Solar developer linked to DA probe overbilled by at least $1 million using altered invoices, records show

The developer of a failed solar project bankrolled by the City of Industry overcharged by at least $1 million by allegedly altering invoices from subcontractors, according to court filings.

Industry paid the developer, San Gabriel Valley Water and Power, $20 million in reimbursements over a roughly two-year period for work on a proposed 450-megawatt solar farm on 2,500 acres of ranch land straddling Diamond Bar and Chino Hills, commonly referred to as Tres Hermanos Ranch.

Billings from two different subcontractors, HELIX Environmental Planning and Ambient Communities, were significantly higher — sometimes double — what the companies say they actually billed the solar developer, according to recent court records obtained by the Southern California News Group.

Investigators from the Los Angeles District Attorney’s Office raided the homes and offices of SGVWP’s leadership earlier this month. No arrests have been made so far, but filings in the civil lawsuit to recover Industry’s lost investment may provide insight into the direction of the criminal probe. The D.A.’s Office served search warrants at the homes of the lead developer, William Barkett of La Jolla, former state Sen. Frank Hill of Whittier and Industry’s former city manager Paul Philips of Cerritos, among others.

“It looks like there is some falsification of invoices,” said Troy Helling, Industry’s city manager. “We are helping the D.A.’s Office in anyway we can. There is an ongoing investigation and I don’t want to necessarily say anything that might interfere with the D.A.’s investigation.”

SGVWP’s attorney, Peter Sunukjian, did not return calls for comment.

Subcontractor alleges invoices were altered

Days before the simultaneous raids across Southern California, Industry filed a motion asking a Los Angeles Superior Court judge to compel SGVWP’s project manager, Ambient Communities, to turn over records the city claims Ambient withheld from discovery requests for more than a year. The missing records include an attachment on an angry email exchange between Wade Hall, one of Ambient’s principals, and Michael Schwerin, the CEO of HELIX, a subcontractor hired to work on the solar project’s environmental review.

In the emails, Schwerin expressed frustration over what he described as an “altered” invoice that appeared in a November 2017 San Gabriel Valley Tribune article detailing the thousands of hours of work that had been billed to the city by that point. Schwerin states his company billed SGVWP a total of $166,828 as of February 2017, but the invoice submitted to the city by SGVWP, and included in the article, instead claimed HELIX had charged $300,000, according to copies of the invoices released by Industry through a public records request.

“As the CEO of HELIX Environmental Planning, I have the obligation to ensure that my company is not placed into legal jeopardy by actions we did not commit and were not aware of until after the fact,” Schwerin wrote. “If you think involving your team’s attorney would be helpful in expediting the resolution — by which I mean quickly communicating our correct invoice amounts to the City of Industry — then yes, feel free to bring her or him into the discussion.”

Schwerin demanded Hall have the city directly confirm they knew of HELIX’s “actual billings,” the emails showed, but that exchange seemingly never happened, according to city officials. The missing attachment from the email — a draft of a letter Schwerin threatened to send to Industry’s city attorney — has yet to be turned over either, according to Industry’s motion.

In an Aug. 24 statement, Schwerin said SGVWP told HELIX the invoices were changed “in accordance with the lease” between Industry and the company.

“SGVWP also indicated that it would provide the City with the actual amount that HELIX Environmental Planning had billed to SGVWP,” Schwerin stated. “We are cooperating with the City in response to their subpoena.”

Schwerin and his attorney, Anthony Mahavier, declined to answer questions about the emails.

Industry City Attorney Jamie Casso said the city did not receive the letter mentioned in Schwerin’s original emails, or corrected billings from SGVWP.

“We have tremendous concern about the propriety of San Gabriel’s billings,” Casso said. “The entire transaction is being reviewed.”

Project manager says billings were lower

Ambient’s own billings are among those in question. Ambient has attempted to distance itself from SGVWP and recently asked a judge to remove it from the civil case. Hall and Robert Anselmo, another principal in Ambient, allege they were consultants without any interests in the project or its accounting, which they say was controlled by Barkett, who formed SGVWP with Hill, a former state senator from Whittier with strong ties to Industry’s politics.

In the filing, Michael Gibson, the attorney for Hall and Anselmo, stated the company’s contract with SGVWP was for $50,000 a month. The same invoices submitted to Industry by SGVWP instead showed Ambient charging $110,000 a month, according to documents released in a public records request.

SGVWP asked for more than $2 million in reimbursements from Industry for Ambient’s billings from June 2016 to December 2017, according to an analysis of records previously released to the Southern California News Group. Invoices with the same dates, submitted by Ambient as an exhibit in the civil case, showed total billings of less than $1 million for the same time period.

Gibson declined to comment on the discrepancies between the invoices.

Casso, Industry’s attorney, said the city doesn’t accept Gibson’s argument that Ambient was just a consultant.

“Many things were signed by Wade Hall on behalf of San Gabriel Valley Water and Power,” Casso said. “These guys were intimately involved in this transaction.”

HELIX went to Hall to demand answers about the alleged altered invoice for a reason, Casso said.

Red flags abundant

Over the years, Industry ignored numerous red flags related to the solar project.

The cap on reimbursements for SGVWP’s work was initially set at $5 million in 2016, then jumped to $11.5 million and then to $20 million in less than two years. Industry, under Philips’ leadership, didn’t require the company to turn over records showing its investors or the members of the company prior to disbursing the payments.

In 2017, Industry’s then-finance director, Susan Paragas, initially raised concerns about vague invoices submitted by SGVWP. But she later said she stopped scrutinizing the deal as much when the city’s payments were restructured as a loan. The catch, however, was that SGVWP only had to pay back the money once the project was completed. It never even broke ground.

A Southern California News Group investigation in 2017 found numerous erroneous and questionable billings submitted to the city by Barkett and Hill’s company. The spending included more than $100,000 in invoices on the letterhead of a law firm that had shut down a year before the work allegedly occurred. A partner in the defunct firm said he knew nothing about the solar project and alleged Barkett owed him money from a previous deal.

The city later determined SGVWP erroneously used invoices on the closed firm’s letterhead, instead of a new firm for one of the other partners.

The Industry City Council, which approved the project in secret in 2016, soured on the idea in 2018, shortly before the council cut ties with SGVWP, Hill, Barkett and anyone who supported them.

Hill, then an extremely influential figure in Industry’s politics, had gained favor by helping a new majority get elected on the council in 2015. He recommended Philips as city manager and brought the solar project to the city. Court filings indicate the Whittier Republican secretly owned a stake in San Gabriel Valley Water and Power through another company, Mojave Green Power LLC.

At the same time, Hill seemingly played both sides. He collected monthly payments indirectly from Industry as a consultant of the Cordoba Corp., the contractor hired by the city to oversee its investment in the proposal.

Hill was cut off in 2018 when City Council members alleged he attempted to get a new housing project built to stack it with supporters who would have become one of the strongest voting blocs in the city of roughly 200.

Industry sued SGVWP, Barkett, Hill and others in 2019, alleging the company siphoned off the $20 million and, though it billed for thousands of hours of work, it would not provide evidence backing up the invoices. The company’s representatives argued they didn’t have to turn over the records and the matter is still pending in court.

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