Debra Wong Yang
United States Attorney
Central District of California
United States Courthouse
312 North Spring Street
Los Angeles, California 90012
November 1, 2005
Thom Mrozek (213) 894-6947
Los Angeles, CA - The former mayor of Lynwood, California was convicted this afternoon of a host of federal corruption charges for orchestrating a scheme that defrauded city residents by funneling city business, including exorbitant no-bid contracts, to a "consulting company" he and his family controlled.
Paul H. Richards II, a 49-year-old resident of Lynwood, was found guilty of 20 counts of "honest services" mail fraud for depriving Lynwood residents of his honest services while serving as an elected official. Richards served as a Lynwood city councilman, which included seven stints as mayor, from 1986 until he was recalled in a special election in September 2003.
In addition to the "honest services" mail fraud counts, the federal jury convicted Richards of five counts of mail fraud, extortion, eight counts of money laundering and making a false statement to government investigators.
"This case sends an important message to any public official who would consider exploiting their position - no one is above the law," said United States Attorney Debra Wong Yang. "There is a special trust between public officials and the citizens of this nation, a trust that we seek to preserve by vigilantly investigating and prosecuting crimes committed by public officials. Any politician engaging in fraud or corrupt acts should be looking over their shoulder."
The evidence presented at trial showed that Richards set up a consulting firm, ostensibly owned by his sister, that was awarded a series of unnecessary and exorbitant consulting contracts that had the potential to cause the City of Lynwood to lose over $2.5 million.
After deliberating for approximately four days, the jury also convicted two associates of Richards:
- Richards' sister, Paula Cameo Harris, a 56-year-old Altadena resident, who purportedly served as the president and owner of Allied Government Services (AGS), the company Richards set up to obtain consulting contracts with Lynwood; and
- Bevan Atlee Thomas, a 56-year-old resident of Anaheim, a former consultant to Lynwood, who allegedly obtained a $25,000 per month consulting contract with Lynwood, which he secretly subcontracted to AGS.
All three defendants convicted today are scheduled to be sentenced on February 13, 2006 by United States District Judge R. Gary Klausner.
Richards, Harris and Thomas participated in a scheme to defraud the citizens of Lynwood of their right to Richards' honest services. AGS's primary source of revenue was three lucrative contracts initiated and approved by Richards.
In the first contract, Thomas obtained a "nuisance abatement" consulting contract in 1999. Under this contract, Thomas would be paid up to $25,000 per month for performing consulting services and nuisance abatement work for the city. However, Thomas secretly subcontracted his work to AGS, which then subcontracted to other friends of Richards, including his personal gardener. Lynwood taxpayers ended up paying five times what they should have for the work performed.
In the second contract, the indictment alleges that Richards forced the city's trolley operator, Commuter Bus Lines (CBL), to retain AGS as a "transportation consultant" in exchange for receiving a five-year extension of CBL's contract with Lynwood. CBL had agreed to hire its own consultant and to pay for the cost. But when the city insisted that CBL hire AGS at $7,500 per month, CBL objected and demanded increased fees to pay AGS. The city, led by Richards, agreed. Although AGS performed little or no work for CBL under the agreement, the city authorized CBL to pay AGS more than $60,000.
In the third contract, the indictment alleges that Richards orchestrated a deal between Lynwood and AGS in which AGS became the city's exclusive representative to negotiate the construction of billboards along the Century Freeway (I-105). In exchange for representing the city, AGS would be paid a 20 percent contingency fee, and the city would pay all of its expenses. Before AGS received this contract, Richards had already given his tentative approval to a multi-million dollar billboard project with Regency Outdoor Advertising. Because the billboard deal was largely pre-negotiated by Richards, AGS stood to earn $960,000 for no actual work except hiring one of Richards' friends as its attorney. AGS sought no competing bids for the billboard project.
During the trial, a lobbyist for Regency testified that he gave Richards an illegal $7,500 campaign contribution while Richards was negotiating the billboard contract. That lobbyist, David N. Smith, a 65-year-old resident of Palmdale, previously pleaded guilty to making a corrupt payment to Richards and is scheduled to be sentenced next year.
As a result of the three contracts with AGS, Richards violated his duties to the city by, among other ways, failing to disclose his interest in decisions benefitting AGS and Thomas. Richards specifically benefitted in the following ways, among others:
- AGS and Thomas satisfied debts for campaign literature for Richards's political campaign and the campaigns of allies;
- AGS and Thomas gave contributions to a political action committee set up by Richards' sister and nephew, with that money being used to fund political campaigns of Richards' allies in Compton, who supported a real estate development Richards was pursuing in Compton;
- AGS paid for an improvement on a Richards home in Cerritos;
- AGS paid a salary to Harris, who distributed the funds to other members of Richards' family; and
- AGS paid a salary to Richards' nephew, who performed personal projects for Richards while on the AGS payroll.
Harris withdrew large sums of cash from AGS' bank account, which corresponded to large sums of cash deposited by Richards into his personal account.
Harris was convicted today of 18 counts of mail fraud, four counts of money laundering, and one count of perjury for lying to a federal grand jury.
Thomas was found guilty today of nine counts of mail fraud, four counts of money laundering, two counts of bribery and one count of perjury for lying to a federal grand jury.
The mail fraud charges carry a maximum potential penalty of 20 years in federal prison, as does the extortion charge against Richards. The bribery and money laundering counts each carry up to 10 years in prison. The perjury and false statement charges each carry a statutory maximum penalty of five years in prison.
This case was investigated by the Los Angeles Field Office of the Federal Bureau of Investigation and IRS - Criminal Investigation Division in Los Angeles.
Release No. 05-148
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