John Wallace facing a criminal investigation

January 21, 2016

John WallaceThe South San Luis Obispo County Sanitation District Board of Directors voted unanimously Wednesday to take reports of malfeasance by former district administrator John Wallace to District Attorney Dan Dow, the Federal Bureau of Investigation and Attorney General Kamala Harris.

Carl Knudson, of Knudson and Associates, spent almost two hours presenting his report on past management practices and providing recommendations to avoid future malfeasance to the district board. Knudson also asked the board to seek a criminal investigation into Wallace, the owner of the Wallace Group.

Board President John Shoals said he had made mistakes and let some of the wrongdoing occur. In 2010, former sanitation district employees Scott Mascolo and Devina Douglas sent letters informing Grover Beach Council members, Arroyo Grande Council members and the Oceano Community Services District Board about misuse of public funds and problems with the plant complying with safety and health requirements.

District management responded by terminating the whistle-blowers and demeaning the credibility of news organizations, including CalCoastNews, that covered the allegations.

For about an hour, during public comment, citizens asked the board to seek criminal prosecution of John Wallace. Julie Tacker noted that federal grant money was in play which could allow the FBI to also investigate the criminal allegations.

Mike Byrd asked the board to also send the report to state engineering licensing agencies and the State Bar of California regarding allegations in the report of wrongdoing by sanitation district legal counsel Michael Seitz.

Wallace Groups public relations and communications expert Chris Gardner said Wallace had not had time to read the report and develop a response. Gardner asked the board to continue the item until Wallace had a chance to address the board.

Sanitation district board member Matt Guerrero said he thought Wallace should have an opportunity to respond to the allegations and asked that Wallace’s response be placed on a future agenda.

Shoals disagreed, and said that Wallace could speak during regular public comment, and that he would give Wallace additional time to respond to allegations in the report.

Arroyo Grande Mayor Jim Hill made a motion to carry out Knudsons suggestions regarding district operations and procedures, to pay Knudson approximately $14,205 for completing the investigation and to ask for a criminal investigation. The board voted unanimously to approve Hill’s motion.

Thomas A

Fire Adam Hill’s FaceBook page is getting very interesting. Mrs. Torres-Hill has been commenting on the first post.

Thomas A

Dee must have gotten in trouble, she unliked the page which deletes her comments. We will spare you the screenshots. Let’s just say she was very upset that the Fire Adam Hill video is showing up on her timeline on FaceBook and she and Adam are innocent. Thank you for the huge show of support on FaceBook, check it out and Fire Adam Hill in 2016!


Does the SLOC DD, CA AG and/or the FBI now have to “agree” to prosecute? Or is starting the prosecution process a foregone conclusion at this point?

Of the three agencies, which is most likely to be the lead one?

In any event I suspect customers of the South San Luis Obispo County Sanitation District should be burning up DD Dan Dow’s phone right now.


He is too busy promoting human trafficking month in a self promotion bid to pay attention to a crime with 38,000 victims. Additionally his calendar is full with 771, yes, 771 Drunk in Public cases. John Wallace can steal millions, but if he celebrates watch out!

don the beachcomber

To learn more on Adam Hill, go to:


Learn, the vote him out.



Please include some of the pages to this report on your story.

How about the legal fees one?

I like this quote from Knudson

” In essence, the rate payer’s funds were used to defend Wallace as an outside contractor against the interest of the District employees.”

Or how about this one:

“I would suggest a “Policy” that prohibits District Managers or District Legal Counsel to be involved in defending lawsuits that directly or indirectly implicate their actions as a cause for the lawsuit. Given the incredible amount of legal expenses paid by the district to the Wallace Group and Michael Seitz to essentially defend their actions and at the same time pay the Wallace Group and Michael Seitz in excess of 100s of thousands of dollars to “consult” or aid in the defense seems to reward them for their incompetence and in our opinion is the potential conflict of interest.”



” In December 1999, total hours billed to the District by the Wallace Group was 81 hour per month for both Administrative and Engineering work, and by 2009, the Wallace Group had increased chargeable hours to over 663 hours per month!”

That is 4 full time people for the entire month.

Currently 8 people work for the San District!!


It is truly jaw dropping that the San board displayed any degree of fiduciary responsibility based on the information in this report and these findings. It is frankly incredible to suggest that a reasonable person would not look at that tangled situation and not think it a conflict.

Shoals and Guerrero are working professionals in the intricacies of government, utilities and the law. They must stand up and take responsibility.

Too many people join boards in order to placate their narcissistic tendencies, feather their nest or to use their positions for CV fillers in order to get better pay elsewhere. Most of these types don’t do their job.


Even the Tribune has something on its website.

Interesting how Wallace had his PR boy Chris Gardiner ( formerly of Tolosa Press) to ask for time for a rebuttal to a 124 page report!

Be sure to read that report

It is explosive and very damning! got to agendas and packets and look for the Knudson report

56 boxes!

1.2 million in legal fees

Business cards with Wallace employees posing as San district employees

Attorney’s wife as HR director

Ferrara and Nichols not asking any questions letting monthly receipts = $70,000!

2 whistleblowers lives interrupted!

Where is all the money??


I agree with letting Wallace defend himself.

Let him talk to the DA

or the Attorney General

or the FBI

I’m sure they’re anxious to hear what he has to say.

Thomas A

Clean up time. You are next Adam Hill.


Hey Tony Ferrara …. I hope your house sells quick …. may I recommend some out of the way place in South America


Big Tony left and is in Palm Springs directing Caren Ray and KFB how to breathe.


Palm Springs, well within FBI reach.


Lol at Shoals about face. This man can not be trusted.


Finally, a unbais report filled with facts, verification, and details. Thank you Jim Hill and (holding my nose) John Shoals. As for Matt Guerrero, you are definitely one of the reasons this was allowed to go on for so long. You have certainly been part of the problem and I hope the payoff from Wallace was worth it.


Don’t allow yourself to be fooled by Shoals.

He is a longtime friend of Tony Ferrara and Bill Nicolls–the same two Sanitation Board Directors who voted 2-1 against Jim Hill for YEARS. Let’s see if he removes Mrs. Nicolls as his current alternate to the district.

Neither Shoals nor Guerrero wanted this audit, despite how Shoals wants to spin it now.

He kept Nicolls as the appointee to the District so he could remain at arms length and pretend not to know what was going on.

No shortage of BS in GB or AG where Guthrie and Ray are going to pull the same crap.

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