San Simeon manager wants residents to fund his legal defense

October 17, 2022

By KAREN VELIE

The San Simeon Community Services District Board of Directors is considering having the rate payers cover another $167,773 in legal bills related to alleged conflicts of interest and mismanagement, at a cost of $800 per rate payer.

The San Luis Obispo County District Attorney’s Office filed a civil suit in Sept. 2021 against Charlie Grace and his company Grace Environmental Services, which is paid to manage the district, alleging illegal business practices and false advertising. Prosecutors are asking the court to order the district to stop conducting unlawful and fraudulent acts of unfair competition and to stop making untrue or misleading statements.

County 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. These penalties currently add up to more than $2 million.

In a Sept. 23 letter to the district, Grace’s Los Angeles based attorney Amber Maltbie argues that the district should cover the cost of Grace’s legal defense because the board directed him to commit the alleged violations.

For example, the civil suit accuses Grace of writing and publishing an article in the San Simeon CSD newsletter that misled district residents about the mismanagement.

In her letter, Maltbie argues it is the district board’s fault for requiring a newsletter.

Prosecutors also 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. Maltbie argues the district board is responsible because they referred to Grace and not his company as the general manager.

Even though Grace’s contract with the district includes an indemnity clause, it does not cover “intentional, willful, or negligent operations or conduct of Grace Environmental Services or any of its employees, agents or subcontractors.”

The district attorney’s case could take a year to play out, beginning with a case management conference scheduled for December. While the current board majority supports Grace, that is likely to change.

Three people are running unopposed for three open seats on the board: incumbent Michael Donahue, Karina Tiwana and Jacqueline Diamond. All three candidates have voiced concerns regarding Grace’s continued management of the district.

The California Fair Political Practices Commission penalized Grace last year for the “inherent harm” he did to the community by sitting on both sides of the negotiating table. Grace negotiated a contract with Grace Environmental Services, the private company he owns, in 2016 in violation of state laws enacted to protect the public.

In March, the current board agreed to pay $49,250 to Grace for legal bills he incurred while defending himself against the California Fair Political Practices Commission regarding conflict of interest violations. Even so, the board refused to pay Grace’s $4,500 fine.

On Oct. 11, the district board met in closed session to discuss Grace’s request for $167,773 for recent legal costs, even though the court has not yet determined if Grace’s actions violate the law.

In a cure and correct letter, activist Julie Tacker accuses the board of violating the Brown Act when they met in closed session because the board did not disclose the item in open session before going into closed session as required by Government Code 54957.7 (a) and because they discussed the issue as a threat of litigation even though the letter did not include a threat.

Following the closed session, district staff said the board took no disclosable action, though it is anticipated the district board will bring back the item before the new board is seated in December.

The district is primarily funded by local residents and business owners through their water and sewer bills. 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.

Tacker is concerned about the cost to rate payers in the disadvantaged community.

“If this board agrees to pay $168,000 in legal bills, with only 208 utility connections in the tiny district, that equals $800 per connection,” Tacker said. “Unless the court determines that Grace followed the law, he should pay his own legal fees.”


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ryguy

This is very troubling news about government With these articles here I never see a comment from the accused party though. I would be more inclined to believe the reporting if I heard the other side of the story or the article mentioned they refused to comment. Was there an attempt to interview the other side?


casappleton

Sounds like this guy is playing the John Wallace playback. Rack up millions in fines and force rate payers to pay.


exWGemployee

I was thinking the exact same thing. Sounds exactly like a John Wallace scenario.


It’s all too familiar in SLO County. Same stuff, different CSD.


casappleton

Did the fine for Oceano flood ever get paid


newlook

Yes.The fine for mismanagement of the WWTP and the resultant plant failure during a heavy rain event was paid in 2016


casappleton

By who?


kayaknut

Is Charlie Grace still associated with The San Simeon Community Services District and if so, why?


fish

my understanding he’s their GM


commonsenseguy

I can guarantee the rate payers of San Simeon with tell Charlie Grace and his attorney where they can stick their request. What’s up with the San Simeon District? Why is the corruption so blatant? Between this district and the Port San Luis District it’s time clean house, file charges and convict all those affiliated with these mini-mob district members.

I wonder how much the angry and compromised Bruce Gibson has his hands in this. More political favors? More of the pay-to play that seems to follow him and Tom Foulks everywhere.


fish

Put Cambria on your list of corruption back door dealing just the faces change


SLO Friend

One of the problems is that very few people want to run for office in these small districts. It looks like residents got fed up in San Simeon and there are new people coming in. In Port San Luis , it looks like there was no one running against Mary Matakovich so she’s in for 4 more years. In a few years lets hope someone runs against Bob Vessley who has costed that district likely well over $300K in payouts, attorney fees and lost productivity (many employees leaving) due to his harassing behavior and actions.


newlook

Or recall these board members.


Hank Photo

To make matters worse in small San Simeon, this year the district was split into 5 smaller, that is, tiny districts. There are only 190 registered voters. The district will not likely be voting for a candidate again in a competitive election. That means a couple of parties and business interests end up running the town.


newlook

Residents should form a fair practices group(or something similar), bind together, and file civil suits against the GM AND the Board members for monetary loses due to negligence, incompetence, dereliction of duties, not fulfilling sworn fiduciary responsibility,etc. Also, recall Board members


MBwaiter

The common denominator in SSCSD and Port San Luis is their attorney Minnery. He has given both tremendously bad legal advice and let this happen. I cannot understand how they let him stay as legal counsel and why he isn’t paying back all the fees paid to him.