District Attorney Press Release
District Attorney Press Release

Former District Administrator of South San Luis Obispo County Pleads No Contest to Allegations of Conflict of Interest

District Attorney's Office
Date: 3/6/2018 2:30:53 PM

John L. Wallace pleaded no contest to two misdemeanor counts of conflict of interest.

This morning John L. Wallace pleaded no contest to two misdemeanor counts of conflict of interest stemming from his tenure as district administrator of the South San Luis Obispo County Sanitation District (SSLOCSD) and general manager of the Avila Beach Community Services District (ABCSD).  He also agreed to pay restitution in the amount of $59,724.57, with $18,097.70 going to SSLOCSD and $41,626.87 to ABCSD.

“This prosecution illustrates the very technical nature of California’s conflict of interest law and serves to place special districts statewide on notice that this business model poses an inherent conflict of interest and puts ratepayer’s money at risk,” said District Attorney Dan Dow. 

The allegations were similar for each facility, that Mr. Wallace, as a manager of a special district, had a conflict of interested by permitting Wallace Group, a company of which he was a major shareholder, to provide engineering services to those districts.   The investigation did not reveal any misappropriation of funds on the part of Mr. Wallace or Wallace Group.  Payments to Wallace Group during the relevant timeframe were approved by the respective districts.  The criminal complaint alleged conduct dating back to 2011 for SSLOCSD and 1995 for ABCSD.  

A preliminary hearing in this case began yesterday before The Honorable Judge Timothy Staffel of the Santa Barbara County Superior Court.  A central focus of the hearing was whether the evidence would be limited by the four-year statute of limitations. During the hearing Judge Staffel expressed doubt about whether the statute of limitations should be tolled which would allow prosecution for conduct prior to 2013.  Evidence at the preliminary hearing demonstrated that the allegations of conflict of interest had been well-publicized in 2011. 

The resolution of the case was made in light of Judge Staffel’s statement regarding the statute of limitations, and equitable considerations, including the fact that attorneys for the districts had at various times indicated that a conflict did not exist and a 1993 Grand Jury finding that Mr. Wallace’s similar arrangement at the San Simeon Community Services District did not constitute a conflict.  

After accepting the change of plea, Judge Staffel described the agreement as a “just resolution” and opined that “public entities across the state need some training. 

The conviction of Mr. Wallace is the result of a year-long investigation by the San Luis Obispo County District Attorney’s Office Public Integrity Unit.  

Point of contact for media inquiries is Assistant District Attorney Eric J. Dobroth (805) 781-5819.