District attorney sues San Simeon manager over alleged illegal practices

September 29, 2021

By KAREN VELIE

The San Luis Obispo County District Attorney’s Office filed a civil suit on Tuesday alleging illegal business practices and false advertising against a company paid to manage the San Simeon Community Services District (CSD).

The complaint accuses Charlie Grace and his company Grace Environmental Services, which is paid to manage the district, of unfair and illegal business practices. The People of the State Of California filed the civil suit against Grace, Grace Environmental Services and Does one through 20.

Nestled along the coastline near Hearst Castle and the Piedras Blancas Light House, San Simeon is primarily a tourist destination. The home of 11 hotels, San Simeon has approximately 500 residents and a yearly district budget of almost $1 million for wastewater collection and treatment, road maintenance and street lights.

The district attorney’s nine causes of action include:

The San Simeon CSD pays Grace Environmental Services approximately $55,000 a month for managing and upkeep of the district, including weed abatement. However, after swapping out bookkeepers, Grace began submitting weed abatement invoices from third-party vendors for the district to pay while continuing to get paid for weed abatement through his contract.

At a CSD board meeting, San Simeon resident Hank Krzcuik “criticized the district’s job bidding process, stating the district was violating state laws.” Krzcuik was also critical of the scope of work Grace was performing for the district, including the apparent double billing for weed abatement.

“The Grace Environmental Services contract needs to be carefully reviewed and potentially re-negotiated in line with the actual services being performed,” Krzcuik wrote the CSD board.

Even though the law allows the public to criticize government, Grace threatened to sue Krzcuik for interference with business.

The complaint also alleges Grace violated the terms of his contract regarding facility maintenance expenses. Prosecutors accuse Grace of violating California’s Unfair Competition Law because he refused to allow the public to scrutinize invoices regarding the maintenance expenses.

When questions arose about his possible conflicts of interest, Grace allegedly lied to the board about communication with the California Fair Political Practices Commission, according to the civil suit.

“At the May 2017 board meeting, Grace failed to abstain from participating in discussions of whether the 2016 contract violated conflict of interest laws,” according to the civil suit. Grace knew, or should have known, that if a legal opinion found the 2016 contract violated California’s conflict of interest laws, the district’s board would likely need to take action that would result in either a modification or termination of the 2016 contract.”

Prosecutors accuse Grace of violating the California’s Business and Professions Code because he misled the public to believe he was the CSD’s general manager, according to the civil suit.

The civil suit accuses CSD officials of writing and publishing an article in the San Simeon CSD newsletter that misled district ratepayers into believing the district lost a grant because of false allegations made by the public. However, the National Fish and Wildlife Foundation rescinded the $125,000 grant because district officials failed to resolve areas of concern.

The SLO County District Attorney’s Office is asking the court to order San Simeon CSD officials to stop conducting unlawful and fraudulent acts of unfair competition, and to stop making untrue or misleading statements. Prosecutors are seeking civil penalties of $2,500 for each act of unfair competition and for each false or misleading statement, in addition to court and investigation costs.