Why Larry Agran will be in courtrooms defending his Great Park actions in the coming year, but won’t to jail.
(image credit: OC Weekly)
As a service to my fellow OJ bloggers pondering Larry Agran, I have summarized the legal situation Larry is a likely to face in the coming months as described in the publicly released depositions.
Much is already clear. The City of Irvine is going to sue Gafcon and Forde & Mollrich, probably under False Claims Act, to reclaim several million dollars. The legal action to pursue those millions will require putting Larry’s role as chairman under the legal microscope. I can not tell if Larry will be a “target” of these legal actions or just an important “witness”
Herewith, a summary of over two thousand pages of depositions.
1. No exhibit, question, or testimony suggest any public money went to Larry personally.
2. Almost every deponent agrees that Larry Agran’s involvement into day-to-day decisions was “unusual.” Some defend this, some don’t, but few dispute it.
3. Larry was careful to never give specific directives. Instead, many deponents discuss how Larry’s “thoughts” or “interests” played a large role in shaping the general direction of the project. Concurrently, Arnold Forde or Stu Mollrich were present at most meetings. Both Larry’s hand-picked CEO Mike Ellzey and Gafcon’s No. 2 Thom Maxwell-Miller testify that Arnold claimed to speak for Larry (Thom Maxwell-Miller deposition p 117, Ellzey statement, p 3). Most deponents, including Arnold himself, agree that Arnold had a direct role facilitating many decisions. (Forde p 14, 71, 114 )
4. No one disputes that Gafcon performed “out-of-scope” work. (see below) Much testimony and several exhibits also claim Gafcon overbilled for sub-contractors’ work and submitted sub-standard work on multiple occasions. Gafcon CEO Yehudi Gaffen obviously disputes this.
5. Multiple staff members objected to Gafcon billing, including two CEOs and the city manager. The board would often authorize payment anyway, nicely summarized by Arnold Forde’s quip “Just Pay it. We have three votes“. The fourth and current CEO didn’t just object to Gafcon, he fired them.
6. The Final Report will almost certainly recommend legal action against Gafcon, possibly under the False Claims Act. (Mollrich p 183) Larry’s legal woes will turn on how those legal actions are pursued.
7. Larry’s key legal vulnerability is the “close out” of the Design Studio “Contract 2.” This was the final payment to Gafcon, and it had two parts. The first payment for $554,586 was fine. The second payment for $833,246 was disputed by staff, but got paid any way. How that payment got approved will be the focus of scrutiny.
8. The Auditors queried many deponents about who negotiated the close out. Most agree that it was primarily Chairman Larry Agran and CEO Mike Ellzey, which interacts with two issues. First, Mike, unlike the prior three CEOs, reported directly to the Chairman instead of the board as a whole. Second, it’s not clear Larry had the legal authority to negotiate on behalf of the board.
9. Several deponents testified that Larry tried to get the contract closeout approved without a vote from the full board.
10. The auditors sought documentary support for the $833,246 payment. As best I can tell from the depositions, they didn’t find much — but I may have missed it. City Manager Sean Joyce could not recall any audit to support the payment, for example. (Joyce, p 80)
11.In particular, the auditor wanted to know who authorized “Recital 1” and “Recital 2” and what documentation supported these recitals. I believe Gafcon’s defense will rely heavily on these recitals.
In addition, clauses E through I of section 3 “Waivers Releases” seem incredibly favorable to Gafcon to this non-lawyer, and were apparently added by the city. (Kohn, Exhibit 11, page 161). However, the auditor didn’t seem interested in that.
12. The auditor aggressively questions City Attorney Phil Kohn over the insertion of the below “knowing and voluntary” clause. The auditor claimed Phil admitted this was inserted into the contract by Larry Agran without the knowledge of the Board. When the auditor tried to get Phil to confirm this, Phil got extremely lawyerly and refused to answer the question (Kohn, pp 97 -99).
12. I don’t see how Larry Agran can be held responsible for Gafcon’s alleged over-billing or substandard work. But the nature of the out-of-scope work would seem to put Chairman Agran in a less-than-ideal place legally. These next two passages give a succinct summary of the situation:
From interim CEO Sharon Lander’s deposition (p 169):
Thom Maxwell-Miller, the Number two Gafcon employee at the Great Park, concurs on pages 100 and 101 of his depostion:
The Great Park Balloon was one example of this contracting style (Landers p 69), although there are others.
The fact the Larry would get contractors moving on a project and then sort out the paperwork later isn’t necessarily a problem. However, pusing through the final $833,246 payment without full board approval would seem to be problematic. But, legally, what kind of problem is that?
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