State controller: Montebello misspent more than $31 million

A pair of audits shows the city of Montebello misspent more than $31 million over five years through questionable spending, loans and fund transfers, according to California's controller.

Controller John Chiang said Thursday much of the money for the city's redevelopment agency was improperly used for items such as dinners in Las Vegas for the city manager and embroidered polo shirts for councilmembers.

The eastern Los Angeles County suburb of 65,000 has a multimillion-dollar budget deficit and could be broke this fall.

Interim city administrator Larry Kosmont says the Controller’s audits are wrong.

“The conclusions of the state controller’s office in the city’s opinion is a bit overreaching and not quite appropriate in some major categories," he said. "The observation section is basically a politically-charged free-for-all where the state controller is, I think, providing opinions as to redevelopment policy which has nothing to do with redevelopment law.”

The U.S. Department of Housing and Urban Development found last year that the city had misused federal housing grant money for a project that was never completed. The agency is demanding the city repay $2.2 million.

Controller Chiang says he ordered the audits after Montebello failed to comply with new and tougher financial reporting rules for cities. Those rules were tightened after the fiscal scandal in the City of Bell.

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