By Mark Gutglueck
Colton City Manager Bill Smith and detectives with the Colton Police Department are trying to untangle a set of intertwined facts that pertain to a dubious circumstance involving municipal operations in the Hub City.
Unknown at this point is just how deep the matter goes and whether Smith and other city officials, including the mayor and city council, dare go much further in uncovering it, lest it mushroom into a full-blown scandal that revives the disrepute Colton was subjected to in the early 2000s when a former mayor and no fewer than four councilmen were charged and convicted of felonious activity involving the misuse and abuse of their power and positions of public trust.
At the very least, the current contretemps in Colton definitely entails the questionable routing of money. Further, it possibly involves embezzlement or misappropriation of funds and potentially is linked to timecard and overtime fraud of a prodigious proportion.
What is known is that on Tuesday March 22, Mike Cory, who is the superintendent in the City of Colton’s water/wastewater division, and Steve Contreras, a senior water treatment operator in the water/wastewater division, were placed on administrative leave and remain on leave.
Intrinsic to what occurred is Colton’s status as one of the few cities in San Bernardino County that approximates a full service municipality. Despite currently being the 15th largest of the county’s 24 cities and incorporated towns populationwise, Colton is the second-oldest, having been incorporated in 1887. A railroad town, as a consequence of its age it matured early, and at one time was a full-service municipality, with its own police department, fire department, water utility, electrical utility, sanitation division and cemetery operations. In 1996, the city privatized its sanitation department, contracting with what was then Taormina Industries and what is now known as Republic Industries for refuse handling. The remainder of the city’s municipal service departments remain intact.
The Sentinel is informed that roughly ten years ago, the city’s water utility replaced most of Colton’s domestic and business water meters, leaving the old ones that had been removed from city residences and businesses on truck trailers in the police department’s impound yard proximate to the police department headquarters/City Hall complex. On at least one occasion since then, vandals or thieves managed to scale or otherwise defeat the barrier around the periphery of the yard and make off with a relatively small number of the obsolescent meters. The remaining meters languished there for nearly a decade until November 2021, at which point Cory instructed Contreras and another employee to take them to a scrap dealer. Three loads of the meters were carried over to the scrap metal recycler, who paid for them in three installments of $10,000 apiece. Two of the checks were made out to Contreras, who turned all of the money over to Cory. This apparently occurred on November 29, 2021.
The Sentinel is informed that the City of Colton’s policy with regard to the handling of money generated by the liquidation, sale or disposition of surplus equipment is not specific, but that line employees generally pass the proceeds from surplus equipment and property along to supervisors or department heads and that the money thereafter makes its way into the city’s general fund.
The assumption of Contreras and the other employee was that the $30,000 entrusted to Mike Cory made its way to City Hall. While that appears to have been the case with regard to the check made out to the city, the money represented by the two checks made out to Contreras was not initially sent to City Hall and was left unaccounted for.
When it was brought to the attention of city management that the sale of the obsolescent water meters had produced a return of $10,000, an amount deemed less than their actual scrap value, an inquiry was begun. At some point, city higher-ups learned that the scrap company had issued not a single check for $10,000 as payment for the meters but three such checks. When it was discovered that two of the checks had been made out to Contreras and that Contreras had converted both to cash, city officials proceeded upon the presumption that Cory and Contreras were complicit in the theft of public funds. It was at that point, the Sentinel has been told, that both were put on leave.
The matter was handed over the police department to investigate. Detectives learned from the water division employee who had assisted Contreras in collecting and transporting the water meters to the scrap dealer that the meters had been transported in three separate and equal loads, that he and Contreras had been paid three installments of $10,000 for each of those loads in the form of a single check made out as payable to the city and two checks payable to Contreras and that after the checks to Contreras had been cashed, the money – $20,000 – and the remaining check for $10,000 had been turned over to Cory. The water division employee said he witnessed the cash transfer between Contreras and Cory while they were in Cory’s office.
Detectives obtained a search warrant for Cory’s workplace and desk as well as his home in Fontana. Upon serving the search warrant at Cory’s residence, members of the Colton Police Department insisted upon Cory opening the safe he had on his premises. Inside they found $15,000 in cash. The Sentinel is told that Cory upon being questioned by different detectives about what had occurred, gave conflicting explanations of why the $20,000 in cash had not been immediately provided to the finance department at City Hall as well as the origin of the $15,000 in his home safe.
Thereafter, according to information provided to the Sentinel, detectives initiated inquiries directed at Cory’s and Contreras’s personal back accounts to see if there were any apparent irregularities in the amount of money deposited therein and whether they might thereby ascertain if their personal finances reflected possible embezzlements or misappropriation of city funds.
While the two checks for the scrapped water meters made out to Contreras initially cast suspicion on him, the Sentinel is told, the police department’s theory of his involvement has reportedly run into difficulty as no evidence has been churned up to demonstrate Contreras ever received funds to which he was not entitled.
The vetting of Contreras, a Colton native and the son of Korean War Hero, indicated that he had no motive to steal money from the city. His stepmother has substantial wealth – quantified as several million dollars. Contreras himself has bank accounts and holdings to indicate he is comfortably fixed. Moreover, it was learned, Contreras has proven to be a soft touch, as he has made several loans to his colleagues at the city, including money provided to one who was going through a divorce and another to assist him in a child custody legal battle. Investigators learned that Contreras had loaned $20,000 to Cory, a figure which garnered attention for several reasons, including because it matched the amount of money in the checks made out to him for two of the loads of scrap metal he recycled in November and because Cory was his supervisor.
The investigation led to an examination of time cards and overtime pay practices in the Colton water division. According to available information, at one point an employee had been paid for 135.5 hours of work in what was, or was supposed to be, a standard two-week period that normally entailed 80 hours, including 18.5 hours on one Sunday. The overtime list for that employee’s pay period, the Sentinel was told, showed the employee double-charging hours for the same job on August 4, 2019, which included not listing an “end time” for his work.
During the same time period, ending on August 9, 2019, another employee had one 24-hour period where he was paid for 27 hours and a third Colton water division employee claimed to have worked 20.5 hours on a single Sunday. That employee claimed to have worked 144.5 hours during a normal 80-hour two-week pay period. The overtime record for that third employee showed that on August 4, 2019, he triple-charged for being “on call” and “waiting for others,” and double-charged for a “brown water” call in the same neighborhood relating to the same incident based upon two different people calling in on the same issue.
A fourth employee’s timecards beginning around July 1, 2019 show he claimed to work 16-to-17 hours per day for almost 2 weeks straight, working well into the dark at the wastewater treatment plant. When video footage was reviewed, it was discovered he was not on duty during much of the time he claimed on his timecard, which was approved by Cory. In that case, this fourth employee was allowed to “pay back” the overtime money he had been paid during that time period, with no discipline being applied for what one city consultant knowledgeable about the case said was a clear example of “timecard fraud.”
No one, including City Manager Bill Smith, was available at City Hall this morning or this afternoon to comment on the reports relating to the investigation.
Rumors abound that the matter, which is still developing, carries with it the possibility of maiming Colton with an indelible black eye similar to that which came about with the 2001 bribery indictments and convictions of Colton Mayor Karl Gaytan and Colton councilmen Donald Sanders, James Grimsby and Abe Beltran as well as Councilman Ramon Hernandez’s 2006 arrest and 2008 conviction on 24 misappropriation of public funds charges.
An employee who had witnessed Contreras hand over the $20,000 in cash to Cory said that what might appear to have been overtime pay made to Contreras could possibly be explained by an intense round of work Contreras had been engaged in that related to repairs of the city water system’s Rialto Reservoir, which he said at one point remained inoperative despite extensive work by an outside consulting firm which had cost the city hundreds of thousands of dollars. Contreras, he said, doggedly and virtually single-handedly worked on the reservoir, including after hours on weekdays and during week-ends, at last completing the corrections that allowed the reservoir to be brought back on line.
Scrap Metal Checks Written To Colton Employee Touches Off Investigation
By Mark Gutglueck