L.A. Trash Trucks: Warnings Unheeded

It was a horrible and heartbreaking way for the two young friends to die, their heads shattered by a metal rod that burst out of a Los Angeles trash truck then punctured a school bus in which the boys were sitting side by side.

City officials were quick to dismiss the accident as a fluke, a bizarre malfunction. Others, closer to the ground, were shocked by the deaths but not surprised by the breakdown.

For two years, city maintenance workers had been warning that the truck bodies--built by Amrep Inc. of Ontario--were plagued by design flaws and substandard workmanship, memos obtained by The Times show.

They were especially critical of welds that were cracking on crucial parts, a major factor in the December deaths of Brian Serrano and Javier Mata.

So pervasive were the problems that the top maintenance supervisor urged his boss to rethink Amrep’s multimillion-dollar links to the city.

“I again recommend that we stop buying trucks with Amrep bodies,” he wrote to then-fleet services director Harold Cain in late 1993.

But that did not happen. Instead, the money kept flowing. Cain never told higher-ups of the deficiencies, and his division recommended another contract for Amrep and its partner, Inland Empire White GMC, which built the trucks’ frames.

With no tough action being taken, some workers questioned the city’s relationship with Amrep and Inland. Cain, for example, played golf with an Inland executive, while another city employee overseeing the truck contract was a friend of the head of Amrep.

The suspicions of favoritism hardened last year when Cain went to work for Inland--six months after his future employer and Amrep received $18 million for another fleet of trash trucks.

Cain and other key players in the Amrep/Inland contracts deny any special favors and insist that there was no way to foresee the catastrophe that claimed the lives of the two 8-year-olds. They contend that all trash trucks are “high maintenance,” no matter who makes them, and that Amrep’s work was consistent with industry standards.

“Hindsight is always 20-20,” said Randall C. Bacon, head of the city’s general services department, which is responsible for buying and fixing the trash trucks. “But I haven’t been exposed to anything that would show me anything was done wrong.”

Others are less certain.

The city controller’s office, in response to questions by The Times, has begun a broad investigation into the matter--from how the contracts were awarded to what, if any, personal relationships existed between city and company officials.

“This is a major concern to us,” said Controller Rick Tuttle.

Although the presidents of Amrep and Inland declined to comment, Amrep attorney James Reed said the company’s large volume of business speaks for itself. “Why do most people choose Amrep? It is the quality,” he said.

*

Beyond disclosures that city employees had been complaining for years about Amrep’s quality, hundreds of pages of documents obtained by The Times through the state Public Records Act reveal other irregularities.

Among them:

* Trucks broke down so often that Amrep received hundreds of thousands of dollars in cost overruns under annual contracts to provide spare parts. For instance, one contract was increased from $105,000 to $350,000. This despite the fact that the purchasing agent approving the expenditures exceeded his authority to do so.

* Amrep and Inland submitted false documents to the city in an apparent effort to undercut other bidders for a $10.7-million contract in 1993. Although Amrep and Inland had entered the competition, they submitted an even lower bid by a fake company to make sure no one could beat them. Its name: Perma Inc., which is Amrep spelled backward. Cain knocked Perma out of contention when a rival business questioned its existence, but Inland and Amrep were not penalized. They landed the contract as the second-lowest bidder.

* Key documents detailing why city officials considered Amrep/Inland trucks the best despite the numerous complaints about quality are missing from the contract files. “That should all be in there,” said Asst. General Manager Jon K. Mukri. “I can’t explain it.”

The disclosures are certain to complicate the city’s legal strategies. One victim’s family has sued the city, and the other family is expected to follow soon.

“What can I say? I will never get my son back,” Javier’s father, Francisco Mata, said when told of the revelations in the documents. “They should have done something about the problems. . . . I hope this tragedy never happens to anyone else.”

Steven A. Lerman, who represents Brian’s mother, Maria Serrano, added: “To continue purchasing the equipment given the repeated complaints is insane.”

Some of the problems cited by the city repair staff were confirmed by an independent metallurgist hired by the city after the boys’ deaths. Among other things, he concluded that the accident resulted from design flaws and poor quality workmanship endemic to the Amrep fleet.

City workers detected trouble as far back as 1992, shortly after Amrep won a $3-million contract to place automated arms on existing trucks to lift garbage cans.

No sooner had the trucks hit the road than drivers found weld cracks on the new arms and in the hoppers where trash is stored.

“We are concerned that a trend may be developing which will become even more severe as the trucks receive additional use,” Sanitation Bureau Manager Marilyn L. McGuire wrote to Cain in a June 1992 memo asking him to investigate.

Cain told then-chief maintenance Supt. John Gasca to look into the problems. He reported back the next month that Amrep had agreed to fix the defects.

While some of the flaws were corrected, many others were not, documents show. In fact, the problems became more severe. Cracks in welds appeared elsewhere on the trucks. The new arms began bending, breaking and tossing out garbage as they lifted trash cans.

Worse, in some trucks, components had begun to break prematurely in the compacting mechanism--the same mechanism that two years later would fail and kill Javier and Brian.

Maintenance supervisors accused Amrep repair crews of working short shifts or not showing up. Amrep failed to provide repair manuals, making it difficult for city crews to fix trucks because Amrep had made so many design changes in response to complaints. “You didn’t know what parts were in them,” one maintenance supervisor said in an interview.

*

With the problems mounting and with inadequate responsiveness from Amrep, the memos show, Gasca met with the company’s owner, Jose Ghibaudo, in May 1993. Gasca gave him a detailed list of 27 problem areas with suggested solutions. Ghibaudo promised to take care of the problems.

But two months later, Gasca told Cain that the “ongoing chronic” problems had not been corrected and suggested he weigh Amrep’s future with the city.

“I recommend that we take a serious look at any present or future purchases of any equipment manufactured by Amrep,” Gasca said in a July 1993 memo. “This recommendation is based on the fact that over the past year Amrep has not fulfilled its obligations in resolving chronic problems.”

Cain could have initiated a review process requiring the company to appear before a panel of general services officials empowered to put a company on notice or even cancel a contract.

Not only was there no review, Amrep and Inland were awarded the largest trash truck contract in city history--ultimately worth $25 million--to build 225 trucks.

Truck No. 70, which was involved in the fatal accident, was manufactured under that contract.

“We were asking, ‘Why are we buying new Amrep trucks when we can’t even straighten out the problems with the [automated arms]?’ ” one maintenance supervisor recalled.

As they feared, the new trucks seemed as problem-plagued as the old.

In October 1993, Gasca held an extraordinary meeting of eight maintenance supervisors.

As they sat around an oak table at fleet service headquarters, Gasca asked them to write down any problems they were having with Amrep, according to a source who was present.

After about 20 minutes, each read from his list. “Everybody was having the same problems,” recalled the source, who requested anonymity because of Bacon’s order that no one in general services talk to the news media about Amrep.

The supervisors complained that Amrep had failed to fix many of the breakdowns on their 1992 trucks and that 14 problems were common on vehicles being delivered under the new contract, according to minutes of the meeting.

Among other things, cylinders in the new trucks’ compactors were breaking within weeks of delivery.

In one instance, the company returned a truck to the city with its controls for the automated arm reversed: when the “up” switch was hit, the arm would go down, and vice versa.

Gasca attached a report of the meeting to yet another memo in which he recommended to Cain that the city sever its ties to Amrep. “The supervisors still feel that Amrep is not attending to [their] needs,” Gasca wrote. “I again recommend that we stop buying trucks with Amrep bodies.”

But Cain said all trash trucks have problems and that Amrep would fix things, a fleet services official said in an interview.

In March 1994, Gasca was transferred to another assignment. Seven months later, chief maintenance Supt. Alvin Blain wrote his own memo to Cain about “major problems.”

Once again, Blain said, Amrep was not honoring its repair commitments. It was returning trucks without verifying that they worked and had yet to provide a comprehensive repair manual.

Amrep also put used parts in new vehicles, Blain wrote. During a later meeting with Blain, Cain and others, Amrep president Ghibaudo insisted that he only used old tailgate cylinders--which open the truck’s rear doors--”for testing” the performance of the vehicles while awaiting new parts. He said he would not do it again.

*

None of the complaints that swirled around the company, however, derailed its quest for another contract in early 1995. Amrep and Inland won an $18-million deal for 165 trucks, which continue to roll off the assembly line and onto the streets.

In an interview, Cain conceded that Amrep was not quick to fix problems. “I’m the first to admit that Jose [Ghibaudo] is slow,” he said.

But he defended his decision to stand behind the manufacturer. There was little alternative, he said, because few companies make automated trucks.

“People make recommendations, and that’s fine,” Cain said. “But when you only have one or two viable vendors, what the heck are you going to do?” [During that period at least three other companies made automated trash trucks.]

Cain also defended his decision to withhold information about Amrep’s performance from his superiors, saying he wanted the problem handled at his division’s level. He blamed Gasca for not getting the job done. “So I transferred him out of the division,” Cain said.

Cain said the problems were resolved after Gasca was replaced, even though city documents show that Gasca’s successor complained about Amrep, too. Moreover, as evidence of the company’s continuing shortcomings, 66 of its trucks were grounded after the December accident because of shoddy welding and design flaws.

Under instructions from the head of general services, Gasca and Blain declined to comment.

Although Cain insisted that his decisions were based on merit and logic, some workers under his supervision had become skeptical--especially after he was hired by Inland, after he retired in May.

In fact, Cain was accused of a cover-up in an anonymous letter received by the general services personnel division.

The letter alleged that Amrep violated its contractual obligation and that “Cain was covering up and not enforcing it because he was receiving kickbacks,” said Pete Granna, a senior personnel analyst who, after looking into the letter, said he could find no evidence of wrongdoing.

“No one was able to come up with anything,” he said of his talks with some supervisors.

Granna acknowledged, however, that he never reviewed contract files or interviewed Cain himself. He was unaware that Cain had been hired by Inland, which is an independent dealer that sells General Motors and other vehicles.

In his interview with The Times, Cain said he never accepted any gifts or gratuities. He also said it would be wrong-headed to infer anything from the fact that he went to work for Inland or that he often played golf with former company executive Stephan S. Stockdale, Inland’s point man with the city.

Initially, Cain said he had sought work at the company only after he had retired. But he later called The Times to say that Stockdale had offered him a job two weeks before he left the city.

“He wanted me to be a liaison with the city. But I checked into it and told him I couldn’t” because of potential conflicts of interest, said Cain, who instead became a sales representative.

In addition to his $6,487 monthly city pension, Cain receives $20,000 a year plus bonuses for his part-time job at Inland, documents filed in divorce proceedings show.

Stockdale and Inland President Michael J. Allec did not respond to repeated requests for interviews.

Beyond the millions of dollars spent to purchase the trucks, hundreds of thousands more were going for parts because of all the mechanical problems.

For example, one contract for parts, from October 1991 to November 1994, soared from an agreed-upon $315,000 to $976,815, records show.

The expenditures were authorized by then-purchasing agent John Trevgoda, whose father, now retired, was a top official in the general services department.

Trevgoda improperly approved huge increases in the parts contracts. Under department guidelines, he was barred from approving more than $50,000 at a time.

Records show that one day in August 1993, he approved a payment of $350,000 to Amrep, tripling the value of the contract. One day in 1994, he authorized a $200,000 payment, nearly the entire amount allotted for that year.

Trevgoda’s supervisor at the time, Kenneth F. Desowitz, acknowledged that Trevgoda was not authorized to approve such large increases. And he acknowledged that he should have watched more closely to make sure that the soaring costs were properly authorized and justified. “I guess that’s a flaw in our procedure,” he said.

In all, taxpayers have spent $2.6 million over the past five years on Amrep parts--30% more than the company said would likely be required.

“Those aren’t cost overruns,” insisted general services chief Bacon. “Those are from purchasing more parts than they had anticipated.”

Trevgoda, citing Bacon’s ban on news media interviews, declined to comment.

*

If complaints about Amrep’s quality were not enough to sideline the company, critics and rivals say that what happened during the 1993 bidding to build a new fleet should have been.

Inland submitted two bids. One said that Amrep would build the bodies. The other, a lower one, said a company called Perma would do it at its Stockton facility.

Steve Stoltz, representing a rival body manufacturer, said he raised an objection when the sealed bids were read at a meeting with the city in April 1993. “Perma, who’s that?” Stoltz recalled asking.

In reality, Perma was Amrep spelled backward. And its office phone number was actually Amrep President Ghibaudo’s home phone. In fact, business records show, Perma did not exist. Not even the Stockton address listed in the bid existed.

After the competitor’s questions, Cain and a top subordinate, Ron Patitucci, disqualified Perma, calling it “a relatively new body manufacturer with less than two years of experience,” according to the contract file.

When asked why he erroneously called Perma a “new” business, Cain said he assumed that was true “because we had never heard of them.”

He said that at the time he did not think the company was bogus and that he saw no reason to investigate further, even though the Inland president had signed a form, under penalty of perjury, attesting to the proposal’s validity.

Meanwhile, Amrep’s Ghibaudo quickly tried to legitimize Perma--on paper. One month after its disqualification, he filed for a business name for Perma in San Joaquin County. Records show that he did nothing else.

Ghibaudo hung up his telephone when called for comment. Patitucci did not return repeated calls.

Inland submitted other questionable documents as well.

The company stated that Perma, Amrep and two other subcontractors were city-certified as women- and minority-owned businesses. In fact, those subcontractors were not certified, according to David T. Peterson, manager of the city’s Office of Contract Compliance.

Inland submitted another questionable document involving whether it made the required “good faith” effort to diversify its work force.

In the end, Amrep and Inland got the nod for the $10.7-million contract.

Despite its huge contracts, Amrep recently filed for Chapter 11 bankruptcy protection. It did so after a federal jury in July ordered it to pay $1.6 million to rival Sunbelt Automated Systems. Sunbelt had alleged that its patented automated arm was copied by Amrep so that it could win the lucrative city contracts.

And last week, the city temporarily halted deliveries of Inland/Amrep trucks after Sunbelt and another company alleged that the vehicles did not meet city specifications regarding width, height and other requirements. Assistant City Atty. Christopher Westhoff said the city disputes the allegations but halted the order while it awaits a report.

Sunbelt President Armand Mezey questioned whether the city would have been so attentive had the two boys not died.

“I really don’t know if the city would not have paid much attention to this had it not been for that accident,” Mezey said. “The accident brings to light the shortcomings in the lack of quality and the need to adhere to strict vehicle specifications.”

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SOUNDING THE ALARM

Two years before a malfunctioning Los Angeles city trash truck killed two 8-year-old boys, officials repeatedly complained of problems with the vehicles and the company that built them, Amrep Inc.

* June 26, 1992

Marilyn L. McGuire, a Bureau of Sanitation official, tells then-fleet services Director Harold Cain that used city trucks on which Amrep installed new automated arms, new trash compactors and other components were suffering problems after a short time in service. “We are concerned that a trend may be developing which will become even more severe as the trucks receive additional use,” McGuire wrote.

* July 19, 1993

Fleet services maintenance Superintendent John Gasca tells Cain that Amrep has not resolved “ongoing chronic” problems, including poor welding, design flaws and the firm’s failure to service vehicles and provide parts. Gasca recommends that Cain put a stop on deliveries of new trucks. “This recommendation is based on the fact that over the past year Amrep has not fulfilled [its] obligations in resolving chronic problems,” Gasca writes.

* Oct. 26, 1993

Gasca informs Cain that Amrep’s new trucks are breaking down within weeks of delivery. Gasca attaches minutes of a maintenance supervisors meeting held four days earlier during which they document 13 different problems. “I again recommend that we stop buying trucks with Amrep bodies,” Gasca writes.

* Sept. 2, 1994

Maintenance Superintendent Alvin Blain, who replaced Gasca, tells Cain there are “major problems” with Amrep. Among them: Amrep failed to honor commitments to fix trucks, made made numerous undocumented design changes. “Amrep installed used parts in new vehicles (tailgate cylinders). Blain writes.

Source: Los Angeles city memos