John Wallace arrested on felony conflict of interest charges

January 24, 2017

John WallaceEditors Note: “The criminal complaint against John Wallace is attached below the article.

By KAREN VELIE

The San Luis Obispo County District Attorney’s office has filed felony conflict of interest charges against 73-year-old John Wallace, the former administrator of the South San Luis Obispo County Sanitation District. The announcement came Tuesday.

After conducting a 10-month investigation into allegations that Wallace was funneling money from the sanitation district to his private engineering company, The Wallace Group, the district attorney filed two felony counts. Wallace is accused of having financial interest in a contract that he made in his official capacity. Wallace is also charged with two misdemeanor counts of using his government position to influence a decision in which he has a financial interest.

“The public has the right to expect that their elected and appointed officials and their administrators will carry out their duties in a lawful, ethical and professional manner,” said District Attorney Dan Dow. “The District Attorney’s Public Integrity Division will thoroughly and fairly review all matters referred to us and will pursue charges such as these whenever appropriate.”

In 2010, CalCoastNews exclusively reported on accusations that Wallace had been funneling millions of dollars from the sanitation district to his private engineering company without proper oversight. The sanitation district serves the residents of the Oceano Community Service District, Arroyo Grande and Grover Beach and is governed by a three-person board consisting of one representative from each community.

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. Both ended up losing their jobs shortly after they became whistleblowers.

In 2011, the San Luis Obispo County Grand Jury, prompted by the CalCoastNews investigation, mounted an investigation into Wallace and the sanitation district board of directors.

Following its investigation, the Grand Jury recommended that the district board consider hiring independent management and that it evaluate and compare organizational and operational alternatives for the district. The San Luis Obispo County Auditor Controller’s Office was tasked with looking into the conflict of interest allegations.

“The Grand Jury finds the district is in a state of denial regarding the conflict of interest and, as a result, the district has taken no effective steps to mitigate the conflict,” the report says. “The Grand Jury concluded that, as a result, the board and the district are exposed to a number of financial, legal and public trust issues.”

Ex-mayor Tony Ferrara

Ex-mayor Tony Ferrara

At that time, former Arroyo Grande Mayor Tony Ferrara, Arroyo Grande Council Woman Caren Ray, Grover Beach Mayor John Shoals, former Grover Beach Councilman Bill Nicolls and former Oceano Community Services Director Matt Guerrero supported Wallace and claimed the allegations were unfounded.

In Oct. 2011, the SLO County Auditor Controller’s Office provided its investigation report to the sanitation district board saying, “there are reasonable controls in place and operating adequately to mitigate the perceived conflict.”

Nevertheless, former Grover Beach Mayor Debbie Peterson and Arroyo Grande Mayor Jim Hill battled to have an investigation launched into the allegations and to remove Wallace from his administrative position at the sanitation district.

In 2015, the district hired Carl Knudson of Knudson & Associates who confirmed conflict of interest allegations and asked the sanitation district board to send his report to criminal investigators.

On March 4, the sanitation district sent the SLO County District Attorney’s Office the Knudson report and asked county prosecutors to investigate the allegations of criminal misconduct.

Wallace’s is slated to be arraigned within the next couple of weeks.

People v John Wallace-Complaint by CalCoastNews on Scribd







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  1. Snoid says:

    Wonder what the judge will think when Wallace says “whats it gonna take to make you happy” The infamous JW whats your price line.

    (18) 24 Total Votes - 21 up - 3 down
  2. hijinks2 says:

    I’ll bet money that somehow the investigation or criminal prosecution gets botched, thus helping their buddy and good friend walk.

    They will provide “alternative facts” to sway the jury and people.

    (11) 25 Total Votes - 18 up - 7 down
  3. 1965buick says:

    Classic white-collar criminal.

    (26) 40 Total Votes - 33 up - 7 down
  4. Ron says:

    You know where you luck out, Cal Coast News?

    The perps in your investigative stories — like Gearhart and Wallace (actually, alleged perp in Wallace’s case) — don’t have Dan Dow going over to their homes to raise campaign funds, like mine does.

    Trust me, if Dan Dow had ALSO been going over to Wallace’s home to raise campaign funds, the story above these comments wouldn’t exist. Trust me.

    Lucky you!

    : -)

    (11) 39 Total Votes - 25 up - 14 down
  5. FreeAGCouncil.com says:

    Tony, Tony, Tony
    What have you done?
    Are you going to throw buddy John under the bus to save your limping ass?
    Nothing the ratepayers would like more than to see you working at a Sewage plant int he RAW!

    (30) 36 Total Votes - 33 up - 3 down
    • rukidding says:

      With all of the ongoing sewage problems at the California Men’s Colony Prison this all may work out to be a pretty good deal. Tony and John, while serving their just due time, could work on the sewage plant problem and get it all resolved.

      (27) 37 Total Votes - 32 up - 5 down
  6. standup says:

    Oh but it’s ok to have a trained attack dog kill a man and not charge the two bit cop owner? What a joke. Oh let’s keep paying his salary just to be fair.

    (14) 34 Total Votes - 24 up - 10 down
    • Citizen says:

      You have to read the law on dog attacks and the responsibility of the owner. The DA has to follow the law,

      (19) 27 Total Votes - 23 up - 4 down
  7. Ben Daho says:

    We the People!

    (20) 22 Total Votes - 21 up - 1 down
  8. SamLouis says:

    Wallace’s firm had their finger in the Pismo Preserve too. Supposedly they were doing some pro bono consulting. Given the ridiculous cost overruns on the PP, I now have to wonder…

    (48) 54 Total Votes - 51 up - 3 down
    • Snoid says:

      That would be their MO more less to make more money. Mistake after mistake, change orders and corrections they never own up to. Wallace himself even admitted this once.

      (33) 37 Total Votes - 35 up - 2 down
      • analyticone says:

        It’s a perfect “planned obsolescence” scheme. Take a look at the projects Wallace has done – across the board – they design, engineer, manage, build, and then administer a project. Then, oops! something goes wrong and they have to redesign, re-engineer, project manage, administer, and build all over again, and again, and again. The profits just keep rolling in. Some examples? The Nacimiento Pipeline (Ogren) that leaked and needed a very expensive fix. The brewery on Hwy 101 that elicited odor complaints and would have been an easy fix for a licensed sanitation operator. Our very own SSLOCSD. Nearly every project went this way. Cypress Ridge, where Wallace couldn’t get the waste right and experts had to be called in to fix it and did so quickly and easily. Los Osos Sewer District. How many more can you name? Look closely, and you will see.

        (31) 37 Total Votes - 34 up - 3 down
        • beacon of light says:

          Wallace also had fingers in the Yes on Measure J Committee big time! Possibly more contracts for him!

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

          Ding, ding,ding…I see you’re starting to grasp the theory of “sustainable in practice”.

          (21) 25 Total Votes - 23 up - 2 down
  9. SamLouis says:

    Ferrara is next.

    (35) 39 Total Votes - 37 up - 2 down
    • ajdury says:

      From your fingertips to the DA’s ears!

      (26) 30 Total Votes - 28 up - 2 down
    • RonHolt says:

      It would be nice but I think that would be harder to prove legally. He could claim ignorance or incompetence in his job as former SSLOCSD Board Chairman and only someone with evidence (e.g. Wallace) could overcome that. (I am not sure Ferrara’s ego would let him claim incompetence though so maybe they could trap him that way.)

      (17) 19 Total Votes - 18 up - 1 down

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