Desert Vortex News
City Contract Doc “Fraud”?
Problems Afloat at the John Furbee Pool
By: DEAN M GRAY – April 19, 2013
DESERT HOT SPRINGS, CA – A subcontractor claiming he has not been paid for construction
on the John Furbee Aquatics Center detailed over-billing and contract steering in testimony
before the Desert Hot Springs Health and Wellness Center Foundation Board.
“On a public works job this is scandalous. This is scandalous. This is the kind of stuff people go
to jail for,” said Barger speaking about what he witnessed on the job. “This is unbelievable. And
to have somebody approve it just to get the
guy paid is absolutely wrong. But it served
me well when I found it because it told me
what was going on with this job. It is the
craziest thing I have ever seen in my life.”
During April 17, 2013 testimony before the
Foundation Board, the subcontractor, Jim
Barger of Pacific Custom Pools, detailed
pervasive over-billing which misrepresented facts in order to qualify for funding.
“This [over-billing] has been approved by the contractor, the architect and by the city showing
this has been approved and that it [the work] is 100 percent done at the end of October. Not
January, at the end of October,” said Jim Barger of Pacific Custom Pools, the subcontractor.
“This should concern you. This is three sets of eyes looking at this document and approving that
this work was done and I assure you we were not done. Somebody had this money and it was not
me,” said Barger.
Trial by Board Unveils Truth
In the meeting that played like a courtroom trial with two lawyers making arguments and the
Foundation Board sitting as a review panel, Barger was unabashed in telling the Foundation
Board what was taking place was illegal.
In addition to owning Pacific Custom Pools, James Barger has served ten years as a Los Angeles
County Commissioner for Business Licensing. Barger’s company specializes in commercial pool
construction and has the swimming pools at Mandalay Bay, Caesars Palace, the Luxor, Hard
Rock Hotel, and the Sahara Hotel in Las Vegas to his company’s credit.
Barger’s experience in the pool business is held in such high regard that he is a highly sought
after by attorneys for his expert knowledge.
Fraudulent Construction Progress Reports
What Barger said is illegal are construction progress reports submitted for payments so the
contractor could get paid on the federally funded Health and Wellness Center project. He said
that he did not finish his work until January but the progress reports documented his work as
complete in October even though it was not.
After Jim Barger’s testimony, the Foundation Board agreed to take a ten minute recess. During
that recess at least one Foundation Board member expressed concern, with her comments picked
up on open microphone left on during part of the recess.
“We have not had knowledge or control over any of the terms or negations at the time this was
taking place,” said Foundation Board Director Kathy Greco.
Foundation Board Chair Rick Daniels explained to her that at the time the city received
federal tax funding for the project all the contracts for the Health and Wellness Center
project were shifted to the Foundation from the city. Daniels answer did not address
Greco’s concerns.
“My point is this is only the third meeting of the Foundation Board. I have not had any analysis
of this. This was all a city project up until the New Market Tax Credits moved it to the
foundation,” said Greco. “It is most appropriate, more appropriate that this be heard by the city
council.”
“But the law is that the entity responsible, which is now us, has to hear this,” said Rick
Daniels.
During rebuttal of Jim Barger’s testimony, Doug Wall of Doug Wall Construction, the
general contractor for the project, did not contest Barger’s allegation of over-billing but
rather confirmed to the Foundation Board the practice had taken place.
“It think is has been explained why the line items were over-billed,” said Doug Wall.
“Because of the new market tax credits and various other reasons the city was having a
hard time keeping up with the pace of the job according to the payments. Rudy had us
over-bill.”
Doug Wall explained that Rudy Acosta, the city project manager on the job, was
responsible for misrepresenting the facts and that the over-billing paperwork was
eventually altered again, after funding came in.
“Once the new market tax credits came in, we rectified all those billings,” said Doug Wall.
The Problem
The problem with that, said Jim Barger, was that Doug Wall got the money that resulted
from the over-billings but none of the money was used to pay him. Bargar said he had as
much as $80,000 of his own money into the project when he pulled off the job because he
could no longer bankroll the work for the city.
“I just got to the point where the City of Desert Hot Springs really wasn’t to worried about
me, said Jim Barger. “I gave you a grand opening, I filled your pool with water and that’s
the thanks I got. I doubt there’s a whole lot of people in this room that would have put out
$80,000 bucks. I’d had enough.”
That became a point of contention during the hearing. Doug Wall contended that Pacific
Custom Pools had “abandoned” the job. Barger countered that because Doug Wall kept
hold of the money owed the pool contractor that Barger could not pay his employees. He
said other subcontractors were having the same problem.
Doug Wall and Jim Barger both agreed the matter is headed to a lawsuit. On that point, Barger
asked the Foundation Board why it wanted to put itself in harm’s way. He said if the Foundation
Board ruled in his favor it would be only an “arm wrestling match” between Doug Wall and him.
“I don’t understand why you would put yourself in a position between Doug and I today because
your pool is done,” said Barger. “I sit on a commission. I don’t always do what staff suggests if it
does not make sense to me. Why would you put yourself in that position, to be “good people” to
Doug?”
Rick Daniels asked Barger to confirm the pool is ready for swimming, Barger said, “Before I
came here I stopped by the pool. I didn’t see a single thing there that is stopping you from using
that pool. That’s the Scout’s honest truth.”
Daniels responded, “I believe you.”
Jim Barger also serves on the Board of Directors for the San Gabriel Council Boy Scouts of
America.
More Problems
The over-billings are not the only business practice Jim Barger said was illegal on the
construction project. He said illegal single-source purchasing was taking place that cost the
city a lot of extra money on the project.
“We were told in those specs that we had to buy from one guy,” said Jim Barger. “How would
you like to have a deal where you are just waiting for the phone to ring because somebody’s
plans say you’re going to by from that guy. And I made a big squawk about it because I was
trying to save you money.”
Bargar said when he challenged the single-source requirement he was told he could not, that he
was not allowed to.
“Don’t you guys know the law?” asked Barger.
“Sir, we’re kind of getting off the subject,” said Rick Daniels.
Pity
Contacted by telephone a day after the meeting, Jim Barger said, “I feel sorry for the
people in the town,” said Jim Barger. “Nobody in charge was paying attention to the
money. They were spending money like drunken sailors right up to opening day and even
though they had advanced $5 million to the prime contractor they still weren’t caught up
on paying us for the pool.”
The Foundation Board voted against Pacific Custom Pools. The likely result of that action
will be a lawsuit filed by the subcontractor against the Foundation Board. Because of the
city’s involvement, the matter may also turn up on a closed session agenda item under the
heading threat of potential litigation.
Meanwhile, the pool is scheduled to finally open May 27, 2013, Memorial Day.
Familiar Names in Charge
Serving on the Desert Hot Springs Health and Wellness Foundation Board is Rick Daniels
(Chairman), Kathy Greco (Vice Chair), Jan Pye (Secretary), Yvonne Parks and Kate
Singer.
Rudy Acosta was appointed project manager for construction of the Health and Wellness
Center project. He was formally the City Redevelopment Agency Director until the RDA
was shut down by the State.
Legality of Meeting Questioned
The meeting itself was subject to controversy as Scott Baird, the legal council for Barger
questioned the legality of the meetings. Baird alleges the by-laws of the Health and
Wellness Board mandate that meetings be open to the public and held at 7 pm. Prior
meetings were conducted at 8 and 9 am and the meeting of March 17 was held at 3 pm.
Baird argued that prior actions of the Board may have been illegal since meetings violated
the by-laws. City Clerk Jerryl Soriano is then heard on the recording of the meeting
voluntarily suggesting the solution of amending the minutes to create false meeting times.
City chronicle of all Health and Wellness Board
meetings, agendas and audio recordings