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Home arrow Home arrow The FACTS arrow Response letter to Phil Lough
Response letter to Phil Lough dated January 22, 2013
Response letter to Phil Lough dated January 22, 2013


January 22, 2013

 To:  The Mayor and City Council

 From: Shauna Clark, City Manager

 

During the January 10, 2013 Council meeting Phillip Lough presented a notebook to each member of the Council containing materials to back up his allegations of violations on the part of the City Attorney, City Manager and others.

 This letter is a written response to the allegations which were listed on a document inserted into the notebook. The portions in Italics are directly quoted from the report that Mr. Lough and others including Michelle Kurtz and George Edwardz read into the official record of the January 10, 2013 Council meeting.


I.    (Alleged) Municipal Code Violations

 Response: All contracts are reviewed by the City Attorney.  Some contracts may not be signed by the City Attorney at the time they go before Council because they are in the format pre-approved by the City Attorney. On an annual basis, the City Attorney sends templates on the two major types of city contracts:  1. contracts for public works projects and 2. contracts for professional services.

 Some contracts in the notebook did not show the City Attorney’s signature because they are not copies of the original document on file with the City. For example, the copy of the contract for SDH is from the agenda package.  Once the Council approved the contract, the City Attorney signed it. The original signatures are on file with the City Clerk.   

 

II.  (Alleged) City Manager Violations

 A.  Alleged non-disclosure of outside employment 

Response:  Mr. Lough states that Shauna Clark is not on staff at CSUN.  That’s true.  As is common with every university in California and elsewhere, professors are classified as faculty not staff.  Had Mr. Lough inserted Shauna Clark on the search page at CSUN he would have found the link to the faculty profile of Shauna Clark. Had he clicked on that link, he would have found the following faculty profile:

http://tsengcollege.csun.edu/programs/MPA/faculty

Shauna Clark

City Manager, City of La Habra Heights

M.B.A., California State University, San Bernardino

Shauna Clark taught in the MPA program at CSUN's Tseng College for six years. Her classes include MPA 643, Public Sector Personnel Management, and MPA 644 Public Finance and Budgeting. In addition, she has taught Community and Economic Development. Before teaching at the Tseng College, Clark lectured at Cal State Los Angeles and Cal State San Bernardino in the MPA programs. She holds an MBA with a concentration in Finance and a B.A. in Public Administration from Cal State San Bernardino.

Shauna Clark is the City Manager of the City of La Habra Heights and previously was the City Manager of the City of San Bernardino. For the 10 years between those two positions she was a public/private sector consultant working for several cities in California, including Los Angeles, Carmel-by-the-Sea, Moreno Valley, Riverside, Pasadena, Bell Gardens and Baldwin Park.

 

B.  Shauna Clark is president of Lionheart Designs

 Response:  Shauna Clark was president of the board of Lionheart Designs Inc., incorporated in California in 2002.

         1.  Not allowed as per contract

Response:  Shauna Clark is not and has never been employed by Lionheart Designs, Inc.  Shauna Clark has never received income from Lionheart Designs, Inc.   Lionheart Designs, Inc. did not do business within the City of La Habra Heights.

         2.   Shauna Clark is listed as agent with Secretary of State

Response:  Shauna Clark was an authorized representative of the board of directors for Lionheart Designs., Inc. which give her the authority to sign as president of the board.  Holding a board chair, is not the same as being employed by that company.

a.  Corporation was suspended for non-filing of paperwork

Response: Lionheart Designs Inc. went out of business and is allowing the corporation status to lapse through expiration; just as a person allows their business license to expire rather than cancel it once they stop doing business in a particular city.  The relevant tax paperwork for ending corporate status was filed with the Franchise Tax Board and IRS by corporate CPA.

b.  Fair Political Practices Commission Form 700 does not declare additional income sources

Response: Shauna Clark never received income from Lionheart Designs, Inc.

Before Shauna Clark was employed by La Habra Heights she owned more than one business in the private sector and held other board seats.  Currently she holds a board seat on a business not mentioned herein, and has other business investments; however, there is no requirement to report these on a form 700, nor is there any conflict of interest, as none of those businesses operate within the city limits. 

        3.  Lionheart Designs, Inc., was located in Irwindale

a.  Business License until 2011

Response:  Relevance?  None

b.  Moved to Henderson Nevada as a Ebay only business

Response: There is no connection between Lionheart Designs, Inc., incorporated in California as a custom furniture and cabinetry business, and LionHeart Designs International doing business as lionheart-designs.com in Nevada to sell sports memorabilia. The businesses do not have the same name nor are they the same type of business.  

c.  Richard Pulsifer is connected with the business as a location to mail checks

Response: I do not know Richard Pulsifer nor had I heard the name until Mr. Lough attempted to make a connection between two completely unrelated businesses.

a.  Shauna Clark lists her affiliation with Lionheart Designs as a donor to the  Pasadena Heritage Organization

Response: Pasadena Heritage is a nonprofit organization that advocates for the preservation of Historic Architecture in Pasadena and surrounding areas.  Shauna Clark was vice president of the Board for nearly six years.  Shauna Clark is still a member and a donor to Pasadena Heritage.

There are several portions of newsletters and articles from Pasadena Heritage inserted into Mr. Lough’s notebook of false allegations. These appear to imply that Shauna Clark is still on the board.  However, the reader will note that none of the newsletters or articles that mention Shauna Clark show the date of publication. Had the entire article been in the notebook the reader would be aware that the articles pre-dated the appointment of Shauna Clark as City Manager of La Habra Heights.

Does the City really want a City Manager who never worked in the private sector, who never made a payroll, and who never supported a nonprofit organization?  I still donate to many non-profits and will continue to do so. 

        5.  Lionheart Designs sells 9600 items which include probably counterfeit utilized NASCAR, Pro, College sports memorabilia.

a. License would be too costly to afford to be authentic gear, a cybernet crime investigation by the FBI White collar crime unit

b. City council furnished iPad and DSL connection at her home as part of her contract

1. For City use only

2. If City Manager Shauna Clark is involved in the selling of counterfeit logo items using City property, the city is aiding and abetting illegal activities.

        6. Lionheart Designs is operating in Nevada without a Business License and has no legal business status with the City of Henderson Clark County, the State of Nevada.

Response to Items 5 and 6:  The attempt to connect Shauna Clark and/or Lionheart Designs. Inc. to a Nevada corporation is false and malicious.  Adding an assumption that the Nevada corporation is connected to Shauna Clark and compounding that by saying the firm is selling counterfeit items is a reckless disregard for the truth.  Also, accusing Shauna Clark of misuse of city computer equipment is malicious and unsubstantiated. These statements constitute defamation per se.

        7.  Alias for Shauna Clark’s surnames search include: Hoggins and Edwins.  Edwins surnames is affiliated to Lionheart Designs a.k.a. Lionheart International

Response: These are not aliases. There is no connection between the name Edwins and Lionheart Designs, Inc., of California or LionHeart International of Nevada.  Edwins was a married surname. Shauna Clark has been divorced since 1991. Lionheart Designs, Inc. was incorporated more than ten years later in 2002.

C.  Shauna Clark failed to disclose she owns the house located at 696 E. California Boulevard.  Across the street from Doug Ewing office building located at 7XX California Boulevard

Response: Saying Shauna Clark failed to disclose ownership of 696 E. California Boulevard is simply false because there is no duty to disclose property that is more than two miles outside the jurisdiction of La Habra Heights.  Moreover, the rental income is not reportable on Form 700 unless the tenant does business in La Habra Heights. The tenant is a radiologist who practices in Pasadena.

Shauna Clark moved from 696 E. California prior to being hired as Interim City Manager and has not lived there since. Shauna Clark regards Phil Loughs investigation into property she owns as a trespass and invasion of privacy. 

1.  The City Hall remodel project was a no-bid contract

Response: 

a. The City has not awarded a contract for the remodel of City Hall

b. A contract was awarded to Doug Ewing for conceptual designs.

c. There is no requirement in the Municipal Code or in State law that professional services contracts be given on a competitive or price basis.

d. Nevertheless, as the staff report noted, multiple firms were asked and more than one firm responded to the City’s request to review the buildings.  Ewing Architects was the only firm that came up with a concept for renovation.

e. When the remodel actually takes place (if it does) there will be a competitive process for the general contractor, which, unlike a professional services contract is a public works contract and must be awarded to the lowest responsive and responsible bidder.

2. Shauna Clark was on the Executive Board of the Pasadena Heritage  Organization and Doug Ewing AIA handles the organization home tours

Response:  Shauna Clark was on the Executive Board of Pasadena Heritage.

Pasadena Heritage home tours are given by staff and board members, not by Doug Ewing whose name appears on the donor list along with at least twenty other architects.

Doug Ewing is a nationally renowned award-winning architect and his projects have been on tours produced by the Foothill American Institute of Architects.  The focus of the FAIA is quite different than the focus of Pasadena Heritage. Nevertheless, I did become aware of Mr. Ewing’s work on projects while I was on the board of Pasadena Heritage. 

Municipal Code 2.6.20 A.3 states that the City Manager is responsible for: “The initiation of contracts, agreements, and other written obligations on behalf of the City, including those that require Council approval,” therefore it is incumbent upon me as City Manager to choose qualified firms and professionals to do business with the City.

Based on years of observing projects by Ewing Architects, along with many other architects, and based on the fact that I was project manager on three multi-million dollar municipal building projects and have firsthand experience of the importance of hiring the right architect, I am confident Ewing Architects is an excellent choice for architectural design related to LHH City Hall.

Shauna Clark has never received a check or any other type of remuneration from Ewing Architects, Inc.  To imply a kickback, as was stated on the Lough’s Twitter account, is a bald-faced lie, is malicious, and a reckless disregard for the truth. Defamation of this nature can result in civil and criminal charges.  

                III.   Alleged City Approved Contractors Violations

        A.  SDH Associates Inc., October 2012 city Manager, City Attorney, and City Council approved a $50,000 contract with verifying the following:

1.  Stephen Sommers President is not an engineer

Response:  The City Manager and staff are aware Stephen Sommers is not an engineer.  He is not required to be one to run an engineering firm.  The agreement is with the firm and the firm has engineers on staff.

            2. Brian Esgate is listed on the company website as an Office Engineer

Response:  Brian Esgate is the Corporate VP and a registered civil engineer thus an officer of the firm is an engineer. The firm employs other engineers as well.

3.  Brian Esgate signed the La Habra Heights contract as Vice President of SDH Associates

Response:   Correct, and per the Corporate resolution Brian Esgate is also the VP

      4.  SDH is operating illegally with a California Secretary of State suspended corporate status, due to failure to pay taxes and/or non-filing of papers.

            Response from Mr. Sommers:  Apparently the issue of suspended corporation status was due to our not having paid a $25 renewal fee. The notification went to our old address. I updated our address on their website and paid the $25 fee, so we should be “good to go”.

      5.  SDH Associates Inc. is operating illegally without a City of Riverside business license.  City of Riverside verified all three addresses SDH Assoc. Inc. gave the City of La Habra Heights do not have a valid business licenses

 

Response: Not true. The city has copies of SDH’s business license from

Riverside. Again, this is a reckless disregard for the truth.

 

      6.  The Company address appears to be an apartment

     

      Response:  Incorrect. The company address is in the Canyon Crest Towne Center.  The apartment on the website is an example of a project engineered by SDH, not the location of the business.

 

      7.  The picture of the building listed in past projects is an apartment building

     

      Response: True. The apartments are one of the projects engineered by SDH

 

8.  The company has had no business license since 2002 at the primary location given to the City of La Habra Heights.

 

Response: Incorrect. Though not required to, as a result of Mr. Lough’s notebook, SDH has provided a copy of its business license to city staff.

 

B.  TBG Solutions LLC (Retired PERS Employee)

            1.  Larry Schroeder is not an accountant and not a CPA

Response: There is no requirement that Larry Schroeder or any other municipal finance consultant be a CPA. CPA is for the private sector.  Larry Schroeder is fully qualified to be a consultant for any municipal government.  He has a PhD in Public Administration. He teaches finance and public budgeting as a professor at La Verne and at Cal State Pomona.  He was finance director of the cities of Glendora and Lakewood for many years.

2.  Larry Schroeder was hired as Financial Manager

Response:  Dr. Larry Schroeder was a consultant for the City of La Habra Heights over two different periods. Neither Shauna Clark nor any member of staff or Council had met Larry Schroeder before he was hired.  A background check revealed he was eminently qualified as a municipal financial consultant. 

Dr. Larry Schroeder first assisted the city as a municipal finance consultant, cleaning up a considerable mess.  Two years after finishing that project, Dr. Schroeder’s company TBG Solutions, filled in until Rochelle Clayton was hired. Dr. Schroeder may have been referred to as Financial Manager but the City hired his firm, TBG Solutions.  Dr. Schroeder was never an employee under either the IRS or PERS definitions.

3.  Communications graduate, IT experience with a Masters in Public Administration. 

Response: Dr. Schroeder says he was not a communications graduate but does have IT experience. He holds both a masters and a doctorate degree in public administration. 

4.  TBG Solutions has no legal business status in Claremont or the Secretary of State of California

Response:  TBG Solutions closed in 2012.  A letter from Larry Schroeder indicates the establishment and the closure of corporation were handled by his attorney and all proper paperwork was filed.

5.  TBG Solutions LLC was cancelled by the Secretary of State. Cancellations of LLC per state definitions when the check to the state bounces

Response:  This statement is completely false.  There are many reasons why corporation status is terminated.  TBG did not bounce a check but closed the corporation through notification.

To say that TBG Solutions bounced a check is malicious and a reckless disregard for the truth intended to imply that Dr. Schroeder cannot be trusted. This is libelous.

6.  P. O. Box at 310 N. Indian Hill is illegal to use as a business entity LLC.

Response:  Many businesses and individuals use P. O. Boxes as a mailing address.

7.  Additional address 414 Yale Avenue Claremont, CA is office of Larry Schroeger’s (sic) attorney who knew nothing about TBG Solutions.

Response: That statement is false.  Phillip Lough appeared at the office of the Larry Schroeder’s attorney at 414 Yale Avenue, Claremont, and asked about Larry Schroeder.  He was told by an employee of the firm that if he was looking for Mr. Schroeder he should check at City Hall since Larry Schroeder is the Mayor of Claremont. This activity on the part of Mr. Lough verges on stalking and obsession.   

8.  TBG Solutions LLC has been paid in the $100,000 range for contract work year to year on an on-going basis in violation of PERS regulations.  He was also paid more than the previous finance management/job equivalent, a violation of PERS regulations.   

Response: As explained, Dr. Larry Schroeder was a consultant for the City of La Habra Heights over two different periods not year-to-year. He first worked for the City after the departure of Freddy Vega and assisted the City in finding the finance manager, Maricela Medina.  Maricela left the city after two years for a better paying job in Pico Rivera. Larry was brought back in until we were able to hire Rochelle Clayton. Larry Schroeder may have been referred to as Financial Manager but he was never an employee under either the IRS or PERS definitions.

9.  Larry Schroeder is currently the Mayor of Claremont

Response: True. 

10.  Larry’s 700 form does declares (sic) his year to year work with La Habra Heights, PERS violation

Response:  PERS retirees are allowed to work for another PERS agency up to 960 hours per year and longer with permission from PERS. The response to Item 8 explained Larry Schroeder’s work with the City. It’s only recently that PERS has made an issue of retirees who have jobs that relate directly to city functions and in both cases the matter involved fire personnel who wore city uniforms and drove city vehicles.  

C.  CNC Engineering

1. Sean Nazarie signed the contract with La Habra Heights as Engineering Direct (sic) as a registered engineer and the State of California does not recognize him as a licensed engineer

            Response: False.  Mr. Nazarie’s state License confirmed. The information is on     file at city hall and on the state website.

D.  AQ Engineering (Retired PERS Employee)

1.  Scott Fazekas recommended Amad Qattan. A.Q. Engineering and selected from four other engineer interviews.  Names of other engineers are not disclosed.

Response: False.  Scott Fazekas and Shauna Clark met Amad Qattan on the same day; when the candidates for city engineer were interviewed.  Amad Qattan is the former Public Works Director of Corona and a licensed engineer, fully qualified to work for the City of La Habra Heights.

2.  No evidence of official bid process

Response: Neither the Municipal Code nor state law requires a bid process for professional services.  Municipal Code 2.6.20 A.3 states that the City Manager is responsible for: “The initiation of contracts, agreements, and other written obligations on behalf of the City, including those that require Council approval,”

If Mr. Lough wants to view Amad Qattan as a City employee (which he was not), then Mr. Lough is referred to Municipal 2.7.50 B. which states: The City Manager shall have the authority to hire unclassified employees…”

3.  Amad Qattan was paid $165,000 twice the amount of what his contract and PERS allowed

Response:  The City’s PERS attorneys from LCW advised staff that PERS makes an exception to the 960 hour rule for persons who have special licenses such as engineers and attorneys.

4.  Amad Qattan was a year to year contractor in the capacity of a city employee supervising employees and hiring sub-contractors with invalid businesses and lack of licenses

Response:  Amad Qattan did not have formal supervisory authority but he did advise the City Manager on disciplinary matters.  Amad Qattan did not hire a sub-contractor who lacked the valid licenses. If Mr. Lough is referring to Sean Nazarie who works for CNC, he is directed to the fact that the Council approved the contract with CNC and that Sean Nazarie has the requisite licenses as a registered civil engineer.  (Proof of license available)

IV.  Warrants

A.  Warrants for work by contractors are paid prior to their approval by the City Council to work in LHH.

Response: Mr. Lough has presented no evidence that contractors were remunerated illegally.   If he cares to present a specific example, staff will research the matter. As previously noted, the city manager is responsible for recommending contractors for professional services. 

Public works contracts are bid and the bid award is made by the City Council.  Once a contract is approved by Council and progress is made, the City Manager may authorize partial payment to the contractor based on the terms of the contract. However, the City always holds a retention until the Council authorizes the notice of completion.

Mr. Lough’s attention is also directed to the answer in B, below.

B.  Some expenditures are paid without ever being approved by the City Council

Response: More than any other comment, this points up Mr. Lough’s utter lack of knowledge of how any government operates.  Nearly all expenditures are made without pre-approval of the City Council. Annually, the City Council budgets for one year of expenses.  The related expenditures are incurred by staff without pre-approval as long as purchases for supplies and equipment are made in accordance with the City’s purchasing policies set forth in the Municipal Code. The Municipal Code grants the City Manager the authority to purchase up to $10,000 worth of supplies or equipment without Council approval.

Each month the City Council reviews every warrant written against the city treasury in the previous month. If the Council wants to know more about expenditure they ask staff. 

Conclusion:

            Several of us deserve an apology from Mr. Phil Lough, Michelle Kurtz, etc. whose only goal is to disrupt city business. 

Sincerely

 

Shauna Clark

 

 cc:       Holly O. Whatley, City Attorney

            Charlene Wynder, Dapeer, Rosenblit and Litvak

            Amad Qattan, A. Q. Engineering

            Steve Sommers, SDH

            Scott Fazekas

            Doug Ewing

            Sean Nazarie, CNC

            Dr. Larry Schroeder

            Lt. Richard Shear, Los Angeles County Sheriff’s Department