Milpitas City Manager Accused of Misusing Taxpayer Money

Milpitas once again finds itself at odds with its city manager, whose litigious posturing has apparently triggered a probe into suspected corruption.

The City Council will convene tonight for a closed-session performance review of Tom Williams, the agency’s highest-ranking staffer for more than a decade. An agenda posted online barely 24 hours before the scheduled meeting lists three items up for discussion: Williams’ evaluation, a lawsuit he filed against the city to block the release of public records and one more anticipated legal challenge.

What’s not mentioned, but will no doubt come up in the parley, are allegations that Williams misused public funds. According to a document obtained exclusively by San Jose Inside, Williams spent $37,000 of taxpayer money on his personal attorney, signing it off as “official city business.”

Under Milpitas city policy, that’s ground for discipline or termination. Under state law, namely PC 424, that’s a felony punishable by imprisonment. The city’s outsourced legal counsel, Chris Diaz, said as much in a May 5 letter to the council. Incidentally, that's the same charge prosecutors leveled against disgraced Santa Clara County Supervisor George Shirakawa Jr. a few years back.

Diaz said he found out about the illegal charges on May 2 from Jane Corpus, the city’s interim finance director. The letter describes how Williams used his city-issued credit card to pay a $7,000 legal bill to Ad Astra Law Group and later signed off on “various documents” requesting an additional $30,000 in public money for the same firm.

Once Diaz caught wind about the unlawful expenses, he emailed Williams, demanding that he reimburse the city and noting that the charges were never justified to begin with. Williams obliged, but that makes him no less liable under the law. San Jose Inside has filed a California Public Records Act request for Williams’ charge card statements, but the city has yet to provide them.

Tom Williams

City Manager Tom Williams. (Photo courtesy of the Milpitas Post)

Two days after Diaz found out about the misappropriated funds, a city-commissioned auditing firm raised concerns about the charges, deemed the agency “high risk” and called for “a more thorough review of the city’s finances and controls.”

The auditors may have never learned of Williams’ expenses had he not taken his own city and reporters to court to halt public records requests by San Jose Inside and the Milpitas Post. According to Diaz’s letter, the auditors found out about Williams hiring Ad Astra Law Group for his personal legal defense from news reports.

“The auditors have knowledge of the city manager’s legal dispute from media articles and are aware of the law firm name,” Diaz wrote. “The auditors are now deeming the city a ‘high risk’ and will now need to conduct a more thorough review of the city’s finances and controls. I have now been asked to speak with the auditors. In addition, the city now has a pending public records act request seeking this information.”

San Jose Inside broke the news about the legal dispute after obtaining a copy of a cease-and-desist letter Williams sent to Mayor Rich Tran—the city manager’s most vocal critic. The letter claims that 32-year-old Tran repeatedly discriminated against the 53-year-old Williams based on the latter’s age. It also alleged that the mayor inappropriately disparaged the city manager’s job performance at public events and on social media.

Tran’s criticism stems from Williams’ connection to a years-long exodus of top-tier staff and several personnel lawsuits that resulted in costly settlements on the public dime.

In 2015, the city shelled out $600,000 to settle an age discrimination clime filed by former office clerk Lori Casagrande. In March 2016, the city’s former personnel director, Carmen Valdez, won $100,000 to drop charges of retaliation. A month later, the city paid $140,000 to the federal government over another age discrimination claim. Last month, former city attorney Mike Ogaz settled another retaliation claim in exchange for $975,000. San Jose Inside has requested information about additional settlements, but has yet to see records responsive to that request.

Then there’s staff turnover, which puts taxpayers on the hook for a substantial sum in hiring and training costs. Since Williams became the city’s top bureaucrat in 2006, his behavior has prompted numerous department heads to abruptly pack up and go. Many of them took medical leave before quitting, while others retired early.

Public works and engineering director Greg Armendariz took medical leave and resigned in 2012. Kathleen Phalen filled the role as interim until the city appointed Jeff Moneda, who took medical leave and resigned in 2014. The city eventually split the role into two positions, with Steven Machida promoted to chief engineer in early 2015, but resigning in fall of 2016 without public explanation.

The city’s planning division has seen equally high turnover. In 2011, planning chief James Lindsay left his post. His successor, Diana Barnhart, followed suit the next year after a protracted medical leave. Steve McHarris became the third planning director to resign in four years in 2015, but he filed a complaint against Williams before ducking for cover on medical leave and taking a job with the city of San Jose. From 2015 to last year, the Milpitas Post reported, three rank-and-file city planners left, as did acting directors Sarah Fleming and Bill Ekern, who resigned after Brad Misner stepped in as permanent director. The city had to outsource the department’s functions to just to keep pace with planning applications.

The city’s legal department began to unravel after Ogaz tried to address McHarris’ concerns. According to the ex-city attorney’s retaliation lawsuit, Williams urged the council to fire the entire three-person legal department as payback for Ogaz investigating the McHarris complaint. Milpitas has since outsourced its legal work to Diaz.

From the time Mayor Tran was sworn into office, he has butted heads with Williams. The youthful mayor’s missteps gave Williams fodder to lash back. Tran admittedly broke open meeting laws by emailing the entire city council. He also unapologetically plagiarized President Obama’s inauguration speech as his own. But many of the mayor’s constituents have applauded his calls for accountability. His Facebook page is full of supportive comments from residents telling him to keep up the fight.

Williams and Diaz have repeatedly cautioned Tran and the rest of the council from openly criticizing the city. During a public budget hearing last week, Williams characterized Councilman Anthony Phan’s questions about city spending as “badgering.” When Tran posted on Facebook about how Williams has been linked to expensive litigation, the city attorney told him to be careful about posting such opinions. Sources say the repeated warnings have had a chilling effect on the newer council members.

Meanwhile, Williams has been building a legal case against Tran and the city for the past several months. In March, Williams hired Ad Astra Law Group, which penned the cease-and-desist letter to Tran and sued to block its release, along with other documents. It’s unusual that Williams went to the trouble of a “reverse CPRA” lawsuit, however, because if he sued Tran as he said he would by April 28, those allegations would have become public anyway. It’s possible that Williams didn’t originally plan to follow through because of the optics of a city manager trying to demand a seven-figure sum from his own agency.

Tonight’s agenda mentions additional “anticipated litigation” and names the city as defendant, which might relate to the age discrimination claim against Tran. The city manager’s contract protects him from termination without cause, but Diaz’s allegation of graft could give the council grounds to fire him.

Williams and his legal counsel did not immediately respond to a request for comment. Williams has defended his record in the past by pointing out that he balances the budget every year. The Milpitas police union came to his defense as well, sending an open letter that commended the city manager for not outsourcing their job.

Tran told San Jose Inside that he has no idea what’s will happen tonight, but that he hopes his colleagues do their due diligence in holding the city manager accountable. “I let the universe do whatever it does,” Tran said. “I can’t control the things I can’t control. I’m hopeful that regardless of what happens, I’m going to do what the community of Milpitas taught me and do the right thing.”

The homegrown mayor admitted that he’s made mistakes, but that he’s learning and his message remains the same. Williams is the only city employee the council has the authority to evaluate, Tran said, so he takes that responsibility seriously.

“I literally have six months of experience as mayor,” said Tran, a county social worker by day. “I don’t have all the answers. I feel like when I started, I was the driver. The city car only fits five people, you know, and it seems like I’ve been moved to the passenger side.”

The timing of the closed-session meeting is also noteworthy. Vice Mayor Marsha Grilli, who tends to be sympathetic to Williams, called for the klatch the same day Tran leaves for Guam on a two-and-a-half-week assignment for the Army Reserve. While the council finally evaluates its city manager, which the mayor has urged them to do all year, Tran will be an ocean away.

This article has been updated.

Jennifer Wadsworth is a staff writer for San Jose Inside and Metro Newspaper. Email tips to [email protected] or follow her on Twitter at @jennwadsworth.

13 Comments

  1. Very entertaining, unfortunately the manly art of dueling isn’t allowed anymore for settling these matters.

    Perhaps you could do an expose on Janet Napolitano’s $175,000,000 party time slush fund while you’re at it.

    Isn’t a one part system so much more fun than checks and balances?

      • Well if we could get someone like The Donald, to fire one of the players involved. I’m absolutely positive scillions of women with cuntcaps would show up out of the either demanding a specal prosecutor to be named and put in charge
        hunting down some Russian Republican witches that paid a fortune to have their kids indoctrinated in the UC system.

      • Well if someone like “The Donald” would fire one of the players involved, I’m sure a skillion women wearing cuntcaps would suddenly apper out of thin air demanding a special prosecutor be named to hunt down the deplorable Russian
        Republican witches that overpaid the poor UC regents for the indoctrination of their foul offspring.

        Corruption has no bounds.

  2. Google ‘tom williams Milpitas city manager salary’ and see the salaries we paid him and the police . These are the folks who wanted to bring the casino to Milpitas, who keep milking Milpitas by recommending raises to each other.

  3. This clearly is a violation of public trust. He was caught abusing his power! How effective will Williams’ leadership be if he remains? There will be no public or employee trust on any thing that he does henceforth. Termination is the only right thing to do!

  4. > Good to see the SJI comment machine is up and working again!

    Curb your enthusiasm, Gunner.

    I’m suspecting that SJI may have used the same IT consultant that the gubbermint used for Obamacare websites, or Hillary used for her email server, or the DNC used for their email.

    I think the Russians may have hacked SJI.

    SJI needs to call in a high-powered IT consultant to resolve the problem. Maybe someone like Seth Rich.

    Oh, wait. He’s dead.

    • I was starting symptoms of withdrawal without your witty daily comments MR Bubble and the rest of you as well.
      Life is not the same without a real comedian hosting the Tonight Show either!