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Politics & Government

Can NEO Consulting Get a Fair Trial Locally?

Hercules consultants ask a judge to move the city's lawsuit against them to another county.

A company that earned millions of dollars managing affordable housing and other business for the city of Hercules is asking a judge to move a lawsuit against them elsewhere in California on the grounds that they cannot receive a fair trial in Contra Costa County, according to court documents.

Hercules filed a last month against its former city manager, Nelson E. Oliva, and the company that bears his name, NEO Consulting Inc. (dba Affordable Housing Solutions Group).

The city is asking for $3 million in damages and alleging that Oliva’s continued involvement in the company after his appointment to the city’s top management position violated state laws and constituted a breach of the city manager’s fiduciary duty, according to court records.

The lawsuit also names Oliva’s daughters--Taylor, Gabrielle and Adrianna Oliva, two of whom managed the company for a few years until it was purchased last year by Walter McKinney, a business associate who Oliva had appointed to police chief in the Southern California city of Hawaiian Gardens when he was city manager there in the 1990s.

“NEO is a corporation no longer owned by the other defendants, and the risk is likely that a jury would perceive NEO differently than it would its local municipality and redevelopment agency, such that a local juror pool would align its interests in favor of the recipient of their tax revenues,” NEO attorney Eva Plaza wrote in her pleading to the judge.

The motion asks the judge to transfer the lawsuit to a “neutral county, where none of the parties are located.” When a company is not “doing business” within the county, it might well be perceived as an “outsider,” and in that case a mandatory change of venue is “proper,” Plaza argued.

Plaza did not return a phone call to her Los Angeles office Friday afternoon. David Trotter, a Walnut Creek attorney hired by the city to file the lawsuit, declined to comment.

Oliva’s company, doing business as Affordable Housing Solutions Group, was
hired late in 2003 to manage Hercules' affordable housing program, which had
been shut down the year before following a federal investigation leading to the arrest and conviction of a city employee.
 
The contract proved to be a lucrative one for NEO/Affordable Housing Solutions Group. By early 2007, when Oliva was appointed City Manager, the company had collected slightly more than $1 million from Hercules.

The top management seat provided Oliva with a salary of $185,000, free use of a city-owned car and even an interest-free loan of $250,000 to buy a house. But it specifically prohibited him from engaging in any outside employment, saying in no uncertain terms that the city manager’s job was “not a part-time position and will require Oliva to work greater than a customary forty-hour week.”
 
Not only was Oliva forbidden from taking on other work, he was required to “confer with the mayor and/or city council before undertaking any projects for organizations other than the city which may require a substantial time commitment.”
 
So Oliva handed the company over to his daughters, one who was in high school at the time and the other in college. A new general manager was appointed, too – Walter McKinney, a man who worked for Oliva as chief of the newly created police department in Hawaiian Gardens in the 1990s.

Under their stewardship, the company went on to collect another $3.2 million from the city.
 
In most cases, the council actions authorized Oliva himself to conduct contract negotiations with his former business associate, McKinney, who became NEO general manager after Oliva went on the city payroll. Ultimately, McKinney said he purchased the company from Oliva’s daughters last summer.

But reports show that Oliva made personal appearances soliciting contracts for NEO in other California cities over the past two years. Recent of him soliciting contracts for his former company last year in Lompoc prompted public outrage and inspired the City Council to consider whether his appearance might not have violated his contract with the city.

“Before he became city manager, (the city) advised Oliva that he was required to fully divest any interest in NEO to avoid violation of conflict of interest proscriptions under California law and any appearance of impropriety,” Trotter wrote in the city’s lawsuit. “This was a precondition to his being hired as city manager.”

In terms of the lawsuit, it appears the allegations against NEO, Inc. will be handled separately from those against Oliva and his daughters, none of who have as yet filed a reply.

Whether or not the case will be heard locally might well hinge on an interpretation of how NEO’s involvement in the community might be perceived by a jury.

“Once an application is made under Code of Civil procedure, section 394, the transfer must be granted, unless the defendant is somehow considered to be intimately identified with the affairs or closely associates with the people of the community,” Plaza wrote to the court, citing a 1984 San Francisco case.

Attorneys are scheduled to argue the motion in court on Nov. 23.

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