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John Wallace’s attorney threatens sanitation district

February 4, 2016

Wallace signs

By KAREN VELIE

An attorney for former South County Sanitation District administrator John Wallace asked the district board Wednesday to rescind their decision to send allegations of criminal malfeasance to multiple law enforcement agencies and then alleged the district faced legal liability if it did not cooperate.

Two weeks ago, the board voted to send the 124 page Knudson Investigations report of mismanagement and malfeasance to the FBI, the San Luis Obispo District Attorney and the Attorney General. Carl Knudson has worked for more than 40 years as a fraud investigator and has testified as a certified fraud expert in more than 50 federal and state trials and proceedings.

However, sanitation district staff said Wednesday they had been busy with other tasks and had not yet taken the report to law enforcement.

John WallaceOn Wednesday evening, the sanitation district board provided Wallace time to respond to the allegations in the Knudson report.

Wallace asked the board to reject the report and not to send it on to law enforcement. In support of his request, Wallace said the allegations in the report were untrue, it was based on hearsay not facts, and that the bookkeeping under his leadership was meticulous.

Approximately 75 people attended the board meeting forcing some to listen to the meeting from an adjacent room. In addition, three Arroyo Grande Police officers stood at the entrance to City Hall.

Following Wallace’s speech, the board allowed the public to respond. Of the 24 speakers, 10 asked the board to send the report to law enforcement and 14 spoke on Wallace’s behalf.

Wallace supporters were made up primarily of Wallace Group employees and service club members.

Several local Rotarians spoke of Wallace’s impeccable character before asking the board not to send the report to law enforcement.

“I have known John Wallace for a decade,” attorney Bill Herreras said. “My experience with John is honesty, integrity and good moral character.”

Wallace Group employees also touted Wallace’s community service work. Wallace Group principle Kit Carter said the rate payers who pushed for the investigation did not have the intellect to understand what was going on.

Several rate payers who supported the investigation said that the San Luis Obispo Grand Jury had come to the same conclusion as Carl Knudson and that it was important to let law enforcement either verify the allegations or exonerate Wallace.

“This is not about character,” Coleen Martin said to the board. “This is about your fiduciary duty to the rate payers.”

Attorney Dennis Law with the San Luis Obispo law firm of Andre, Morris & Buttery, said Knudson’s investigation was inadequate, did not include sufficient interviews with Wallace Group employees and should not be sent on to law enforcement. Law said he represents Wallace and the Wallace Group.

“You made a reference to law enforcement that has appeared in the newspaper,” Law said. “There is harm happening today, now, immediately to him and his business. So, what I feel needs to happen, you need to rescind the decision regarding the references to law enforcement. If their was a technical approval of the report, as a part of you action, you need to rescind it.”

After public comment, the board asked Wallace to provide it a copy of his response and took no other action.

When asked about Laws allegations of liability to the district, San Luis Obispo based attorney Stew Jenkins expressed surprise. Jenkins said that California Civil Code Section 47(b) provides an absolute privilege for matters brought up in proceedings such as sanitation district meetings.

In addition, the California Supreme Court had held in the 2004 Hagberg case that it is absolutely privileged to refer a government audit to law enforcement specifically to assure the open communication between citizens and public authorities responsible to investigate and remedy wrongdoing, Jenkins said.


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BRING IT!


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Knudsen made clear that he wanted to interview the employees but Wallace wouldn’t let him. Now he slams Knudsen for not interviewing his employees. That is just plain surreal.


And staff hasn’t had time in the past two weeks to comply with the board directive to forward the report to law enforcement authorities? How long does it take to type in three email addresses, attach the document and hit send?


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On PAGE 2 Mr. Knudson reports that he did not interview Wallace employees because Mr. Wallace insisted on being present at the interviews.


Guess Wallace and his lawyer didn’t read the report, cuz they missed page 2. It was clear that Wallace’s character references had not read the report or looked at the finances, and do not live in the District.They just blindly believed all that Wallace put forth to them about what a wonderful soul he is.


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The ratepayers who pushed for the investigation ‘don’t have the intellect to know what’s going on”? Taxpayers who paid for Wallace’s windfalls – are you insulted?


Remember, the grand jury found something wrong. But then, they were not buddies of Wallace, nor of his ‘great buddy’, Seitz. Nor non of Sheriff Parkinson’s friends were on the grand jury nor investigating the problem.


Wonder how much Wallace paid for his condo in Florida in a Parkinson development? That was purchased with your money when he used the SCSD as a personal piggy bank.

Yes, the good ole buddy system does have its perks…………….


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What I’m looking forward to is when former Mayor Tony Ferrara must be deposed.

He, who was on the San Board for a decade or so.

Same ‘ole, same ‘ole

“But the rates were low and Big Tony told us everything was fine”

So of course it must be.


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If the allegations are baseless why does he protest so much about law enforcement reviewing the report?


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“Knudson’s investigation was inadequate, did not include sufficient interviews with Wallace Group employees”, I say okay let the FBI, the San Luis Obispo District Attorney and the Attorney General handle those “interviews” or would it be called questioning under sworn testimony with the penalty of perjury if they do no tell the truth? You don’t have a problem with that Mr. Wallace do you?


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I did notice that Shoals was the only board member to go up and shake Mr. Wallace’s hand, good ole boys network.


He must have thought bringing all his gang and taking up almost every seat in the house would work to his favor,NOT!


I found it interesting that Wallace did not mention how the plant is running so efficient now, using less chlorine and has not had any problems. oh and they did this without having a abundant staff of Walllace people running the show.The plant is actually making money once again and is able to work on getting the redundancy plan going forward.


Kudos to the staff at the San Dist, you are able to do much of the work in house saving us, the rate payers money. I have to wonder why The Wallace group was not able to do that.


I did not hear Wallace say anything about the conflict of interest either. You can fool some of the people some of the time, but you can’t fool all the people all the time. If your records were so meticulous why are they not at the plant where they should be.


Talk to the FBI and clear your case with them if you can, but I believe Mr. Knudson knew what he was doing and you got caught with your hand in the cookie jar.


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Just watched the meeting. Reminded me when Ferrara tried to pack the chambers with his “buddies”. I hope those from SLO are willing to put their face on the front page of this website to apologise to the ratepayers for providing the “good guy defence”

Gotta go puke now.


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Another SH!T SHOW! for sure.


The SLO crowd was a little too SLOW in responding.


That reports and its 1,000 pages of exhibits are online and to be sent this week!


No turning back now.


And this time the law enforcement agencies will be looking into Wallace, not just at the San District but to Wallace and all his dealings. Ouch!


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