The City of Industry has repeatedly prevented the testimony of witnesses in the criminal hearing of former City Manager Paul Philips and may end up creating an opening for Philips’ defense team to argue their client cannot receive a fair trial on corruption charges.
Experts say the judge in Philips’ case could outright dismiss the misappropriation of public funds charge against the former administrator as a last resort if the court is unable to find a balance between Philips’ constitutional right to a fair trial and Industry’s statutory right to prevent the public disclosure of confidential discussions protected by attorney-client and closed session privileges.
“It is a possibility in the sense that if the defense is unable to present its case — because it is being unjustifiably prevented from doing so — then the defense might have a good argument to have the case dismissed,” said David Loy, an attorney for the First Amendment Coalition, a nonprofit organization focused on freedom of speech and open government.
However, other lesser remedies, including a court order forcing testimony against the city’s wishes, would be weighed before a dismissal would be considered, said Loy, who is not involved in the case and could only speak about the possibility in general terms.
“This might well be the rare case where the attorney-client privilege of a third party must yield to his constitutional right to defend himself,” he said.
A preliminary hearing to determine if there is probable cause to warrant a trial for Philips is currently underway. The former city manager is accused of assisting three other defendants in what is described as “an uncharged conspiracy” that allegedly allowed a developer to embezzle millions from a $20 million solar project funded by the City of Industry on land known as Tres Hermanos Ranch, along the edges of L.A., Orange and San Bernardino counties.
Red flags
So far, the prosecution in the case has painted a picture that suggests Philips authorized payments without proper approval and ignored red flags surrounding the investment, effectively allowing the scheme to continue. But despite weeks of testimony, there hasn’t been evidence that Philips received any of the stolen funds and the exact allegations against Philips remain vague. Two former staff members hired by Philips have stated he verbally supported their attempts to scrutinize the project’s billings.
Both the prosecution and the defense have been roadblocked by the city when trying to determine what exactly Philips was authorized to do and what, if anything, he told the City Council about the red flags brought to his attention by staff. Much of the project’s approvals in the first year were done in closed session, a private meeting of council members where participants are legally prevented from disclosing the contents without the council’s permission.
Industry has refused to waive its closed session privilege and Judge Michael Pastor, who briefly noted the oddity of the victim blocking testimony, has affirmed its right to do so. Pastor also has upheld many of the city’s objections to other testimony that would violate attorney-client privilege.
Expected to testify
Philips’ attorneys, Steve Cooley and Joe Weimortz, said Philips likely will take the stand during his ongoing preliminary hearing. But he may be unable to present evidence that could exonerate him because of the city’s assertions of the two privileges.
Industry sent Philips a letter shortly after he was charged by the Los Angeles County District Attorney’s Office in late 2021 that warned him that he could violate the terms of his severance — which was roughly a year’s pay, or around $275,000 — if he does not tell the city in advance what he plans to say or if testifies about anything he learned from closed session.
Philips, through his attorney, has yet to comply with the letter’s demands and the city has not enforced its threat any further.
“This is consistent with what has gone on so far, which is the City of Industry — through their attorneys — does not want certain information to come out,” Cooley said in an interview. “It could be that the information makes them look bad, it may be that the City Council members are treating the (Ralph M.) Brown Act and their closed session meetings as some sort of holy grail. Or it may be that somebody wants to cover up and conceal evidence that would exonerate Paul Philips completely and implicate others in some form of wrongdoing.”
Cooley, a former Los Angeles County district attorney, and Weimortz have yet to motion for a dismissal and have allowed the objections to pile up in the meantime, potentially giving them the opportunity to later argue that the totality of the blocked testimony has violated Philips’ constitutional rights.
“Obviously, the assertion of privileges in this case is a big issue and is still unresolved in terms of its impact,” Cooley said. “One would think that the City of Industry, in particular, would want the truth to come out.”
City could waive confidentiality
Under state law, the City Council can waive the confidentiality requirements at any time by a vote of the majority. The district attorney’s prosecutors have argued that the City has used the two privileges as a “shield” and that spotty record-keeping on the city’s part has made it hard for investigators to determine when, and if, closed sessions were properly agendized. Under state law, if a closed session is held illegally, anything discussed would not be confidential, but proving that can be difficult, particularly as the statute of limitations for challenging a closed session would have passed years ago.
Industry City Attorney Jamie Casso denied the city is attempting to hinder or obstruct the criminal case. Industry is separately suing two of the four defendants, as well as other companies involved in the project, in civil court.
“Absolutely not,” he said. “The city wishes the prosecution well in their efforts. We’re as cooperative as we can be with the D.A.”
He declined to say why the city will not waive either attorney-client or closed session privileges. Much of the information would be as much as six years old at this point and would relate to land that Industry no longer owns.
Casso could not speak about the preliminary hearing as he is a witness who may be called to testify.
Councilman Newell Ruggles similarly denied the allegation that the council is trying to conceal anything.
“My personal view is that anybody that is criminally involved needs to be prosecuted,” he said.
This isn’t the first time Industry has been accused of using confidentiality laws to hamper an investigation. In 2018, the Los Angeles County District Attorney’s Office closed a probe into financial transactions related to the late David Perez, a former mayor and head of Industry’s trash hauler. A letter from then-District Attorney Jackie Lacey’s office to the Los Angeles County Board of Supervisors at the time alleged city officials refused to be questioned and to release certain documents that they felt were protected by attorney-client privilege. Spotty record-keeping similarly made it difficult to determine if work was properly billed.
“In the absence of complete and reliable information, a determination … cannot be established beyond a reasonable doubt,” wrote Alan Yochelson, the then-head deputy district attorney.
Perez denied all wrongdoing and his attorneys at the time called the investigation a “pointless goose chase.”
Hearing resumes Wednesday
The battle over confidentiality in Philips’ case is likely to come to a head in the near future. His preliminary hearing resumes Wednesday, April 20, and most of the remaining witnesses are city officials who would be protected by one, or both, of the privileges, according to statements made by the prosecution during court.
Besides Philips, the city’s decision not to waive either privilege will come into play in the prosecution of attorney Anthony Bouza as well. Industry’s attorneys have also said the City Council will not waive Bouza’s attorney-client privilege. Bouza was charged alongside Philips, developer William Barkett and former state Sen. Frank Hill last year. Bouza negotiated the terms of a lease agreement with Barkett on the city’s behalf and is accused of having a conflict of interest related to a $1.5 million debt owed to him by the developer.
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