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Federal investigation into Atascadero shifts into high gear

July 27, 2010

By KAREN VELIE

Federal agents from several agencies including the FBI and FEMA were in the city of Atascadero a few weeks ago asking questions about the Printery – the city’s former youth center – and searching through records related to the alleged theft of FEMA funds by the city of Atascadero, city officials said.

“He asked me when the last time the Printery was used actively by the city,” said Kevin Campion, the director of the Atascadero Skate Park who told the investigator that he was not involved in youth activities until a few years ago. “He was pretty aggressive.”

Campion said he called City Hall to report the agent’s question and was told that federal investigators were going through offices and interviewing staff there also.

A city employee, who asked to remain unnamed to protect his or her position, said City Manager Wade McKinney claimed the federal “audit” was a standard yearly event.

“Anytime any agency deals with FEMA, once the projects are completed, the office of the Inspector General inspects the project,” said Marcia Torgeson, Atascadero city clerk and assistant to the city manager. “The audits are routine and expected.”

In 2008, City Attorney Brian Pierik announced that FBI investigators were conducting a probe into activities at Atascadero City Hall. It was suspected that the inquiry centered around the city’s unconventional and questionable procurement of FEMA funds to build a replacement youth center at 5493 Traffic Way.

FBI public relations officials have declined to confirm or deny any investigation.

CalCoastNews first revealed the apparent sleight-of-hand by city officials in an early 2008 article. The story revealed how city officials bilked taxpayers out of more than $4 million in disaster aid to construct a replacement youth center under the guise the previous center had been rendered unsafe during the 2003 San Simeon earthquake.

Those officials alleged the historic Printery Building was the city’s youth center at the time of the quake, according to state and federal records.

However, at the time of the quake, the Printery Building, located at 6351 Olmeda Avenue, was not functioning as a youth center, but as a meeting hall for the Freemasons. The city’s actual youth center stood a few blocks away, at 5493 Traffic Way, the site of the city’s current skate park.

Responding to allegations of improper actions, McKinney developed his version of a “timeline” to bolster his claim that funds for the city’s youth center were acquired appropriately. McKinney said that city agencies were sponsoring events such as volleyball, cheerleading, “Mommy and Me” classes, and Friday Variety Nights at the Printery Building during the month of the quake.

However, during a city council meeting, Community Services Director Brady Cherry said the only ongoing activities at the Printery Building in December 2003 were Masonic meetings and private karate classes. Neither of which would qualify the building for taxpayer funded repairs.

In addition to attempting to procure funds for the Printery, city officials have requested federal and state aid to help repair the historic City Hall rotunda building because of damage they said was caused by the 6.5-magnitude quake, including sinking of the foundation, bricks that popped out of the building’s façade, new cracks throughout the building and water pipes that began to leak.

However, there is evidence in Atascadero – the recollections of former elected officials, city employees, and previous reports – that shows that some leading city officials may have purposely lied when they reported that the historic City Hall’s foundation substantially sank during the 2003 San Simeon earthquake.

The disinformation was part of an attempt to get more than $30 million in federal and state disaster relief funds. Of that, approximately $8 million was slated for repairing the un-level foundation.

In April 2010, FEMA denied a second appeal for funding for city hall repairs noting that local news publications had reported on the building’s sinking prior to the December 2003 earthquake.

“The city did not present conclusive evidence that differential settlement of the site was a direct result of the disaster,” said Michael Baldwin, public assistance officer for the California Emergency Management Agency in a letter to the city on April 14, 2010. “Therefore, FEMA denied the city’s second appeal.”

FEMA has agreed to pay for disaster related damage and for strengthening the masonry walls and the foundation of the city hall building.

“I have always believed that something unethical and probably criminal occurred with the acquisition of federal funds for the Printery,” said former Atascadero mayor Mike Brennler. “I hope these investigations bring those who are culpable to justice,”

Updated at 4 p.m. on July 27 to add a response from Marcia Torgeson, Atascadero city clerk and assistant to the city. manager.


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The city accountant, Rachelle Rickard, knew exactly what she was doing as did Wade McKinney and Brian Pierik. Those three are going on the bus (as Katie would say). Others who were involved and knew are O’Malley, Clay and the one that flew, Luna. They all knew.


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You people have it all wrong. If A-town were as corrupt as you say it is, then FEMA and the FBI wouldn’t be investigating them at all. The feds would just turn a blind-eye on this whole thing.

The fact that they are in town asking hard questions shows that Atascadero’s level of corruption is small potatoes.

Frankly, FEMA ought to be the ones being investigated. Why in the world would they even consider giving $4 million to fix a youth center in the first place? Aren’t youth centers and recreation programs pretty much non-essential facilities and services?

In Morro Bay the FEMA bastards pretty much denied the city’s request to help rebuild our fire station engine bay, which WAS damaged in the 2003 quake and deemed condemned by a local licensed structural engineer (snicker, snicker).

The fire station on Harbor Street is the only one in town, and MBFD is a first responder for a disaster at Diablo Canyon, yet FEMA told the city it wouldn’t give more than $12,000 to replace a $2 million building.

And now, FEMA is again stopping up the works with its allocations of ARRA money destined to help fire departments across the country (Morro Bay too).Remember Katrina? FEMA is one f***ed up agency.

And I doubt seriously that anyone on the A-town city council or city staff will ever face arrest in this fiasco. City council people are protected from being prosecuted for criminal acts so long as the act was the result of a duly noticed and properly enacted action by the elected body. And staff can always say, “the city council approved this…”

What could happen is Atascadero would have to repay the $4 million (which I thought they’d already been ordered to do). Don’t hold your breath waiting for someone to be arrested and prosecuted.


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If we have to pay back the 4 million, then somebody had better get arrested. The youth center is a failure and paying back 4 million is going to break us tax paying citizens and our city coffers. My kids spent more time at the bowling alley than they do at the youth center. O’Malley cheated to get in a vote when the bowling alley was bought out by the city that would increase his land value by the creek, while transforming the prosperous bowling alley into new diggs for city hall. Yes, O’Malley cheated by transferring his property into his son’s name and then transferring the title back to himself after his vote. Screw you O’Malley. If we have to pay that 4 million back, your going down.


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If we get lucky, they might file charges on the “attempted ” Rotunda fraud and leave the Youth Center allocation alone.


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Adding to some of the comments. The day after the Printery was transferred to Gearheart he used the building as collateral for a one million dollar loan from Heritage Oaks. He continued to use it as a cash cow to finance his Ponzi scheme until there was 4.5 mil indebtedness along with unpaid taxes. He had no intention of renovating the building because he didn’t have the money and it was going to be very expensive s because of its historical designation. McKinney insisted repeatedly there was progress and Clay, Luna and O’Malley backed him.. The record spoke to the lack of progress.

An incompetent FEMA employee made the whole scheme possible. No one asked Brady Cherry, who was department head for recreation, if the building was used as a youth center because they knew he would not lie. Instead Rochelled Rickard was given the assignment and she was clueless about the recreational activities and not too curious. When Brennler asked Brady Cherry, at that infamous CC meeting, if the building was being used for youth activities he said no and McKinney etal didn’t bat an eyelash. They kept on lying.

I believe the McKinney had a deal with Gearhart to not transfer the building to him until FEMA funds had been approved.


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Your on the money and the Tribune just printed a flowery article (“flowery” where did I just recently hear that term) about how the BOD at Heritage Oaks Bank was unaware of their sanctioned assistance in facilitating the clandestine activities of Geargart et al.

My ass that HOB BOD and bank officers didn’t know exactly what they were doing.


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Here we go again. Why is it that there are always questions of fraudulent behavior in Atascadero? Like a previous person noted it’s always WADE McKinney and Tom O’Malley along with Jerry Clay.

Now it appears that Mayor Fonzi has teamed up with O’Malley and the “good old boys” and gal are at it again. Even though I don’t always agree with the issues of Ellen Beraud I have to credit she and Bob Kelley for not being involved in all of these fraudulent dealings.

Hopefully FEMA and the FBI will get this all cleaned up so that Atascadero can start conducting business legitimately and hopefully regain some respect as being an honest city.

J. Edgar Hoover, where are you when we need you?


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J. Edgar Hoover, where are you when we need you?

I have it on good authority that Jaye is in gay transvestite heaven with his long time companion Clyde…


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Voting Atascaderoids can man-up and take responsibility for the status quo. So can the non-voting citizens.


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[…] This post was mentioned on Twitter by SLO News, CalCoastNews. CalCoastNews said: Federal investigation into Atascadero shifts into high gear – http://tinyurl.com/2dgdff8 […]


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“Wade McKinney claimed the federal “audit” was a standard yearly event.”

LMAO, Right, the FBI and FEMA just show up at the City of Atascadero unannounced annually to conduct an audit. They go through specific records and track down Employee’s at their specific venues to ask aggressive questions. Any other cities have the same experience?


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The long history of financial shennanigans in the City of Atasadero is well documented. And it is always ineteresting the same names appear over and over again…


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I called in to KVEC in SLO about the Printery fiasco WAY back in 07′. I stated then that the whole movement of money from Printery to the new center, stunk to high heavens!! It was questionable then as it is now. I hope the Feds. run each and every person involved, through the mill. I thought then and now that something is amiss and await for the subpoena’s to start being issued.


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It’s been so long that I thought they got away with it. I think Katie is right when she say’s that they attempted to push it too far. I think FEMA gave our City a lot of leeway with the claims of the Printery Building. They got greedy and went too far with the Rotunda, this is sad because I really want to see that beautiful building restored. Atascadero won’t be the same without the Rotunda Building sitting at the forefront of the Sunken Gardens. “sunken” how ironic.


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These officials did well when they managed to get the 4+million for the youth center, despite the fact that the Printery had been sold to Gearhart and was 2 day’s short of closing escrow. To claim that the 8 inch sinkage of the Rotunda building was the result of the 2003 earthquake after the identical problem had been reported in the Tribune prior to the quake was about as cavalier as it gets. Then the city had the nerve to file two appeals when they were denied for obvious false claims. Every false report is FRAUD. Maybe people are right when they say that the FBI takes it’s time and that they are going to show up in Atascadero with a black & white bus to take away all the criminals.

If those people are correct, Tom O’Malley will be on the bus, Jerry Clay will be on the bus, Wade McKinney will be on the bus, Rochel Ricard will be on the bus along with people from Hurst Financial, Cuesta Title and the list goes on.

Kelle Gearhart is singing and he undoubtedly knows plenty.


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