Roger Berg Admits to Violating The Law To Funnel Public Funds to Beaumont Electric

In a Press Enterprise article from September 2015 about Inland Empire municipal financial scandals, Roger Berg told Press Enterprise reporter, Cassie McDuff that he " ...came up with the idea for the city to capture sales tax by acting as a wholesaler for electrical supplies." He also claimed that "The city ran it by the state Board of Equalization, which blessed the deal."

Here is a link to the McDuff article: Click Here

He is likely telling the truth about it being his idea, though I am sure Jim Love helped with the design of the scheme to avoid sales taxes in another jurisdiction. However, according to the State Controller's report, it is clear once again he is lying to the public about the City getting a blessing from the State Board of Equalization.

The State Controller's report states "In October 2008, the Beaumont Financing Authority (Authority) applied for and was issued a seller’s permit by the Board of Equalization (BOE) for the purpose of selling retail goods."

However, the report goes on to say "It does not appear that the Authority is in the business of reselling goods. And then the report says "From 2009 to 2015, the City used the Authority’s resale certificate to purchase approximately $6.5 million of Beaumont Electric, Inc.’s (BEI) supplies and equipment without paying vendors any sales tax."

There is so much detailed in the SCO report wrong with this scheme that I can't post it all here but this one paragraph sums up the problem the best:

After vendors were paid, the City did not have adequate controls in place with regards to the reimbursement of the paid invoices. There was no schedule of payments and the City did not send an invoice to BEI to seek reimbursement. The City relied on BEI to ensure that the City was reimbursed. Our analysis of BEI’s reimbursements to the City revealed that it took approximately 30 to 60 days to receive reimbursement. (page 16)

It also came out in the SCO report that Beaumont Electric didn't submit invoices for payment, instead they provided Kapanicas with their unverified spreadsheets and he then instructed Aylward to cut the checks. Where was the Council oversight on the city's internal controls? Well, we know Berg was spending his time trying to shut Judy up with bogus complaints to governmental agencies. No interest was paid on the 30 to 60 days that Beaumont Electric had their supplies. The lost interest is clearly a gift of public funds.

Link to State Controller's Report Beaumont Electric begins on page 13 Click Here

Berg talks about others' abuse of public funds even in the face of evidence that he is lying. But in this article, when he says "The arrangement netted $62,000 over the past six years", Berg admits to gifting public funds to Jim Love and Beaumont Electric. Berg also admits that his scheme damaged Beaumont when he proudly states "That didn’t make up for what Beaumont lost but every little bit helps.”

By the way Roger, $62,000 net on a $6.5 million investment is not a very good return. Just saying