State audit: Cudahy must repay $22.7 million after corruption scandal

CUDAHY, Calif. (KABC) -- The results of a state audit of the city of Cudahy were released Tuesday after three former city officials were convicted in a bribery scandal.

It was nearly two years ago that a five-hour standoff ended in the arrest of Osvaldo Conde, then a Cudahy city councilman, accused of bribery and extortion.

Conde, then-mayor David Silva and Angel Perales, in charge of the city's code enforcement, eventually pleaded guilty to federal charges and were sentenced last February. Conde received three years in prison. Silva received one year in prison, and Perales was sentenced to five years of probation.

Now an audit of the city's internal controls and fiscal management practices conducted by the state controller's office reveals just how poorly the city was being run when Conde, Silva and Perales were at the helm.

"You had misuse of state dollars, wasted dollars, they had dollars that they could use for a park, they had to return it back to the state of California. Things such as misuse of credit cards, there were no policies as to how you could use it, they overspent, they didn't fully pay their credit card bills, there were late charges," said California state controller John Chiang.

According to the audit, investigators found an almost complete lack of internal controls; questionable leave pay for some city officials; uncontrolled credit card spending; city council meetings that were not recorded properly; as well as bank accounts that were not reconciled.

As a result, Chiang is ordering Cudahy to return $22.7 million in redevelopment money.

It's a hard pill to swallow, yet Chiang commends current city leaders for requesting the audit and being willing to tackle the problems of Cudahy.

"Cleaning up the problems of Cudahy is not going be easy, obviously. There were some serious problems earlier but they're just going to have to take the next steps and they could be incredibly difficult steps to make sure that the city of Cudahy is back on the right fiscal path," said Chiang.

"We pleaded for this report because this is an opportunity to have a starting point for our city to move forward," said Cudahy Mayor Chris Garcia. "This is a good day, this is definitely a good day."

Cudahy resident William Correa says he is fed up with the mismanagement, and hopes the current leadership will turn the city around.