Forde & Mollrich Partner Threatened With Contempt

By Adam Elmahrek

A forensic audit of the Great Park project has taken another twist with Stu Mollrich of Forde & Mollrich — the consulting firm at the center of the ongoing scandal — refusing to disclose finances related to the firm’s former $100,000 per-month public relations contract with the park.

Mollrich, appearing for a July 30 deposition under a legislative subpoena, was threatened with a contempt charge after refusing to answer questions about Forde & Mollrich’s overhead, employee salaries and profit margins. He argued the company didn’t have to disclose that information because it’s a private business.

Yet this information goes to the heart of questions that for years have surrounded the public contract. Park critics allege the company’s services were not worth anything close to $100,000 monthly, and that the no-bid contract meant overinflated profits for the politically connected firm.

The park’s defenders, meanwhile, argue that the audit is nothing more than an attempt by the Irvine City Council’s Republican City Council majority to smear the council’s Democrats, who, until 2012, controlled the council and therefore the park project.

Over $1 million has been spent on the investigation.

So far, depositions and an initial report by Newport Beach-based auditor Hagen, Streiff, Newton & Oshiro Accountants have carried a narrative of waste, abuse and dysfunction between the park’s top management and the consultants that were supposed to answer to the city.

But to longtime critics of the Great Park project, the Forde & Mollrich contract holds special significance as the symbol for years of mismanagement and alleged corruption at the park. While initially envisioned to be Orange County’s rival to New York’s Central Park, the 1,300-acre project has fallen short of expectations.

In his deposition — which ran over eight hours and as transcribed totals 263 pages – Mollrich flatly refused to answer a question about the salary for then Forde & Mollrich employee Sam Allevato, who is also mayor of San Juan Capistrano.

That sparked a contentious back-and-forth between Mollrich’s lawyer, who attended the deposition, and Anthony Taylor, the deposing attorney from Aleshire & Wynder, LLP, which was brought in to help with the investigation.

Mollrich’s attorney David Elson — from the firm Manatt, Phelps, & Phillips, LLP – argued that the consultant’s profits under the contract are irrelevant. What is relevant, Elson argued, is whether the city received the services promised in the contract.

“So you think it’s perfectly acceptable if a public agency is overcharged?” Taylor asked Elson.

Responded Elson: “Overcharged – why are they overcharged if there’s a public process, and at the end of the public process, they received all the deliverables they’re – they’re promised?”

Taylor said he wants to measure the city contract with other Forde & Mollrich contracts to see weather the city was being charged commensurate with the fair value of the services it received.

Taylor noted that “every day” there are lawsuits under the False Claims Act whereby companies are sued for marking up something like a pipe, “ten times what it should have been.”

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