Judge questions district attorney’s case against John Wallace

March 6, 2018

A Santa Maria Superior Court Judge questioned on Monday why the conflict of interest case against John Wallace is being heard in criminal court and not civil court.

Judge Timothy Staffel voiced concerns that neither of the victim agencies, the South San Luis Obispo County Sanitation District and the Avila Beach Community Services District, were seeking restitution. While noting that he thought the case belonged in civil court, Staffel said that there were still more witnesses to hear from when the preliminary hearing continues on Tuesday morning.

Wallace, 73, has pleaded not guilty to three felony and two misdemeanor conflict of interest charges for allegedly using his positions as a government administrator to funnel money to his privately owned engineering company, The Wallace Group.

In 2010, CalCoastNews exclusively reported on accusations that Wallace had been moving millions of dollars from the sanitation district to his private engineering company without proper oversight. Following CalCoastNews’s lengthy investigation and reporting on Wallace, in 2010 the San Luis Obispo Grand Jury determined Wallace had a conflict of interest in his administration of the sanitation district.

That led Carl Knudson of Knudson & Associates to produce an investigative report that led to the SLO County District Attorney’s Office electing to prosecute Wallace.

On Monday, Deputy District Attorney Michael Frye took testimony from Matthew Habber, a former accountant for the sanitation district, who said he believed Wallace had a conflict of interest in his role as administrator while sending work to his private company.

Attorney Mike Seitz, a friend of Wallace who worked as the sanitation district’s legal council while he also worked for Wallace’s private firm, testified that the sanitation districts board of directors knew of Wallace’s conflicts of interest, but continued to allow Wallace to funnel government contracts to his private firm.

On Tuesday morning, the hearing will resume with former sanitation district board member Matt Guerrero testifying. While a board member for the sanitation district, Guerrero voted in support of many of Wallace’s questionable actions and verbally condemned several people who asked the district attorney to investigate him.

In January, just weeks following Guerrero’s appointment to a judgeship, the entire SLO County bench ordered that Wallace’s case be moved to the Santa Maria branch of Santa Barbara Superior Court.

The hearing is scheduled to resume Tuesday in Department 1 at 9:30 a.m.