Fraudulent Concealment

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"fraudulent concealment:

Definition

Deliberate hiding, non-disclosure, or suppression of a material fact or circumstance (which one is legally or morally bound to reveal) with intent to deceive or defraud in a contractual arrangement. See also suppression of evidence."

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Lemme see here...

Deliberate hiding of a material fact? Check.

That one is legally or morally bound to reveal? Check.

With intent to deceive or defraud? Check.

Uhhhh-ohhhhhh!

2004 Los Osos CSD? Montgomery, Watson, Harza? I've got some very, very bad news for you... I'm gooooooood.

"Fraudulent concealment?"

No problemo (after all, this IS SewerWatch).

Ready?

First, we'll need this:



That's a screen shot from a 2005 LOCSD document that I (exclusively, of course) dug up back in 2005.

It's from something called a "value engineering" report, and what it shows is that the park amenities in the Tri-W sewer plant were estimated at over $2.3 million.

That's very important -- an official LOCSD document estimating the park amenities at over $2.3 million.

Next, we'll need this:

"... the (LOCSD) Board on June 17, 2004 agreed to add the picnic area, tot lot, amphitheater, and community garden (to the Tri-W sewer plant)..."

That's a quote from a LOCSD document titled, June 28, 2004 Response to CCC. (The quote shows up on page "111 of 113.")

What that quote shows is that the 2004 LOCSD Board "agreed to add" the amenities, which, shortly thereafter, the District's engineers, MWH, estimated at $2.3 million.

Additionally, the "November 2000" site plan for the Tri-W sewer plant shows (among other amenities) "picnic area, tot lot, amphitheater, and community garden."

Here's the 2000 site plan, developed by the Los Osos CSD and MWH:


Next, we'll need this:

MWH Memo comparing costs of TriW with Andre

What that is, is a pdf file that I created back in 2005, and it contains an LOCSD "memo" that I first dug out of June 28, 2004 Response to CCC. The "memo" was created by MWH in 2004. (The document -- also called "Exhibit 3-C" -- appears after my story in that pdf file. Hey, I created the pdf, so it's "me first," of course.)

That document is vital to this case, because it shows that MWH in 2004, at the request of the California Coastal Commission, created a "hypothetical" sewer project for the District to answer the Commission's question on why the project couldn't be moved out of town.

That "hypothetical" sewer project consisted of a gravity collection system, with a treatment facility east of town, located "adjacent to the cemetery," with a small "pump station" at the Tri-W site, or, in other words, nearly identical to what the county just spent almost four years and $7 million approving.

I repeat: The LOCSD's "hypothetical" sewer project from 2004, was nearly identical to what SLO County Supervisors just approved... in 2009.

Exhibit 3-C concludes that there was no "economic incentive" in 2004 to do what the county just approved a week ago... after four years and $7 million worth of analysis.

Now, here's the "fraudulent concealment" kicker:

In the cost estimates for the "hypothetical" sewer project, MWH failed to include almost all of the estimated $2.3 million in amenities. Additionally, the 20-year cost for operation and maintenance of those amenities, estimated at another $3 million, is nowhere to be found in Exhibit 3-C.

So, to cut up the fraudulent concealment meat, and spoon-feed it to regulators, and the local media (heeerrrre comes the aiirrrrplaaaane... into the hannngaaarrr... open wiiii-iiiide...):

In the EXACT same document -- June 28, 2004 Response to CCC -- where the 2004 LOCSD writes, "... the Board on June 17, 2004 agreed to add the picnic area, tot lot, amphitheater, and community garden (to the Tri-W sewer plant)," they failed to include the cost of those amenities in their Exhibit 3-C study, and, if they had, it would have changed the entire conclusion of that study, to where there WAS "economic incentive" to do almost exactly what SLO County Supervisors just approved.

In June 28, 2004 Response to CCC, MWH and the 2004 LOCSD deliberately hid over $5 million (at least!) in amenity and O&M costs in their cost estimates -- which they were legally AND morally bound to reveal -- with the intent to deceive the California Coastal Commission into approving the Tri-W project, and it worked!

To make matters worse, even with the ONE amenity that they did account for -- the dog park -- MWH grossly low-balls the cost of that amenity.

In Exhibit 3-C, where low-balled numbers for the mid-town Tri-W sewer plant benefited that "project," the dog park is estimated at "$60,000," however, just a few months later, in their "value engineering" report, MWH, and the Los Osos CSD, estimated that exact same dog park at "$690,000," more than a factor (factor!) of 11 from their previous estimate.



Which means, if MWH was SO wrong on that number, how many other numbers were they wrong on (by factors of) in that study? (An independent analysis of those numbers today, would REALLY help answer that question.)

Bottom line?

Not only did the 2004 Los Osos CSD and MWH fraudulently conceal the cost of the park (that the 2000 LOCSD Board originally included in the project, and that the 2004 LOCSD Board "agreed to add" to the project... in the exact same document that includes their "hypothetical" sewer project), but the ONE amenity that they did include in the comparison -- the dog park -- was ALSO a case of fraudulent concealment, because they deliberately (and grossly, I will add) hid the real cost of that amenity... by a factor of 11.5!

And had the Los Osos CSD and MWH not done all of that fraudulent concealment in 2004, it would have changed the conclusion of MWH Memo comparing costs of TriW with Andre to what the county just approved... in 2009... after almost four years and $7 million worth of analysis.

Oh, and one last thing -- fraudulent concealment "tolls" the statute of limitations.

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Recently Approved SLO County Sewer Project Nearly Identical to 2004 Los Osos CSD "Alternative" Project

To: Local Media List
From: SewerWatch
Subject: Wanna see something cool involving Los Osos?
Date: 10/1/09

Dear members of the local media,

Wanna see something cool? Check this out...

The Los Osos sewer project that was just approved by County Supervisors, after over three years, and $7 million of analysis, is nearly identical to a project that I first reported existed back in 2005 (a week BEFORE the recall election) -- a project that the 2004 LOCSD developed, and had sitting in its filing cabinet, and it was an alternative to the Tri-W mess.

The project consisted of a gravity collection system, with a treatment facility east of town, by the cemetery, with a small "pump station" at the mid-town Tri-W site. And THAT project description is exactly what the county just spent nearly four years years and $7 million concluding is the best solution for Los Osos.

Here's the link to my (2005!) story, where I first showed that the LOCSD had an alternative project sitting in their file cabinet... with cost estimates down to the hundreds of dollars:

http://sewerwatch.blogspot.com/2005/09/better-cheaper-faster-nobetter-cheaper.html

I dug that report out of a 4-inch thick, 2004 LOCSD document that was in response to several Coastal Commission questions, including why the sewer plant couldn't be moved out of town?

Gets worse for the 1999 - 2005 LOCSD.

The report on that project concludes that it did not make economic sense to move the facility out of town in 2004, however, as I also first exposed, at this link:

http://sewerwatch.blogspot.com/2005/07/sewerwatch-exclusive.html

... the 2004 LOCSD failed to include millions of dollars worth of components associated with the Tri-W sewer plant in their cost estimates, therefore, it low-balled the costs associated with the mid-town project, and IF they HAD included those millions of dollars in additional plant costs in the comparison, it would have changed the entire conclusion of that report, just like I reported, to where it DID make economic sense to build a gravity collection system, with a treatment facility east of town, by the cemetery, with a small "pump station" at the Tri-W site... which is exactly what the county just spent nearly four years, and $7 million, concluding is the way to go.

All the LOCSD had to do was act on its 2004 memo (that I first exposed in that story) using REAL numbers, and the result would have been nearly identical to what the county just did.

To put this frankly, had the 2004 LOCSD not lied about the numbers in that report in an effort to deliberately low-ball the cost of their now-failed Tri-W project, it would have shown that their 2004 "alternative" project could have, and SHOULD have, been used in 2004, just like the Coastal Commission wanted, and just what the Board of Supervisors recently concluded is the best solution.

Cool, huh?

Anyway, just thought you might find that interesting... or not.

Questions? Just ask.

Thanks,