Central Basin Municipal Water District’s embattled general manager sidestepped internal controls while evaluating and overseeing a construction management contract secretly tied to a man accused of paying him $400,000 in bribes, according to a confidential investigative report obtained by the Southern California News Group.
Certified public accountants hired by Central Basin to probe General Manager Alex Rojas’ handling of a two-year contract with the company, Capstone Partners Group, reported that Rojas lowered the bidding requirements to the company’s benefit, approved payments that exceeded or circumvented his spending authority and improperly deleted more than a hundred emails involving Capstone’s employees, in violation of the district’s retention policy.
Rojas has been on administrative leave from the public water wholesaler since February, pending the outcome of the investigation.
“Based on the foregoing information within this report, Dr. Rojas on multiple occasions has taken actions to limit and/or override Central Basin’s internal controls in relation to Capstone,” the investigators wrote in the June 8 report. “It appears that the district’s internal controls were, in some respect, in name only.”
Investigators concluded that Rojas “lacked candor” during interviews “as multiple statements were directly contradicted by the relevant supporting documentation and/or other district employees.”
“There was a failure in the tone at the top of Central Basin,” investigators wrote. “This failure stems in part due to certain management overrides of internal controls, lack of a key finance director position and reported management pressures to approve certain items.”
Attorney denies wrongdoing
Craig Missakian, an attorney representing Rojas in the bribery case, declined to answer a series of questions after he was given a day to review them.
“Dr. Rojas has not seen a copy of the confidential report and so cannot comment on it,” Missakian said. “For now, suffice it to say that he did nothing improper in connection with the Capstone contract. I understand that several members of the board and the staff have already expressed concerns about misstatements in the report and the validity of many of its so-called findings.”
Missakian did not respond to a request for the names of the board members who expressed concerns.
Central Basin’s board of directors hired the nationwide accounting firm Carr, Riggs & Ingram to handle the investigation last year after a deposition in a case filed by Director Leticia Vasquez revealed that Capstone was run entirely by employees of the Del Terra Group, a company accused of paying $400,000 in bribes to Rojas in an alleged pay-to-play scheme while he served as superintendent of the Bassett Unified School District.
The Los Angeles County District Attorney’s Office charged Rojas, along with Del Terra’s owner, Luis Rojas, who is not related, with 18 counts of money laundering, bribery, perjury and embezzlement in August 2022, roughly two years after Rojas began working for Central Basin. Both men have denied any wrongdoing and the case has not progressed past the initial arraignment.
Rojas, often credited with stabilizing the district following a particularly tumultuous period, initially was allowed by the board to stay on because the criminal case was considered unrelated to his new role. The launch of the investigation last year and Rojas’ subsequent placement on leave followed a shift in the board’s majority.
A separate forensic audit of the years Central Basin contracted with Capstone is expected later this summer.
Fudging qualifications
Central Basin hired Capstone shortly after Rojas joined the agency in late 2020. Drastic cuts that year had left the water district with only six employees, forcing officials to hire contractors to fill the gaps.
Capstone was selected through a request for proposals process and ranked highest out of the applicants, records showed. However, investigators now say Rojas made changes to the requirements that seemingly “only benefited one respondent, Capstone,” and that Capstone should have been disqualified for an incomplete application, according to CRI’s report.
Tracked changes in a template used by Central Basin showed Rojas altered language requiring a company to have “five years of experience” to allow “its assigned staff” to meet the qualification instead. Capstone had formed only three days before the filing deadline, but its proposed team included several water infrastructure experts. One of the experts later told investigators he did not know his name was included until months later.
Rojas extended the November 2020 deadline by a week due to a lack of bidders and Capstone incorporated in between the two dates, records showed.
Investigators determined Capstone’s proposal lacked required information, such as how many employees it had, where its offices were located, and whether it would pay prevailing wages. The district’s rules for the process stated any proposal that did not include “all items of the ‘proposal requirements’ will not be considered,” and, according to CRI’s report, it should have been disqualified as a result.
Rojas did not participate in the scoring, but was part of the evaluation committee.
Both of the companies eventually selected for the open-ended construction management contract, Capstone and the Cumming Group, had ties to Rojas’ tenure at Bassett Unified, investigators found. Capstone received six out of the eight tasks assigned by Central Basin over the next two years, and though Cumming worked on higher valued projects, Capstone was paid more.
Capstone made just shy of $800,000 for managing roughly $7.7 million worth of projects, while Cumming made $467,843 from $8.8 million in projects, the report stated.
Safeguards bypassed
Capstone was owned by Manuel Jaramillo, who would later testify that he worked for Del Terra and used other Del Terra employees to complete the work for Central Basin, which serves nearly 2 million customers from 24 cities and unincorporated areas from La Habra Heights in the east to Carson in the west and from Signal Hill in the south to Montebello in the north.
County prosecutors allege Rojas, while working as Bassett’s superintendent from 2014 to 2017, signed off on more than $1 million in payments to Del Terra for work that could not be substantiated. The District Attorney’s Office uncovered $400,000 in payments from Del Terra-related entities to a technology company registered to Rojas during the same time period.
CRI did not find any evidence that Capstone failed to complete any of its projects for Central Basin, though investigators found some payments, including an overpayment of $24,950, that did not comply with the district’s policies and administrative code. Some records were missing or inaccessible, making it more difficult to ascertain what exactly Capstone was paid for, according to the report.
The $24,950 overpayment was paid to Capstone as a deposit for a roof repair and was never credited in subsequent billings, the investigators stated.
At least one payment exceeded the $25,000 limit Rojas has before needing board approval. Others appeared to split purchase orders into smaller amounts to circumvent the threshold, according to the report.
Capstone’s invoices lacked specific information, such as descriptions of the work performed or the hours worked. Similar allegations were made in Bassett regarding Del Terra’s invoices, according an audit conducted by California’s Fiscal Crisis & Management Assistance Team.
Capstone declined to produce supporting documentation requested by CRI.
Missing emails
Rojas’ own record-keeping hindered the investigation as well. The general manager claimed he did not remember the password to his district-issued cellphone, tablet or computer, and investigators were unable to access those devices as a result. The investigation also noted that the tablet appeared to have been reset to factory defaults.
At least a hundred emails were deleted from his account, according to the report. Investigators found 121 emails in other employees’ accounts that included both Rojas and a Capstone employee. Yet, in Rojas’ account, they found only three. The district does not back up emails, and CRI could only recover emails retained by other employees.
Rojas reportedly encouraged employees to delete emails regularly, despite the district’s administrative code requiring retention for a minimum of three years. The report states Rojas told the investigators in an interview that he deleted emails that were not “his” projects and that “emails are only records if you keep them.”
“Dr. Rojas stated that he has never purposefully deleted emails related to Capstone,” the report states. “Dr. Rojas indicated that ’emails don’t matter,’ as every deliverable was provided by Capstone.”
The investigation similarly found that Rojas did not retain a majority of his emails with Cumming, the other contractor hired alongside Capstone. District employees told investigators that Rojas encouraged them to routinely delete their emails.
Rojas has maintained that he did not know about Capstone’s connections to Del Terra and has denied the company received any special treatment.
Jaramillo, Capstone’s owner, reportedly used a Del Terra email address in emails that included Rojas on at least two occasions. Two of Capstone’s employees had worked for Del Terra in Bassett, according to the investigation.
Capstone terminated its contract with Central Basin in August 2022, the same month that Alex and Luis Rojas were arrested. Jaramillo has denied the arrests factored into the decision and claimed he did not make any money from the Capstone contract. The company has since shuttered.
Board members call for transparency
Four of the six Central Basin board members responded to requests for comment, but only one openly criticized the findings. Directors James Crawford and Thomas Bekele, both appointees to the board, did not respond, while Director Juan Garza declined to comment due to the confidential nature of the report.
In an email, Board President Arturo Chacon, a staunch ally of Rojas, accused either another board member or the district’s general counsel of leaking the report to the Southern California News Group in an attempt to “set a narrative that is potentially harmful to the general manager, this board and this agency.” Board members are prohibited by law from revealing closed-session proceedings and related documents, he said.
“They were obviously upset that no wrongdoing was found or substantiated and want to smear our general manager, staff and the district with this unlawful act,” Chacon wrote.
Vasquez, the director whose lawsuit against the district uncovered Capstone’s ties to Del Terra, intends to ask the board to publicly release the report at its next meeting, currently scheduled for June 24.
“We have a fiduciary duty to make it public and to send this report to the District Attorney’s Office,” she said. “Hopefully, my colleagues will agree with that.”
Related links
Central Basin’s auditor quits over missing records, ongoing ‘mismanagement’
Central Basin will investigate contracts tied to accused official’s bribery co-defendant
Central Basin hires forensic auditor, investigator to review contracts tied to bribery case
Central Basin hired company secretly tied to general manager’s co-defendant in bribery case
Central Basin won’t take action against indicted general manager, memo states
While she could not speak about the report specifically, Vasquez said Rojas’ administration was “intentionally structured” so that he had “control over the entire organization, including its finances and how the finances were being distributed.”
Director Martha Camacho-Rodriguez said the district is in an “emergency,” as it is now years behind on annual audits and its last two auditors have quit after identifying significant deficiencies in the district’s fiscal safeguards. She blamed Rojas’ leadership for those failures, saying the agency’s books are in such a bad state that an audit could not be completed.
Camacho-Rodriguez agreed that CRI’s report should be released publicly and sent to law enforcement. The board must schedule a special meeting to deal with the findings, she said.
“He needs to have some consequences and they need to come soon,” she said of Rojas.