Sanitation district showdown set for Wednesday

March 16, 2011


A proposed investigation into accusations that the administrator of the South San Luis Obispo County Sanitation District (SSLOCSD) has been using his position to funnel monies to his private engineering company is on the district’s Wednesday board meeting agenda.

Allegations of misdeeds that include the misuse of public funds, firing whistleblowers, manipulating sewage spill amounts and tossing unclean water tests have plagued the SSLOCSD for more than a year.

John Wallace is the chief administrator of the district that provides services to about 38,000 customers in Arroyo Grande, Grover Beach and  Oceano. 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.

Wallace and SSLOCSD board member Tony Ferrara have repeatedly claimed the allegations made against the district and Wallace by several plant employees are unfounded.

During a Surf Rider board meeting a little over a week ago, Wallace said that employee claims that they had been fired for informing regulators of problems at the plant would soon be proven false and that the state labor board had already rejected their claims.

However, Krisann Chasairk, spokesperson for the California Division of Labor Standards Enforcement, said that the claims were not rejected. Former plant supervisor Scott Mascolo’s claim was withdrawn by his attorney who filed a lawsuit against the district.

Former laboratory technician Devina Douglas’ case is still open, though she was given a right to sue letter from the state. Douglas has filed two lawsuits, one against the district for wrongful termination and another against Wallace, the Wallace Group and plant manager Jeff Appleton for risking public safety and fraud.

Officials from the California Water Resource Control Board have investigated and validated many of Douglas and Mascolo’s allegations.

Arroyo Grande Mayor Ferrara spoke out at a city council meeting contending that media reports about problems at the plant were incorrect and had already been proven false by an independent investigation he initiated.

Following calls from plant employees that the plant was in violation of safety and health requirements, regulators took a closer look at the plant which resulted in the discovery of numerous violations.

In July 2010, a notice of violation was given to the plant for not keeping records of discharge samplings as required, not reporting that they had demoted one of the whistleblowers and for the improper testing of water samples in an attempt to make the plant appear to be in compliance with environmental requirements.

In January, regulators determined Appleton operated the plant “using fraud and deception,” according to a letter of proposed disciplinary action.

Appleton appealed the state water board’s findings blaming many of the violations on Wallace.

In response to allegations that the plant was operating without the proper manuals, Appleton said he had informed Wallace several times that the manuals needed to be rewritten, but Wallace said “there was not enough money available to update the manuals.” The state rejected Appleton’s appeal saying that as the district manager he was responsible for providing “simple and easy-to-follow plant procedures.”

Appleton also claimed he had not demoted two plant operators without informing regulators. Appleton said Wallace took away his ability to discipline staff even though it was under his job description, according to the state’s response.

In addition, Appelton claimed that one operator volunteered for his demotion and that Mascolo had been reinstated to his supervisor position following a Skelly hearing.

State regulators contend that there is no proof that Mascolo was reinstated. Mascolo also refutes Appleton’s claim and contends he was on paid administrative leave for a year.

As for the allegation that Appleton had asked the lab technician to dump a sample with high levels of bacteria that would show the plant was out of compliance, Appleton said that one of the plant’s operators, Trini Rodriguez, would verify that he did not ask Douglas to dump the sample.

The state rebutted Appleton’s response after interviewing three employees that confirmed the incident. As for Rodriguez, he refused to discuss the incident with the investigators, according to the state’s response which verifies the sample Douglas was asked to dump was in violation of state environmental requirements.

“The reported coliform analysis violated the discharge permit which was reported to the regional water Board,” the report says.

Nevertheless, the attorney for the district, Michael Sietz, was quoted in a Santa Maria Times article on Tuesday claiming that the sample Douglas was asked to dump was not in violation.

During the past three SSLOCSD Board meetings, board member Jim Hill has attempted get the Board to agree to an independent investigation into whether or not it is in the best interest of the district to have Wallace serve as administrator while his engineering firm is contracting with the district.

Each time Hill’s request was shot down by the other two board members. Then, on March 2 , with five members of the media in attendance, both Ferrara and Bill Nicolls agreed to place the issue on Wednesday’s agenda.

Wallace Group staff was asked to put together a report regarding a potential investigation into Wallace’s management of the district, according to the board packet.

Wallace Group staff concluded that every allegation made by Douglas and Mascolo has already been investigated by Rich Thomas of Thomas Consulting, including allegations that Wallace was funneling monies to the Wallace Group while acting as administrator for the plant.

However, even though Mascolo made numerous allegations of misspending, Thomas’ report only looks into allegations the district had paid too much for a roof paint job and a chemical tank. Mascolo’s allegations are redacted from Thomas’ report and Mascolo contends Thomas fails to address many of his concerns.

The SSLOCSD Board meeting is scheduled for 6 p.m. on Wednesday at 1655 Front Street in Oceano.





  1. oceanone says:

    Does Wallace’s firm have similar contracts with other government agencies? Someone said his firm was the engineering firm for the city of Arroyo Grande at one time.

    (3) 3 Total Votes - 3 up - 0 down
    • undertow says:

      Supposedly Paso, San Simeon, Templeton, Oceano CSD have throw him out. He still controls Avila CSD, The Sanitation District, and as of lately was handed Arroyo Grande’s public works admin department compliments of compadre T. Ferrara and no doubt there’s more.
      Gotta give compliments to their advertising agency when they come up with phrases like what was taken from Wallace’s website.
      “We pride ourselves in our expertise in best management practices (BMPs)”,
      BMP’s? is this what got our plant investigated and charged by the State with a NOV, a 3 million gallon sewage spill with probable fines and another NOV coming, their lead man having his certificate downgraded for illegal activity that Wallace was aware of for over a year, yes BMP’s, Id sure hate to see WMP’s.

      (6) 6 Total Votes - 6 up - 0 down
      • MaryMalone says:

        Which BMPs is he talking about? Is it an independent agency’s BMPs? State BMPs? Federal BMPs?

        If they are Wallace’s BMPs, then the worth of the BMPs and the claim to have “met them” is directly proportional to the ethics and honesty of the Wallace Group.

        (3) 3 Total Votes - 3 up - 0 down
    • slojoey says:

      FYI, I think Tony Ferrara’s wife or ex-wife (Christine) used to work for Wallace.

      (1) 1 Total Votes - 1 up - 0 down
  2. MaryMalone says:

    This is getting so absurdly like the “I’m-My-Own-Grandpa” CW song, I’m getting dizzy.

    Let’s see if I have this correct.

    It’s been revealed in the past that Mr. Ferrera have been unwilling to report certain SSLOCSD/ Wallace/ whistleblower issues to the his Board, as is his responsibility. This makes me think of the term—what is it? Oh, yes: “cover up.”

    In three previous meetings, both Ferrera and Grover Beach’s Niccols have “shot down” Mr. Hill’s requests to have an investigation into whether Mr. Wallace should be SSLOCSD’s administrator while the Wallace Group is contracting its services to SSLOCSD. Obviously, the issue at question here for about everyone but Mr. Wallace, Mr. Ferrara and Mr. Nicolls is the huge red warning flag that reads “DANGER! POSSIBLE CRIMINAL CONFLICT OF INTEREST!” flying over SSLOCSD.

    However, in the following meeting, which was well-attended by media, Ferrara and Nicolls agreed to let the issue be heard at the next (upcoming) meeting, and, according to the Board Packet, the WALLACE GROUP was asked to investigate the potential for a “potential investigation into WALLACE’s management of SSLOCSD. a report about a potential investigation into Wallace’s management of the district, according to the board packet.

    So we have the two SSLOCSD members–who have been, IMO, obstructing attempts to investigate the conflicts-of-interest-laden arrangement where John Wallace serves as administrator for the SSLOCSD at the same time The Wallace Group is contracting with SSLOCSD–now agreeing to an “investigation” into the potential investigation of Wallace’s “management” of SSLOCSD but only if the Wallace Group conducts the investigation .

    I bet most readers could have, without finishing the article, predicted that this John Wallace investigation would come back showing that there was no need to investigate John Wallace or his group, The Wallace Group.

    Bingo, that’s what happened. The two involved in the coverup of issues related to the John Wallace/Wallace Group conflicts of interest have decided that the ridiculous “investigation” by Thomas was sufficient.

    You betcha I’ll be there on Wednesday. I wouldn’t miss this for the world.

    (9) 9 Total Votes - 9 up - 0 down
  3. rallyraid says:

    Mr Ferrara’s convictions to see the right thing done are commendable,its unfortunate he is being informed by two that themselves are either clueless or liars, that being Seitz and Wallace. These dudes are never at the plant so how would they know diddly about what goes on and the guy who they trusted for lintel just got busted for Fraud and deception in his duties and had his certification removed,sucks to be you . What kinda game plan could you possibly come up with to convince a jury that the elimination of one of the most critically important positions of a water plant that was costing the tax payers something like $4200 a month, and was done by a person who holds awards, carries an impeccable track record in the business, who just months before exposed illegal activity, and you justifiably eliminate the position and hold on to your $3900 a month janitor who BTW gets the same bene’s as anybody else at the plant including the lab person. Dayum…Jury duty isnt much fun but Id volunteer for this one.

    (11) 15 Total Votes - 13 up - 2 down
  4. Bob says:

    I was at the district meeting last night. District board member and Arroyo Grande mayor Tony Ferrara with the support of board member Bill Nicolls representing Grover Beach objected to any kind of investigation regarding any allegations of district chief administrator John Wallace or his company The Wallace Group that conducts district business as an outside contractor.

    Board member Jim Hill representing Oceano stood up for the public good and requested an investigation regarding the districts management culture and the issue of John Wallace as chief administrator and owner of The Wallace Group as a district contractor. He also called for the investigation to include operational practices of plant operations and recommendations to improve any needed practices or equipment.

    Unfortunately Ferrara and Nicolls disagreed. Ferrara stated they have wasted time and money on the issue and did not feel the need for a independent investigation. he further stated that the hype created by (His Words) “blogger Karen Velie” is the only reason why people such as myself (In words to the effect of) are wasting time requesting action into alleged actions that are not true.

    Mr. Farrara, should allow a independent investigation into the practices of the district plant and a review of district management prove him right!

    In response to board member Hill’s request for a investigation. Farrara suggested instead of a investigation there could be a “Best Practices Review” of the plant involving a adhoc committee of management and board members from other sanitation plants & districts. The board agreed to a motion by Jim Hill for staff to bring back to the board in 2 meetings a plan to move forward with a review of Best Practices. Mr Hill also requested the motion to include a review of “management culture”

    In my opinion the district should sever ties with either Mr. Wallace as Chief Administrator or the Wallace Group as a district contractor. In todays political climate and modern practices, it is absurd to have this type of relationship that allows a district chief administrator to contract out district business to a company owned or associated by the same person.

    I met Karen at the meeting last night and thanked her for the work she does.

    (27) 31 Total Votes - 29 up - 2 down
    • undertow says:

      Why waste more tax payer money when Ferrara searched high and low to find a qualified investigator appropriate for the job. This would lead the public to believe the investigator had no prior connection or knowledge of potential malfeasance in our area, and that the investigator would be completely unbiased.
      Mr Ferrara failed to mention that Mr. Thomas who conducted the investigations is a long time acquaintance of Ferrara and in all likeliness resided in the 5 Cities area while Mr.Thomas served as temporary Chief of Police for Pismo beach, his contract being extended in a special Pismo Beach Board meeting on September 18th 2001.
      No to discredit Mr Thomas or his integrity in his services , however this type of disclosure should be noted. It circles back to the same questions and perception the public has of the long term ties and cronyism between these individuals. The public has every right to question their absolute defiance and be outraged at their refusal to answer questions.
      It smelled like shit yesterday and today its no better.

      (15) 15 Total Votes - 15 up - 0 down
  5. SloTownMan says:

    Why is Pismo Beach still trying to kill the pigeons?

    (3) 7 Total Votes - 5 up - 2 down
  6. SLOChuck says:

    While I still place partial blame on the Santa Maria paper for it’s shoddy journalism, in a way I understand why their article yesterday was… weak.
    They likely trusted Wallace and Co to tell the truth to the public, a feat Wallace and Co has proven themselves incapable of. Wallace lies. Seitz lies. The SSLOCSD board lies (whether it’s intentional or merely ignorance is up for debate.) Of course they are trying to cover their own tails here. The board blindly trusted Wallace, who may or may not have been aware of what a screw up Appleton was.
    Speaking of Appleton, why is there no mention of “disciplinary action” or termination for him listed on the agenda for tonight’s meeting now that the certification demotion had been finalized? Is this another way for them to save one of their own? Are they turning a blind eye? Or was it a simple oversight?
    I urge you all to join me at tonight’s meeting and tell these crooks that they’re done squandering our money and mismanaging our utilities.

    (24) 24 Total Votes - 24 up - 0 down
    • MarkJames says:

      The Santa Maria paper is guilty of a bit more than just shoddy journalism. It isn’t difficult to do a little fact checking before you print a story, rather than to continue perpetuating the dissemination of untruths that are told by Wallace. . The facts are available for anyone that cares to follow up on them and I have to question what the Santa Maria Sun was thinking. In my opinion, some money (such as promises of advertising) passed hands someplace and I don’t say that lightly. There are too many inaccuracies in that article, there is no excuse for that and it is unforgivable.

      (19) 21 Total Votes - 20 up - 1 down
      • kellygirl says:

        I’ve heard that the reporter on that story is a close friend of the Wallace family. My, how far we have fallen from Woodward and Berntsein.

        (14) 14 Total Votes - 14 up - 0 down
    • undertow says:

      SloChuck, I think the Devil is in the details as Appleton in his appeal asks why the District isn’t defending him, why would they unless they put him up to his illegal deeds or threatened him with termination if he didn’t do as they said?. Appleton’s appeal also indicates grievances were filed against Wallace and Seitz by Appleton back in 2004,yet for unknown reasons we;ll never know. I’m by no means defending a convicted criminal here, however there have several accounts of alleged threats by Wallace in that if an individual wanted to succeed or be promoted they needed to do as he said, legal or not apparently. Case in point is allegations of Wallace telling Douglas if she dropped her Labor board complaint against the District and him, Wallace would then consider appointing her as lab director, She didn’t play into Wallace’s threats or game and she got fired, imagine that. Douglas isn’t the first person promised the world by Wallace who never kept his word on their promotion or advancement.
      One of Appleton’s explanations as to why the Districts O&M manual wasn’t updated was that Wallace rejected Kennedy Jenk’s bid to perform the job as it was to expensive, he also disallowed Appleton from doing this as Wallace said the extensive engineering required is not part of Appleton’s job. Well By God guess what, Wallace awarded himself $40,000 to write a new O&M manual after waiting till it was to late and they were in violation, and another $25,000 to teach the plants staff on how to read it, can you say self delegation of work, and how much was that K&J bid to do the O&M manual way back? Top it off with the fact there’s so many errors in the manual it was useless,so good to see Wallace on the ball and familiar with the plant he’s managed for 25 years. If this isn’t worthy of a Federal investigation then what is, please somebody tell me.

      (17) 19 Total Votes - 18 up - 1 down
    • SanSimeonSam says:

      Regarding Seitz and his role, let us not forget that his wife is a senior manager at Wallace Group…Conflict of interest ?

      (8) 8 Total Votes - 8 up - 0 down
      • Anodyne says:

        Sharon Seitz was laid off from the Wallace Group a few months ago.

        (2) 4 Total Votes - 3 up - 1 down
        • MaryMalone says:

          I wonder who the Wallace Group outsourced her job to?

          (0) 0 Total Votes - 0 up - 0 down
  7. tojofay says:

    Can you get another picture of this rat? He should not be associated with Fenway Park.
    And remember folks a society can measured by how effectively it manages its SH-T– ahh– effluent.
    Wouldn’t it be nice to be able to dig for clams in Pismo again?

    (22) 24 Total Votes - 23 up - 1 down
  8. undertow says:

    Quite the opposite of information in comparison to yesterdays Santa Maria times article where words such as “alleged” would lead us to believe nothing has happened in the way of violations or illegal activity at the treatment plant. Our politicians go so far as to say the District’s “NOV” was nothing more than a few paper work related short comings, yet not a word is mentioned regarding former CPO Appleton and the charges against him as plant lead person. There is no mention that as of 3-11-11 Appleton lost his appeal and will have his certificate removed, nor that he was the responsible person overseeing the plants discharge into our ocean for the last ten years who willfully and knowingly allowed untreated sewage to pollute our beaches.
    The appeal clearly shows Mr. Appleton’s lies were met with the facts provided by his own staff who have witnessed first hand accounts of his unethical and often illegal directives as plant manager. The appeal details operator Trini Rodriguez, the man Wallace placed into the temporary supervisor position in Appleton’s absence, and accused of his involvement in the ongoing embezzlement investigation, has refused to comment when questioned by state investigators concerning illegal activity.
    Wallace claims to have hired investigators to look into every alleged incident reported by employees and the findings are that their innocent of any wrong doing, yet they were charged by the state with various crimes such as fraud in reporting, what am I missing here, . If I’m not mistaken were still a couple weeks shy of April fools day, yet a report included in the latest Board pack indicates, “Staff” whoever that is, will recommend the Board review District Councils report whether or not to conduct an independent investigation of the Districts management” . District council? the Board? In reality we have the individuals accused of unethical practices utilizing their own questionable legal council who has graciously prepared a report on his business companions for you to consider as a serious document, Has this this not been the problem all along?
    Anybody see a pattern here in that EVER investigation Wallace and his crew have ordered up has come back clean, yet in the cases where a regulator or legitimate investigative organization was in control they were found to be guilty? Its time to clean up the plants effluent and its management because lately they both smell like poop.

    (33) 37 Total Votes - 35 up - 2 down

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