Central Basin hires forensic auditor, investigator to review contracts tied to bribery case

Central Basin Municipal Water District has hired a forensic auditor and, separately, an independent investigator to review years of the water agency’s finances and the legitimacy of $790,000 in contracts given to a fledgling company with ties to the general manager’s co-defendant in an alleged bribery scheme.

The water board at a special meeting Wednesday, Sept. 27, selected the Renne Public Law Group, based in San Francisco, to investigate payments to Capstone Partners Group, a company that received a construction and project management contract in November 2020.

Board members expressed concerns about those contracts earlier this year after learning Capstone was run by an employee of the Del Terra Group, a Pasadena-based construction management firm alleged to have paid bribes to Central Basin’s general manager, Alex Rojas, while he served as the superintendent of the Bassett Unified School District.

At the meeting, the board also hired Carr, Riggs & Ingram, a certified public accounting firm based in Alabama, to perform a forensic audit of its finances from 2019 until the present day.

Board member Juan Garza pushed for the audit and the investigation back in July after learning about Capstone’s connections to Del Terra. Garza said it is critical for Central Basin to be “stable and strong” to ensure water reliability for the 2 million customers who benefit from the water system.

“The decision by the vast majority of our board to hire independent, third-party experts to investigate the Capstone issue and perform a forensic audit of our agency from 2019 to present is a reflection of the vital need to ensure the integrity of our agency,” Garza said. “We are eager to receive the findings of these efforts in order to move the agency forward, and to restore the trust of our customers, cities and residents.”

Prosecutors charged Luis Rojas, the owner of Del Terra, and Alex Rojas, who is not related, with 18 counts, including money laundering, bribery, perjury and embezzlement, in August 2022.

Prosecutors allege that, from 2015 to 2017, Luis Rojas’ sister paid more than $400,000 to a consulting firm owned by Alex Rojas. During that time, the superintendent signed off on at least $1 million in payments to Del Terra for work that allegedly never occurred, according to the District Attorney’s Office.

Central Basin selected Capstone through a bidding process just days after the company formed in November 2020.

The company terminated its contract with the district without notice in August 2022, the same month of the arrests, though its owner insisted the timing was not related.

Alex Rojas denied knowing about Capstone’s ties to Del Terra until after the contract ended.

“If it is true that they were full-time employees, that would be a concern,” he said in a July interview. “We didn’t know that, we weren’t aware of that. There were never times where our projects were delayed or they were unavailable.”

Both Luis and Alex Rojas have pleaded not guilty to the charges and have denied the allegations publicly. They have yet to have a preliminary hearing to determine if enough evidence exists for the case to move to trial. Prosecutors recently dropped a related case against Luis Rojas and Pico Rivera Councilman Gustavo Camacho that they previously said led them to the payments to Alex Rojas.

In July, Alex Rojas’ attorney, Craig Missakian, said his client welcomes the investigation and the audit.

“Dr. Rojas and the district employees in charge of the procurement process followed all applicable rules and regulations and there is zero evidence suggesting anything improper occurred in awarding the contract to Capstone,” Missakian said in an email. “This issue has become yet another distraction to the board’s important work and Dr. Rojas welcomes the investigation and hopes that the issue can finally be put to bed and the good name of the district’s employees involved in the process cleared.”

The general manager expects the district will receive a “clean bill of health — as it has in all previous similar audits during Dr. Rojas’ tenure as district manager,” Missakian said.

Central Basin Municipal Water District is a public water wholesaler with few of its own employees.

It serves nearly 2 million customers from 24 cities and unincorporated areas in southeast Los Angeles County, with its boundaries stretching from La Habra Heights in the east to Carson in the west and from Signal Hill in the south to Montebello in the north.