Salary Scandal May Force City Of Bell Into Receivership

BELL (CBS) — Bell paid out nearly $95,000 to repay personal loans former City Manager Robert Rizzo gave himself without the apparent knowledge of city council members, the Los Angeles Times reported Tuesday.

A draft of a state audit by Controller John Chiang expected to be released this week indicated the city funds were reportedly put into Rizzo's retirement accounts to repay loans in 2008 and 2009.

"We found the city's system of internal control to be nonexistent, as all financial activities and transactions revolved around one individual, the former chief administrative officer, who had complete control and discretion over how city funds were used," the auditors wrote.

"Public funds were used to repay (Rizzo's) personal loans, apparently without authorization," they added.

Rizzo's attorney told The Times his client did nothing wrong or illegal.

"Mr. Rizzo was paying off his loans with his only money, he was not using public funds," James Spertus said. "I do know, and I confirmed this with Mr. Rizzo, the loans were paid with salary and declared as income on his taxes, and it was done with city approval."

Councilman Luis Artiga, who took a $20,000 loan but is cooperating with an investigation by Attorney General Jerry Brown, told The Times Rizzo's "intentions were to milk and exploit this community to take advantage of the innocence of this community."

City officials told The Times last month that Rizzo received two loans for $80,000 each, while documents reviewed by the newspaper showed that former assistant city manager Angela Spaccia received two loans of at least $100,000 each and Artiga and Councilman Oscar Hernandez and Artiga received $20,000 loans.

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