FEMA rejects John Wallace’s request for disaster funds

February 2, 2016

By KAREN VELIE

The Federal Emergency Management Agency rejected John Wallace’s appeal to reconsider its denial of disaster funds to cover invoices to his company the Wallace Group, according to a Jan. 14 letter from the Governor’s Office of Emergency Services.

In 2010, Wallace’s mismanagement of the South San Luis Obispo County Sanitation plant and a heavy rain storm led to a mechanical breakdown at the plant and a massive raw sewage spill that flowed into approximately 40 homes in Oceano. In 2011, FEMA evaluated the damage and obligated $40,329 for sanitation district plant repair work.

At the time, in addition to serving as the chief administrator of the sanitation district responsible for filing the FEMA fund request, Wallace was also the owner and president of the Wallace Group, a private engineering consulting firm located in San Luis Obispo that did part of the plant repair and administrative work.

In 2013, the sanitation district requested an additional $110,018 for cost overruns. FEMA agreed to part, but not all of the new charges.

In Aug. 2013, Wallace, on behalf of the sanitation district, appealed FEMA’s denial to fund an additional $39,675 for cost overruns. In his appeal, Wallace provided the cost of each invoice and a brief description of the work done, according to the denial letter.

FEMA responded back in Jan. 2014 requesting more detailed information about each invoice and the work performed.

Wallace Group then “acknowledged it had mistakenly included an additional $14,773 in funding” in its appeal request, according to FEMA’s appeal analysis. Wallace Group then revised the appeal amount from $39,675 to $24,902.

The Wallace Group was the sanitation districts prime contractor. Wallace Group submitted nine cost overrun invoices to FEMA for a total of $15,761. Work included bid process activities, procurement, descriptions of work rendered, review of contractor work, and processing payments.

In Jan. 2016, FEMA and the Governor’s Office of Emergency Services denied the sanitation district’s appeal to fund the Wallace Group invoices because information provided by the Wallace Group was inconsistent and work done was for pre-disaster related conditions, the rejection says. In addition, FEMA noted the amount listed in the appeal ($15,761) did not match the total amount of the invoices ($15,540).

Last month, the sanitation district board voted unanimously to seek a criminal investigation of allegations of malfeasance by Wallace in his management of the district.