Stimulus funds aiding companies fined for pollution (Boeing), accused of fraud (Granite Construction) & AIMCO – a major apartment owner based in Denver – offered $13 million in tax credits – paid $3 million to settle a lawsuit over complaints that it operated mold and rodent-infested buildings

Resident Dorothy Peterson said she was considering protesting the stimulus assistance to AIMCO. “If they really wanted to make sure that low income housing was built properly and for residents that were going to be treated like human beings, then they would not give it to an AIMCO,” she said.

By Will Evans
Posted:  01/08/2010

Large corporations working in California have reaped tens of millions of dollars in new federal stimulus funds, despite previous pollution violations, criminal probes, and allegations of fraud, a California Watch investigation has found.

Residents in Ventura County say they are dismayed that airplane and defense giant Boeing received a $15.9 million stimulus contract for environmental monitoring at the same site near Simi Valley where the company was fined for polluting a creek with chromium, dioxin, lead and mercury.

A local resident and opponent, Dawn Kowalski, called the new contract “the fox guarding the hen house.”

Watsonville-based Granite Construction received $6.4 million in stimulus contracts to work on airport runways in Salinas and Monterey, and to repair roads in San Bernardino, Riverside and Butte counties. Yet the company faces three federal probes, including a criminal investigation into whether it fraudulently overcharged the city of San Diego in the wake of the devastating 2007 wildfires.

And AIMCO, a major apartment owner based in Denver, stands to benefit from $13 million in stimulus tax credits to rehabilitate its housing complex in Los Angeles. This federal assistance comes after the company paid $3 million in 2004 to settle a lawsuit from the city of San Francisco over complaints that it operated mold and rodent-infested buildings that posed serious safety hazards to residents. Residents continue to complain about AIMCO’s management.

To government watchdogs, these contracts and others raise concerns about the way the massive federal stimulus program is being administered. Although most major companies in America face lawsuits and regulatory action, these government reformers say a contractor’s entire history should be considered before doling out more money to the same firms.

“It is very upsetting that the government doesn’t do more due diligence before it hands money out,” said Laura N. Chick, California’s inspector general for stimulus funds. “We’ve gotten very used to handing out taxpayer dollars and not so good at overseeing to whom are we giving them and how they are being spent.”

Boeing contract under fire

One stimulus contract through the Department of Energy is causing consternation in the rugged foothills above Simi Valley in Ventura County.

The toxic contamination at the Santa Susana Field Laboratory has been a painfully sore subject to locals for decades. Since the 1940s, the lab was operated by divisions of North American Aviation, which eventually became Rockwell International. It was the site of rocket engine testing and nuclear power development that led to toxins leaching into the dirt and groundwater and a partial nuclear meltdown in 1959.

Boeing acquired the aerospace divisions of Rockwell International in 1996, but community activists said Boeing has been fighting its responsibility for pollution that occurred before and after the purchase. A group of local residents sued Boeing, contending that the pollution had caused cancer. The company settled for $30 million in 2005.

The regional water quality board fined Boeing $471,000 in 2007 for 79 pollution violations that let wastewater and storm runoff from the site ooze toxins into various creeks, flowing downstream to the Los Angeles River.

Boeing had discharged 118.5 million gallons of water laced with pollutants like chromium, lead and mercury, according to the water board. At one point, the company exceeded the allowable concentration of cancer-causing dioxin by 6,900 times. The water board said the chronic violations created a risk to public health and, given Boeing’s resources and sophistication, were “exceedingly serious.”

Dan Hirsch, president of a California nuclear watchdog group, doesn’t believe Boeing should have been rewarded with federal stimulus money for environmental monitoring there. The contract for Boeing, which made $2.7 billion in profits in 2008, was not bid competitively. “How can one have federal taxpayer money going to a company that is responsible for the contamination and is resisting the cleanup?” Hirsch said.

Boeing said it has made significant progress on the cleanup. “Boeing is fully committed to cleaning up the site in a manner that fully protects public health and the environment,” wrote spokeswoman Kamara Sams in an e-mail to California Watch. She said Boeing, NASA and the Department of Energy are responsible for cleaning up portions of the property.

And Jen Stutsman, an Energy Department spokeswoman, responded by e-mail that Boeing has the expertise to perform the work and a good track record of working with the agency. “Changing contractors would only cost the taxpayer additional money as a new contractor arrived and took over the work for Boeing,” she wrote. The project was reported to have created 11 jobs.

At the same time, Boeing is trying to overturn a California toxic cleanup law. On Nov. 13, Boeing sued in federal court to invalidate SB 990, which holds the Ventura County cleanup to especially strict standards. Boeing claims the California-mandated standards are unnecessary and the excavation required would further destroy the “ecological habitat.”

State Assemblywoman Julia Brownley, who represents nearby residents, said she’s concerned that Boeing is getting stimulus money and “almost in the same breath” suing against California cleanup standards. “Something just seems not right in that picture,” she said.

Boeing also won $892,000 in stimulus money from an Air Force contract to help design energy-efficient aircraft of the future. The work is being done at Boeing’s Huntington Beach facility in Orange County. Yet just last August, the company paid the government $25 million to resolve allegations that it performed defective work – and overcharged the government – on an entire fleet of Air Force refueling planes built in Texas.

Boeing disagrees with the government’s allegations and “has far exceeded Air Force contractual quality requirements,” according to a spokesman.

Under investigation

Granite Construction picked up several stimulus contracts – which were distributed through Caltrans and various local agencies – despite being at the center of a fraud scandal in San Diego, where many residents feel the company took advantage of the city in a time of crisis.

“As a taxpayer, I would be more than a little frustrated with that, given the track record here in this city,” said Jan Rasmussen, a San Diego resident and outreach coordinator of Rancho Bernardo United, a community group that helps victims of the 2007 wildfires.

The city of San Diego sued Granite Construction and another company, A.J. Diani, in 2008 for separately allegedly overbilling for their debris removal services after the disaster. The city claimed both companies billed with “falsified records” that overestimated the amount of debris they had cleared, and inflated their costs. The lawsuit is on hold pending a criminal probe by the U.S. Department of Homeland Security.

Granite also faces two U.S. Department of Justice investigations. One targets an Oregon construction project where storm runoff dumped dirt into various creeks, possibly harming the fish population. The other focuses on allegations that a joint venture run by Granite in Minnesota failed to hire enough minority businesses as subcontractors and misrepresented those efforts.

A Granite spokesperson, Jacque Fourchy, said the company is open about its legal problems in corporate filings and disputes wrongdoing in San Diego. “It’s unfortunate,” Fourchy said, “that this investigation continues to plague us because we really feel like we didn’t do anything wrong.”

Apartment owners sued

The federal government has directed stimulus funds, in the form of tax credits, to create low-income housing across the state. Denver-based AIMCO – in a joint venture with the nonprofit Foundation for Affordable Housing – was offered $13 million in tax credits to help fix up its senior housing apartment complex in Los Angeles. An AIMCO spokeswoman said the company has yet to accept the stimulus tax credit and contends the project “represents the company’s continued commitment to meeting the critical need for affordable housing.”

But in the Bayview-Hunters Point neighborhood in San Francisco, residents have complained for years of slumlord conditions and bad management at the AIMCO apartment complexes. “We trust them as far as we can throw them – that’s the general rule when it comes to AIMCO,” said Sara Shortt, director of the Housing Rights Committee of San Francisco, a nonprofit tenants-rights organization.

The city of San Francisco sued AIMCO, saying that the company ignored more than two dozen orders to fix scores of health and safety hazards, including stairways and landings collapsing from dry rot as well as moldy, water-damaged ceilings and walls. Inspectors cited a blocked fire escape and lack of smoke detectors. They also found broken windows and doors and faulty plumbing. AIMCO settled the suit for $3 million in 2004.

Resident Dorothy Peterson said she was considering protesting the stimulus assistance to AIMCO. “If they really wanted to make sure that low income housing was built properly and for residents that were going to be treated like human beings, then they would not give it to an AIMCO,” she said.

But AIMCO’s partner on the Los Angeles project vouches for the company. “They’re huge,” said Deborrah Willard, president of the Southern California-based Foundation for Affordable Housing. “When you’re huge and you own this many units, you’re bound to make somebody unhappy somewhere along the line.”

To search a database of $18.5 billion in stimulus funds awarded in California go to

See also –

More mold complaints against apartment complex – Follow up to – Jacksonville mom says apartment mold, asbestos caused son’s asthma death – Village of Baymeadows Apartments – AIMCO

Information on Riverstone Residential knowingly exposing tenants to extreme amounts of mold toxins at Toxic Mold Infested Jefferson Lakes Apartments in Baton Rouge, Louisiana

Toxic Mold Infested Jefferson Lakes Apartments managed by Riverstone Residential

Riverstone Residential Litigation

Mold Inspection Reports

Photos of Mold in Apartment

Attorney Malpractice

A letter to the NAA regarding an email they deleted without reading – please retract your amicus in the Abad case in Arizona – it is fraud by a political action committee, the National Apartment Association, that is furthering another fraud by another political action committee, the US Chamber of Commerce

Political Action Committee – NAA – files Amicus Brief in mold case (two infant deaths in mold filled apt – Wasatch Prop Mgmt) citing US Chamber/ACOEM ‘litigation defense report’ to disclaim health effects of indoor mold & limit financial risk for industry

“Changes in construction methods have caused US buildings to become perfect petri dishes for mold and bacteria to flourish when water is added. Instead of warning the public and teaching physicians that the buildings were causing illness; in 2003 the US Chamber of Commerce Institute for Legal Reform, a think-tank, and a workers comp physician trade organization mass marketed an unscientific nonsequitor to the courts to disclaim the adverse health effects to stave off liability for financial stakeholders of moldy buildings. Although publicly exposed many times over the years, the deceit lingers in US courts to this very day.” Sharon Noonan Kramer

About Sharon Kramer

Hi, I'm an advocate for integrity in health marketing and in the courts.
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