the Whittier community college’s Music and Wray Theater and “L” Tower, public records showed.

The contracts were not put out to bid, according to Lanny Davis, an attorney with Pinner Construction, a general contractor that worked on an earlier phase of the project and is now suing Rio Hondo and Del Terra for at least $12.3 million in damages.

Davis and Newt Kellam, Pinner’s chief administrative office, allege the board’s decision to continue working with Del Terra goes against its “sacred duty” to use taxpayer dollars responsibly.

“It simply does not pass the smell test when the Rio Hondo Board of Trustees chooses to play ball with Del Terra after its CEO was indicted on charges of public corruption,” Davis said.

Davis and Kellam plan to appear at the board’s June 14 meeting to demand answers for the college’s continued support of Del Terra.

A lawsuit filed against Del Terra and Rio Hondo by Pinner Construction in May alleges Del Terra, while serving as the project manager on behalf of Rio Hondo, intentionally dragged out the seismic and core upgrades of the college’s “L” Tower for an additional 900 days in an effort to boost its own earnings by more than $1 million.

The general contractor alleges it nearly went bankrupt as a result of the delays.

“Defendants did this intentionally with the purpose of causing Project delays or, if possible, to force PCC’s surety to take over the Project by rendering the Project financially crippling for PCC,” the lawsuit states. “If successful in either scenario, Del Terra and Mr. Rojas were guaranteed to roughly one million dollars in additional compensation as the construction manager overseeing a lengthier Project.”

Davis said the project is an example of a flaw in the public construction in which “the consultants get paid more if the project is delayed and the milestones are missed.” Meanwhile, he said, the contractor is penalized.

There isn’t an incentive to hold the construction manager accountable because, in some cases, the firm is contributing to board members’ campaigns, Davis said.

The construction company alleges that college officials knew, or should have known, about the “numerous legal battles and accusations of misconduct by Del Terra” and that Del Terra “was unfit and unqualified to act as a construction manager for any job, much less the Project.”

“Del Terra’s retention on the Project was improper against this backdrop of wrongdoing,” Pinner’s lawsuit states.

The lawsuit alleges that during a meeting about the delays, former Rio Hondo President Teresa Dreyfuss told Pinner that Del Terra would not be replaced because the firm “controls” three seats on the board.

A spokesperson for the college confirmed it was served with the lawsuit, but declined to comment due to the pending litigation.

The allegations against Del Terra in Bassett followed other similar scandals in Montebello and the Alum Rock Union School District in San Jose.

In Alum Rock, a 2017 audit by the state’s Fiscal Crisis and Management Assistance Team found scant documentation for the work performed by Del Terra. The report uncovered rushed contracts, unexplained fees and payments for incomplete work, according to the San Jose Mercury News.

The Santa Clara County district attorney, however, declined to file charges following a three-year investigation into Del Terra, the Mercury News reported. Prosecutors confirmed many of the prior criticisms were accurate, but determined Del Terra’s actions were not criminal, outside of a potential conflict of interest that had exceeded the statute of limitations.

A 2018 audit by FCMAT in the Montebello Unified School District once again criticized Del Terra, the construction manager on the district’s $300 million bond program, for submitting invoices with little to no supporting documentation. Auditors alleged the contract with Del Terra was “unbusinesslike” and too favorable to the contractor, and could not find any proof it was reviewed by the district’s attorneys.

In 2020, prosecutors charged Luis Rojas and Pico Rivera Councilman Gustavo Camacho for allegedly attempting to funnel campaign contributions to a Montebello Unified school board member.

Investigators, while digging through bank records related to that investigation, identified $400,000 in payments from May 2015 to January 2017 from entities connected to Luis Rojas’ now-deceased sister, Virginia Campos, to a company called Erudio Technology Solutions, which is registered to Alex Rojas, then-Bassett Unified’s superintendent.

Bassett, under Alex Rojas, approved a multimillion-dollar construction management contract with Del Terra in April 2015, roughly a month before prosecutors say the payments from the Del Terra-adjacent companies began.

The District Attorney’s Office charged both Luis and Alex Rojas for the alleged malfeasance in Bassett in August 2022.

An audit of Bassett’s finances released by FCMAT in October found the district had repeatedly paid Del Terra for inflated billings and, in some cases, for the same services multiple years in a row, with one contract in 2019 having a nearly identical scope of work as a 2015 agreement that Del Terra had already been paid for, according to the audit.

Auditors found $760,000 in payments for work that was not completed and at least $952,750 in additional services that were allegedly not properly approved.

“Based on the findings in this report, there is sufficient evidence to demonstrate that fraud, misappropriation of funds and/or assets, or other illegal fiscal practices may have occurred in the specific areas reviewed,” auditors wrote. “These findings should be of great concern to the Bassett Unified School District and the Los Angeles County Office of Education and require immediate intervention to limit the risk of fraud, mismanagement and/or misappropriation of assets, or other illegal fiscal practices in the future.”

Last year, attorneys for Alex Rojas and Luis Rojas argued that the charges against their clients were politically motivated and driven by the personal vendetta of Bassett’s attorney, who first made the allegations.

Attorney Michael Zweiback, who represents Luis Rojas, alleged there is insufficient evidence in both the Pico Rivera and Bassett cases.

“That’s why we believe the allegations are going to be dismissed in the very early stages of these proceedings,” he said regarding the latest charges.

A preliminary hearing for the two men has yet to be scheduled in Los Angeles County Superior Court. They are set to appear in court again June 30.