By Amanda Frye and Mark Gutglueck
The unfolding litigation launched against Redlands by former City Manager Nabar Martinez over the city’s unwillingness to live up to its contractual commitment to provide him and two of his children with lifetime medical benefits is parturient with extortionary factors suggesting Martinez has previously blackmailed and is now attempting to again blackmail members of the city council as well as senior members of the city’s managerial and administrative staff.
For more than a decade while he was at the helm of Redlands City Hall, Martinez had a virtually unfettered hand to organize and structure the city’s staff at his own discretion, and the city was essentially run in accordance and in keeping with his judgment. While the model upon which Redlands and all 17 other general law cities in San Bernardino County and all 360 other general law cites in California are governed by calls for the city council to give the city manager policy directives upon which to carry out his day-to-day, week-to-week, month-to-month and fiscal year-to-fiscal year managerial duties, in point of actuality in Redlands the lion’s share of policy decisions along with those relating to managerial function were ones left up to Martinez. Thus, the city council merely rubberstamped whatever Martinez wanted to do, oftentimes after he had already initiated the policy without first consulting with or advising the council’s members, with the occasional exception of his behind-the-scenes interaction with whoever happened to be mayor at the time.
From the time he was brought in as city manager in March 2007 until midyear 2018, Martinez exercised close to absolute autonomy in administering the city’s affairs.
Very early on in his tenure Martinez established his unquestioned primacy and psychological domination over everyone involved at the city. Less than six months into his time as city manager, Martinez was sent an anonymous email form an ex-boyfriend of an employee in the city treasurer’s office alerting him to haphazard controls and accounting under the direction of then-City Treasurer Mike Reynolds. Less than a month later, through further email contact with the sender, Martinez was able to identify him, drawing out from him further detail with regard to problems with how the city’s books were being kept and how sometimes questionable city expenditures were not being subjected to an exacting examination.
Instead of assisting Reynolds in redressing the shortcomings in the way he was carrying out his duties, Martinez calculated the treasurer to be expendable and that the situation simultaneously offered an opportunity to make an object demonstration of his own reach. Martinez referred the accusations to the Redlands Police Department, which in turn notified the district attorney’s office of the accusations. On October 18, 2007, the district attorney’s office served a search warrant on the city treasurer’s office, seizing reams of documents and several computers, while downloading computer files. Meanwhile, Martinez, in private consultation with Reynolds during which he falsely maintained he was on Reynolds’ side in what was after all merely a misunderstanding, persuaded the treasurer to send an email to City Attorney Dan McHugh suggesting that the city manager be empowered to hire temporary replacement staffing for the city treasurer’s office and that the treasurer’s existing staff be reassigned to other departments for the duration of the investigation. At its October 23, 2007 meeting, the city council went along with the suggestions in Reynolds’ email. The following day, pursuant to events choreographed in large measure behind the scenes by Martinez, Reynolds was arrested and charged with three felonies, including misappropriating public funds, falsifying records and keeping a false record. Over the next two weeks the city council further advanced Martinez’s hold over the city’s financial and city treasury operations, complying with his recommendation to contract with Judy Jacobson to serve as the city’s contract revenue manager and substitute temporarily in a role essentially indistinguishable from that the city treasurer, and contracting with Ajilon Professional Staffing, LLC for temporary staffing to replace the staff members previously answering to Reynolds. Reynolds authority for overseeing the city’s investments in the Local Agency Investment Fund was then entrusted to an ad hoc group headed and overseen by Martinez and which included Finance Director Tina T. Kundig, Assistance Finance Director Thomas M. Steele and interim Revenue Manager Judy Jacobson.
Despite all of that, Mike Reynolds, who was unopposed, was reelected to a four-year term as city treasurer with 5,465 votes on November 6, 2007. On November 20, 2007, the city council voted to transfer all non-statutory duties from the city treasurer’s office to the city’s finance director, who was directly answerable to and served at the pleasure of the city manager. On January 15, 2008, the city council ratified a reorganization of the city treasurer’s office formulated by Martinez which transferred signing authority on all city accounts held with Bank of America to Kundig, Steele and Jacobson, each of whom was answerable to Martinez.
At Martinez’s instigation, the city council on February 19, 2008 voted to move the date of the city’s November general municipal election from odd-numbered years to even-numbered years commencing with the year 2010. The ordinance added a year to the recently reelected city treasurer’s term of office, as it did to the terms of all incumbent council members. On August 20, 2008 Mike Reynolds resigned as city treasurer. A week later, on August 27, 2008, Reynolds pleaded guilty to a single count of altering a public record and agreed to a penalty of three years probation, 30 days in county jail and to pay restitution of $38,000.
From that point onward, Martinez had absolute control over the city council, as he had instilled in them the Fear of God, or more accurately, the fear of the district attorney.
Thereafter, the city council, faced with the task of filling the vacancy in the elected office of treasurer by appointment or through the calling of a special election, engaged in a protracted debate as to how Reynolds was to be replaced. Penultimately, the city council on September 10, 2008 appointed Tina Kundig to the elective office of treasurer and delegated investment authority to the city treasurer and then ultimately placed a measure on the November 2010 ballot for voters to decide if the treasurer’s position should remain elective or become an appointed position.
Martinez, as the duly appointed city manager to whom the council had turned over policy setting authority in addition to his administrative and managerial tasks, had manipulated the circumstance so that he was the puppetmaster with regard to the city’s finances, solidifying his command of the city’s purse strings along with all other aspects of municipal governance.
To ensure that Martinez would have an absolutely free hand in how the city’s general fund money was to be expended without any interference from Kundig, whose primary responsibility was to consist of minding how the city’s surplus funds were invested, on November 4, 2008 the city council voted unanimously to remove the city treasurer as an official member of the city’s budget subcommittee.
Martinez had control of everything. He had control of city policy. He had control of city management. He had control of city finances. In time he had control over the city council, its members’ future political fortunes, as well as their consciences. He accomplished this through old fashioned political patronage and the provision of favors to the city council. Some or much of this crossed the line into outright graft. Since Martinez was not the recipient of this graft and he would take care in not directly involving himself in arranging for it by having city employees below his pay grade carry it out, Martinez minimized his own personal risk. The favors were myriad, ranging from enhancing the perquisites provided to council members to landscape work and the provision of decorative rock in front of Mayor Paul Foster’s residence, to requests for and the granting of preferential treatment of friends and campaign donors. Martinez documented details relating to the police department being called to the mayor’s home over a domestic disturbance, which included the mayor’s request to keep reference to the incident out of the police department’s files. His book also cataloged a disagreement Martinez had gotten into with the mayor, and Martinez’s version of events which accused the mayor of discrimination against him and another employee. Martinez entered all of the details about such goings-on into what he told a select group of his closest confidants among city staff at Redlands was his “black book.” That tome, in addition to explicating what where, how and when accommodations, services and goods paid for by the city’s taxpayers that were not available to average citizens were provided to members of the city council, also contained accounts of closed door sessions and private remarks and statements by the council, variances between public pronouncements by the council’s members and action taken during closed door votes, miscues by council members individually and the council collectively, as well as both illegal and simply embarrassing acts by council members since shortly after Martinez’s 2007 hiring. That black book served as an insurance policy of sorts for Martinez, as at every juncture there was enough blackmail material at Martinez’s disposal relating to at least three members of the city council that he could effectively dissuade a majority of that body from taking any action contrary to his interest.
This had far reaching implications. Whenever a dispute developed between Martinez and a city department head or a city employee or between Martinez and a city vendor or between Martinez and a city resident, no matter what the substance of the dispute and the relative merits of those on either of the conflicting sides, the matters would be settled in Martinez’s favor.
To perpetuate his hold, Martinez merely needed to make sure that the members of the Redlands establishment and whoever were in political ascendancy at the moment were taken care of. And his formula involved guaranteeing that the other top dogs among city staff, such as the city attorney or department heads such as the police chief and fire chief were assured of generous salaries and comfortable retirements. This kept scrutiny off Martinez, in particular insulating him from detectives with the police department who could have come into his office to ask of him some questions it would have been somewhat difficult to give answers to.
While the city’s elected leadership – the city council’s members – were hoping that the public would not recognize the degree to which they had surrendered the political control that was yet supposed to be theirs to Martinez, that was wishfully delusional.
On November 2, 2010, when Measure B, a ballot measure asking “Shall the office of the Redlands City Treasurer be appointive?” was at last presented to the voters, faced with the prospect of themselves forsaking the opportunity to have a member of the public independent of the Martinez-controlled City Hall machinery controlling the Redlands treasury, Redlands voters responded with a resounding “No.” Measure B was soundly defeated, with 12,856 votes, or 61.49 percent against it and 8,052 votes or 38.51 percent in favor of it.
But the electorate only gets a vote with regard to two or three members of the council every two years and the treasurer every four years; city councils meet on average twice a month, involving themselves in a multiplicity of votes with regard to a host of issues at each of those meetings. Over the course of his tenure, Martinez was the virtual king of Redlands, with all of the privilege and power that attends royalty, and with a set of liegemen in the form of the city council who were both beholden and devoted to him.
He was yet riding high a year ago. At that time, former Human Resources Director/Risk Manager Amy Martin, who is now known as Amy Hagan, had filed a claim against the city to force it to make good on a guarantee that she would be provided with a “medical bridge” program giving her medical coverage until she reached the age of 65. That benefit had been conferred upon her in her separation agreement from the city, signed by her and Martinez on January 5, 2018 after a several months-long decline in the once-upbeat relationship between the two. That medical coverage was in addition to a cash settlement of $133,981.25 Martin-Hagan was given to leave, derived from providing her with six months’ severance pay in the amount of $84,500 along with a $49,481.25 cash conversion of her accumulated 609 hours of vacation, illness and administrative break leave.
When the matter of ratifying Martin-Hagan’s medical bridge came before it, the city council, which with the exception of Mayor Foster had been kept somewhat in the dark about the details in the deteriorating relationship between Martinez and Martin, had balked at extending Martin-Hagan’s medical coverage, particularly given her relatively brief four-year-and-five-month tenure with the city. Martin-Hagan threatened legal action over the city’s refusal, at which point the matter received public exposure in which it was revealed that an ex-employee with less than five years of service to the city was to receive some 27 years worth of medical benefits. Martinez, instead of inducing the city council and City Attorney Daniel McHugh to simply go along with honoring the commitment made on his own authority as he could have done, elected, perhaps because of negative publicity relating to the matter, to go along with denying Martin-Hagan’s medical benefit. Martin-Hagan filed an administrative claim with the U.S. Equal Employment Opportunity Commission. The city, through its outside attorney, Howard Golds of the law Firm Best Best & Krieger, initially sought to put up a spirited defense in the face of Martin-Hagan’s claim, in doing so relying upon Martinez’s representations with regard to the souring of his relationship with Martin in mid- and late 2018. As the processing of Martin-Hagan’s claim proceeded with the U.S. Equal Employment Opportunity Commission, there were a series of revelations relating to Martinez’s comportment, in particular pointedly sexually-oriented exchanges and harassment that involved Martinez pressing her to coordinate, after work hours and over weekends, his approaches to “date” women 25 years, 30 years and 35 years his junior. While the issues Martin-Hagan raised would up to a year previous to that have likely been glossed over, coming as they did in 2018, at the height of the so-called “Me Too” juggernaut, which embodied deep outrage at the phenomenon of men’s sexual harassment of women, and in particular sexual harassment by men in positions of authority and power, felled Martinez. Those revelations ultimately led to Martinez being put on paid administrative leave in October. At that point, Martinez compounded his problem by threatening legal action of his own against the city in which he implied that he was the victim of bias and discrimination because of his Hispanic heritage and his age. Virtually overnight, it seemed, Martinez had gone from being able to do nothing wrong in Redlands to being a pariah in the 72,000-population city. Having at that point had too much of someone they previously could not get enough of, the city council was in a headlong rush to be rid of him. Hemmed in by an element of the Redlands Municipal Code prohibiting the city manager’s firing “during or within a period of thirty days next succeeding any general municipal election” in which a council member is elected, the council fired Martinez on November 6 of last year, which was election night. Had the council not acted that night, Martinez would have remained city manager, officially if not in actuality, at least until December 6.
A less-than-fully-thought-through and ultimately less-than-successful effort to keep the toxic secrets contained in Martinez’s black book from coming to light was made at the time of his firing. A report was that Martinez was willing to sell city officials a guarantee of his silence for a $1 million payout, such that he was looking to receive for all of 2018 $1,305,667.15, which was based upon 44 weeks of his annual pay of $282,859.05, subtotaling $239,342.28, and 44 weeks of his $78,383.94 in annual benefits, subtotaling $66,324.87, and $1 million. The city instead consented to pay him $845,325, consisting of $255,680 in salary and other pay from January 1 to November 6, $42,631 in benefits from January 1 to November 6, $225,313 for his accumulated and unused vacation and sick leave, and a severance payout equal to 15 months of his salary, which equaled $364,332.
A report at the time was that in addition to the $305,667.15 Martinez was paid for the 44 weeks he had worked, the city had worked out a deal with him in which he was to receive not $1.305 million over the 12 months of 2018 to secure his silence forever with regard to untoward acts by current and former city officials, but an additional $888,920.43 beyond his salary and benefits for the 44 weeks he worked that year, consisting of 18 months of his $350,896.08 annual salary & add-on pay – $526,344.12 – and 18 months of his annual benefits of $78,383.94 – $117,575.91 – along with a cash buyout of his accumulated perquisites including unused sick leave and vacation time and equipment and vehicle allowances totaling roughly $245,000. The Sentinel was informed by the city’s chief spokesman, Carl Baker, however, that the report of the $888,920.43 payment to Martinez was in error.
In the aftermath of Martinez’s exit, the city council and other top-ranking city officials have gradually come to a recognition of the degree to which the depredations both they and Martinez were engaged in are on the brink of exposure. Martinez has yet held his fire, however, refraining from going public with the contents of his black book, while still trying to milk more money out of the city.
The vehicle he has chosen to effectuate that consists of a lawsuit he, his son, Enrique Anatoly Maryshev-Martinez, and his daughter, Marianna Valentina Marysheva-Martinez, have launched against the city. Throughout the first eight years of his service with the city, Martinez and his eligible dependents were provided with the medical coverage available to other city employees. On May 19, 2015, Martinez’s contract was altered to state that upon his achieving 15 years of service with the city he would be eligible for lifetime medical coverage. Referenced in that provision was coverage being extended to his “eligible dependents.”
On March 1, 2016, in the third amendment to his employment agreement with the city, the contract was changed to contain “Upon, and from and after, the city manager’ s separation of employment from [the] city, the city manager shall receive `lifetime medical and dental insurance’ coverage as the same exists on March 1, 2016. [The] City shall pay all premiums required for such `lifetime medical and dental insurance’ coverage only for the city manager and the city manager’s two eligible child dependents whose names are Enrique Anatoly Maryshev-Martinez and Marianna Valentina Marysheva Martinez.” Gone, apparently, was the requirement that Martinez remain with the city for 15 years before he would be eligible for lifetime medical benefits.
Martinez, Maryshev-Martinez and Marysheva-Martinez contend that the city has refused to provide those benefits to them. The trio collectively followed up with a $1.5 million claim against the city, indicating they would relinquish their rights to those benefits only upon the city making such a cash payout. The city rejected that claim and Martinez, Maryshev-Martinez and Marysheva-Martinez filed suit against the city and City Attorney Dan McHugh on April 29 of this year.
The city, represented by the law firm of Best Best & Krieger, is constructing its defense against the suit on multiple grounds, rejecting the suit’s primary allegation of fraud and negligent misrepresentation, while pointing out that the extension of lifetime medical coverage to Martinez while he was in the capacity of city manager was inconsistent with the city’s best interest, unduly influenced by Martinez and the outgrowth of a conflict of interest. The contract, therefore, is theoretically void given that under California law, any public contract tainted by a conflict of interest is void. Moreover, Martinez, as the city manager at the time that the deal to provide Martinez and his children with the medical coverage was arrived at, is therefore a party to the fraud and negligent misrepresentation he is alleging, according to the city.
By continuing to contest the lawsuit, city officials come ever closer to Martinez unloading the material in his black book.
Already a move has been made in that direction. It was revealed last week that on May 4, 2010, with the eighth amendment to McHugh’s employment contract, the city conferred upon the city attorney and his eligible dependents lifetime medical coverage, and that the lifetime medical benefit provision was reiterated in the ninth amendment to McHugh’s employment contract on October 5, 2010, and reiterated in the tenth amendment to his employment contract on October 18, 2011. On December 5, 2017, the same day that the city made a sixth amendment to Martinez’s contract, McHugh insisted on inserting the following into his contract amendment: “[The] City and [the] employee hereby expressly reconfirm that [the] employee’s retirement health benefits relating to medical and dental coverage as set forth in [the] employee’s employment agreement were vested as of May 4, 2010, and shall remain a vested benefit for [the] employee because such retiree medical and dental benefits are included within [the] city’s policies pertaining to employment, evidence exists that such benefits were an inducement for [the] employee to seek and obtain employment with [the] city (e.g., [the] city was aware at the time of employee’s hiring that [the] employee’s spouse had and continues to have through this date a significant pre-exiting medical condition), that such benefits are a form of compensation and were important to [the] employee in continuing and advancing to his long-term employment with [the] city, and that such benefits remain an inducement for [the] employee to continue to be employed by [the] city.” That same day, again at McHugh’s insistence, somewhat similar language was inserted into the amendment of Martinez’s contract amendment, together with language to indicate that Martinez’s health retirement benefits, for which he was not to become eligible until 2022 under the terms by which they were originally stipulated “were vested as of December 5, 2017 and shall remain a vested benefit for employee.”
Thus, it is apparent that Martinez has taken a shot across the city’s bow, reminding everyone that he was not the only one who received favorable treatment by the city council and that if the city continues with its opposition to his and his children’s access to lifetime medical coverage, a similar issue will be made of favorable treatment provided to others.
The Sentinel was contacted by an entity intimately familiar with the goings-on at Redlands City Hall in the year, months, weeks and days prior to the ratification of the second amendment to Martinez’s employment contract in May 2015 and the sixth amendment to Martinez’s contract in December 2017
“The mayor knew that the CM [city manager] was asking for life-time medical and the CM and the mayor discussed it several times,” it was said.
Word leaked that McHugh finalized the language on the lifetime medical coverage for Martinez, Maryshev-Martinez and Marysheva-Martinez, and that at no point did he bring up any issues with it. The Sentinel was told that Martinez’s and McHugh’s contracts were signed on the same night, December 5, 2017, and that before the contract amendments were presented to the council McHugh tweaked the wording in the amendment to his own contract to ensure his benefits could never be taken away. It was suggested that McHugh went along with Martinez getting lifetime benefits for himself and his two children because that was consistent with McHugh locking in lifetime benefits for himself and his wife.
The Sentinel encountered conflicting reports, one of which held that the city council went into each of the contract arrangements with Martinez that were increasingly favorable toward the city manager with all of its members’ eyes wide open as to what was going on because they were yet positively disposed toward Martinez, and they were willing to give away a sizable portion of the public treasury to keep him as city manager. Another version offered was that the balance of the council, excluding the mayor, had not been apprised by McHugh of the full implication of the terms being extended to Martinez because McHugh wanted to avoid any in-depth questioning with regard to the lifetime medical coverage issue so that he himself would be able to participate in the same lifetime medical coverage giveaway as the city manager. It is only now, the Sentinel was told, that the degree to which city attorney’s own greed has been widely revealed as an example of the recurrence of circumstance in which city officials have exploited their positions of trust to put their own personal interest ahead of that of the taxpayers.
In response to an inquiry by the Sentinel, Redlands Public Information Officer Carl Baker said, “On behalf of the city, including the city council and city attorney, we will not respond to questions regarding a matter of ongoing litigation.”
Martinez could not be located for comment.
Firing Reveals Blackmail As Factor In Redlands City Manager’s 11-Year Tenure
By Amanda Frye and Mark Gutglueck