State finds fraud and deception at sanitation plant

January 27, 2011

John WallaceBy KAREN VELIE

After a lengthy investigation, the State Water Resource Control Board has determined that the director of the South San Luis Obispo County Sanitation District operated the plant “using fraud and deception,” according to a letter of proposed disciplinary action.

Specifically, the state’s investigation revealed that plant manager Jeff Appleton instructed staff to manipulate effluent release numbers in order to make it appear the plant was operating in compliance with pollution and discharge requirements. The state is proposing Appleton’s plant operator certificate be downgraded, which would make him ineligible to manage the plant.

Four of the plant’s six operations employees told the state that Appleton either asked staff to throw away poor samples or had written policies prohibiting testing samples at times they were likely to be out of compliance.

Appleton declined to respond the state’s allegations.

John Wallace is the chief administrator of the district, which provides services to about 38,000 customers. He is also owner and president of the Wallace Group, a private engineering consulting firm located in San Luis Obispo that receives about $80,000 a month for plant administration and engineering services.

Plant supervisor Scott Mascolo and former laboratory technician Devina Douglas said they told Wallace of the plant’s failure to comply with rules regarding updating operating manuals, not taking gifts from venders and manipulating testing more than a year ago. After Wallace made no changes, both Douglas and Mascolo reported the alleged abuses to state regulators.

Douglas was let go not long after she informed regulators she had been told to manipulate samplings. She filed a lawsuit against the district on January 11.

Mascolo has been on paid administrative leave for over a year. He is battling the district’s attempts to fire him.

At the same time, the district, an agency which provides sewer services to Arroyo Grande, Grover Beach and the unincorporated town of Oceano, has come under fire for allegedly under-reporting the amount of raw sewage spilled during heavy December rainstorms.

Two of the Sanitation board members have helped keep the public in the dark by not informing the city councils they represent about troubles at the plant. Bill Nichols, a Grover Beach councilman, sat in while investigators interviewed Appleton in June. However, Nichols did not report any of the districts problems to the council and when he gave his report on the district he said things were fine.

Tony Ferrara, Arroyo Grande’s mayor and a sanitation district board member, also failed to mention the district’s pending lawsuits and state investigations when he gave his sanitation district update to the Arroyo Grande City Council.

At a recent sanitation board meeting, Ferrara and Nichols rebuked a suggestion by the board’s third member, Jim Hill, to no longer allow Wallace to serve as the district administrator while his private engineering firm is contracted to do work for the district.

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Do your part and call 781-5800 for the SLO DA’s office. Then call the Ca Attorney General’s office toll free @ 1800 952-5225 and demand action be taken NOW!!!!!! That’s all it takes, a few minutes of your time.

Please do it.

You might get results with the state AG but I would be skeptical of any action from the SLO DA’s office.

He is a “Good ol’ boy” who does nothing to upset anyone with any degree of standing in this community no matter how bad they act — unless and until the public at large demands it. Unfortunately, the “public at large” in SLO County is uninformed as most get their news from TV or the Tribune (aka “Press Release Daily”).


Somebody explain to the public WHY Wallace gets $80,000 a MONTH for NOT keeping proper or no records at all for YEARS at the South County Sanitation facilty and the plant has a dismal history of non compliant discharge.

Why is the plant is in such a state of disrepair after millions of rate payers money has been spent over the years??

And WHO is going to pay the massive fines (the State of California NEEDS the money and is agressively ) for the plant operating in NON compliance with respect to pollution and discharge requirements?

At a recent SCSB meeting a gentleman brought up the fact that the plant discharges processed afluent at an average rate in non storm conditions over a 7 hour period that would exceed a million gallons. 7 hours was the approximate down time of the plant during the December storm that caused the already faulty electrical system to fail. And yet less than 400,000 gallons was reported!

NEWSIE’s comparison to government corruption to an ICEBERG was a PERFECT analogy!

My opinion only leads me to believe that Mr. Appleton is Wallace’s puppet who is merely trying to hang on to his job!

Also in my opinion only $80,000 a MONTH goes a long way to provide possible kickbacks as suggested by SLOchuck and sans Kelly Hearheart way of doing things as recently uncovered.

In my opinion, Wallace needs to be TERMINATED immediately! Talk about CORRUPTION, FRAUD & CONFLICT OF INTEREST problems! This guy needs to go!

Today’s show should be informative to say the least. In all fairness Mr Wallace and Appleton should be invited on the show as well, unless they already declined to show or make a statement which is typical of a guilty party. Sure sounds like Wallace had a easy out by throwing Appleton under the bus, immediately terminating his employment and claiming he didn’t know any of the wrong doing was taking place, but then he’d look completely incompetent in his duties of 25 years of being a general manager, but the Appleton has been there for some 25 years also. Must be buddies by now covering for one another like two peas in a pot of corruption. Guess Wallace had no choice but to cover his butt with lies in hopes to fighting off the dogs, the law, the RWQCB violations, and lawsuits, the fines, the embezzlement accusations, the conflict of interest accusations, the failed performances as district engineer, the incompetence as general manager, Mr Hill etc,etc, and still Nichols, Ferrar and JW say he’s doing his job . If that’s not being blinded by ones own arrogance what is?

In all reality what could Appleton and Wallace say?

Wallace has three options: 1) Claim Jeff is being railroaded (which will make him look stupid because we now have evidence in the form of a reprimand from the certification body that Jeff is a lying/manipulating clod of mud,) 2) Claim he just didn’t know (which will make him look negligent,) or 3) Admit he knew something was up (which makes him complicit in all this.)

Appleton has three options: 1) Claim he is being railroaded (as mentioned above, yeah right,) 2) claim ignorance (which in all rights feed right back into what the certification body stated about him being negligent of his duties, and SHOULD cost him his job) or 3) Admit he screwed up (which definitely will cost him his job.)

Their silence speaks volumes.

The Wallace group has been making money off the Los Osos sewer for at least 12 years now. I know, I know, we don’t even have a sewer yet and he’s still been making money off of it.

Seniorcit writes:

“The Wallace group has been making money off the Los Osos sewer for at least 12 years now

Yep… they sure have, along with his other consulting friends. 12-years-and counting.

And to make this story a bazzillion times more interesting, Wallace and his consulting friends at Multari, Clark, Crawford, and Cleath and Associates (among others) are directly responsible for creating the Los Osos sewer disaster to begin with, starting in 1998, and then have cashed FAT check after FAT check after FAT check ever since, due solely to the fact that they deliberately created the Los Osos sewer disaster in 1998/1999, and the checks are coming from their friends in SLO County government, like public works director, Paavo Ogren, who, not so surprisingly, was the interim GM at the newly formed LOCSD in 1999, where he helped his friends create the sewer disaster.

I first exposed all of that last year at this link:

Nice work, if you can manufacture it.

Great story, Karen.

In it, you write:

“according to a letter of proposed disciplinary action.

If you could link to that letter, that would be very interesting. Thanks.

They stole $3,200 from my family and I want it back, who can I sue I’m getting the hang of it. I will not be able to afford to live here, once they have the thing built, so to me this sounds crazy but I won’t give them another dime until I am forced too! The longer these alleged crooks keep ripping everybody in Los Osos off except a select few of the more upright walking subjects, the longer I get to live here. This ungodly decision to make only Los Osos residents pay for this is outrages look at our roads, “I’m not drunk officer I am weaving to avoid the potholes,” Officer, “I know I have to weave too, have a nice day sir.”

The Wallace group has been making money off of the Los Oos sewer for at least 12 years. I know, I know, we don’t even have a sewer yet.

So this guy is responsible for my $3,200 the CSD took from me in a round about manner, okay

clown, the chese is after the rat here, you will pay, seems you have a lot of explaining to do! In the fraud capital of America, tell me one thing how do you get the stench off your dirty hands. You will squeak soon, I am on your tail, old greedy one!

I listened to your show. At the end you mentioned that there is a lot of misinformation regarding the Price Cyn develop. and that you were going to do a piece on it. I can’t wait to see what you have to say. You also said that King is not one of the owners. He was. He is in all the reports ie EIR, LAFCO etc. as the owner of the Spanish Springs Ranch. I’ve been at meetings where he’s represented himself as the owner of SSR. If he’s not now then he’s up to something fishy again. There is so much that I’d love to spill on this issue.

I look forward to the article.