John Wallace to face felony charges



More than one year after an independent audit raised concerns over financial mismanagement and alleged malfeasance at the South SLO County Sanitation District, the SLO County District Attorney’s Office announced it had filed criminal charges against the sanitation district’s former administrator.

John Lee Wallace, who headed the sanitation district from 1986 to 2013, was charged with two felony counts and two misdemeanor counts for allegedly breaking conflict of interest laws. Wallace allegedly used his position to make, participate in, and influence governmental decisions in which he had a financial interest. Assistant Deputy District Attorney Lee Cunningham told New Times that each felony count could carry a sentence of up to three years in state prison.

Wallace is the principal for SLO-based engineering firm the Wallace Group. During his tenure as the sanitation district’s administrator, Wallace’s firm provided a number of services for the district. An independent audit commissioned by the district’s board of directors raised serious concerns about the amount of money flowing from the district to Wallace’s firm. According to the audit, the Wallace Group assumed control over all aspects of the district’s financial affairs. As it did, billing from the Wallace Group rose from 81 hours and $3,600 per month in 1999, to more than 600 hours and $70,000 per month by the end of 2010. During that time, the Wallace Group received more than $6 million for administrative fees, engineering fees, and major budget item projects. The audit also included allegations that Wallace may have tried to solicit payments to his company from an entity seeking a discharge permit from the sanitation district.

Cunningham said that Wallace would have to be booked at the SLO County jail on the charges.

“His attorney is going to arrange for [Wallace] to turn himself in and be booked on the warrant,” Cunningham said.

Wallace is tentatively scheduled to turn himself in Jan. 31, Cunningham said. An arraignment in SLO County Superior Court is scheduled for Feb. 7.

A statement from Wallace’s attorney, Dennis Law, issued shortly after the charges were filed indicated that he plans to fight the charges.

“John Wallace served the South San Luis Obispo County Sanitation District for more than 27 years, always with direct board and legal approval and in plain view of the public and regulators,” Law wrote. “He is dismayed by the unprecedented action and confident the facts of the case will clear the air.” 

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