California agency enforces laws for workers. But 2 of its officials were charged with crimes
Cal-OSHA, the state agency dedicated to enforcing workplace standards, vowed to take a tough stand against corruption following the 2018 arrest of one of its managers. But the agency continued to pay him hundreds of thousands of dollars and knowingly hired another person awaiting trial for corruption for the same district office.
Richard Fazlollahi, the Santa Ana District Office district manager, was taken away in handcuffs in June 2018. The district manager was ultimately convicted in 2021 for conspiracy in a scheme involving cash payments in return for slashing penalties in cases that included grievous injuries.
“It was absolutely shocking when he was arrested,” said Michael Loupe, the current district manager for Cal-OSHA’s office in San Bernardino. Loupe also worked with Fazlollahi in Santa Ana.
Cal-OSHA kept Fazlollahi on staff for an additional year. In 2019, the year after he was arrested, between extra pay, a full year of retirement earnings and his salary for six months, the sidelined district manager doubled his usual compensation, earning nearly $400,000. Fazlollahi, charged with 25 felonies, ultimately pleaded guilty to 14.
Fazlollahi also allegedly affected an Orange County criminal case, according to district attorney emails. They show he became involved with a manslaughter investigation related to the 2015 death of a worker, causing the criminal case against the employer to be dropped.
A Cal-OSHA spokesperson pledged, following Fazlollahi’s arrest, to “take a no-tolerance approach to malfeasance.”
But months after the district manager’s arrest, the same district office hired another official who faced criminal charges. The agency hired Jason Okonkwo as a safety inspector at the same Santa Ana district office. He was awaiting trial on felony charges of embezzlement, money laundering and public funds misuse at a Los Angeles charter school.
Cal-OSHA faces scrutiny for not only allowing the hire of an official accused of corruption, but the lack of other hires — the department suffers from understaffing – and how that staffing problem affects its execution of its main mission, to keep workers in California safe.
The state of the department, according to a former chief, should be addressed in the state Senate confirmation hearings for newly-appointed head, Debra Lee. Gov. Gavin Newsom in June selected Lee, who was deputy director overseeing Fazlollahi and allowed the Okonkwo hire despite concerns raised by multiple other officials.
A hearing date for the Senate confirmation has not been set yet.
“Cal-OSHA is about fairness and protecting the rights of people. Everyone deserves fairness, including Debra Lee,” said Ellen Widess who served under Gov. Jerry Brown as Cal-OSHA chief. “But hiring someone facing corruption, especially after a horrible breach of trust in the same office defies common sense. As chief, I would have put that (Okonkwo) hire on hold, pending adjudication.”
Cal-OSHA did not investigate
Fazlollahi was arrested in 2018, but a plea deal was not reached until 2021. Cal-OSHA spokesman Peter Melton said the agency did not investigate Fazlollahi following his arrest because it was instructed not to do so by the state Attorney General’s Office. The AG’s office would not comment.
The extent of Fazlollahi’s corruption is not widely known, even within Cal-OSHA. The initial criminal complaint and the state Department of Justice news release only mentioned a bribe for concrete work. The 24 additional felony charges were added later.
Several Cal-OSHA criminal investigators tried to bring attention to the Okonkwo hire, including writing to Newsom and filing a complaint with the Department of Industrial Relations HR department. The investigators said in interviews that Lee retaliated against them, an accusation the department denies.
She was then in charge of Cal-OSHA’s enforcement division where Fazlollahi and Okonkwo worked.
Cal-OSHA did not respond to specific questions about Lee’s oversight role. Melton said in an email that “we can discuss a potential interview with Chief Lee once we get closer to a confirmation date.”
Widess said that she views concerns about tolerance for corruption at Cal-OSHA’s Santa Ana office as symptomatic of broader leadership and cultural problems at Cal-OSHA.
She pointed to an emotional assembly hearing in February in which farm workers and advocates complained that Cal-OSHA employees were tipping off employers about inspections, allowing them to mask dangerous problems.
Following the hearing, an audit spearheaded by Assembly Labor Committee Chairperson Liz Ortega has been undertaken by the California state auditor.
“While it is widely known that Cal-OSHA is understaffed, we know very little about the inspection and citation process,” Ortega said at a May 14 hearing of the Joint Legislative Audit Committee.
Several current and former Cal-OSHA officials, including Widess, said that during confirmation hearings Lee should be asked about her response to corruption at the Santa Ana office and alleged retaliation against whistleblowers.
“I had tough questions during confirmation,” Widess said. “These are appropriate questions.”
What we found
Court documents, agency records, emails and interviews show the Fazlollahi bribery case was more than the DOJ’s “single incident”:
According to court documents and an analysis of publicly available OSHA data, hundreds of thousands of dollars in fines for life-altering injuries were slashed or eliminated by Fazlollahi in cases in which he also accepted bribes.
A manslaughter case in Orange County was dropped in 2017 because of Fazlollahi’s actions, according to an email from the district attorney. Records show Fazlollahi violated Cal-OSHA rules, downgraded violations and withdrew $40,000 in fines against a company when 21-year-old Kevin Morales plummeted to his death from a roof.
Following Fazlollahi’s conviction in 2021, Cal-OSHA failed to contact CalPERS, California’s public retirement system, to inform it that the district manager had been convicted of a felony, which would have required him to forfeit part of his pension. CalPERS told The Bee that “while employers are required by law to notify CalPERS of an employee’s felony conviction, CalPERS is not always timely informed, as was the case for Richard Fazlollahi. We encourage the reporting of this information and will investigate notifications received from other sources, including the media.” Cal-OSHA did not respond to questions about Fazlollahi’s retirement.
Okonkwo was awaiting trial for charges related to conduct at a Los Angeles charter school, according to court documents. Cal-OSHA officials pleaded with the agency to rescind the hire, according to emails and accounts of two officials.
Okonkwo also had a restraining order filed against him by Carol Lee Tolbert, a charter school board member. “I don’t know how Jason Okonkwo could be in charge of making any workplace safe,” said Carol Lee Tolbert. “He did not make me feel safe.” Tolbert had been tasked with cleaning up financial practices at Thee Wisdom School for Young Scientists.
Obstruction in a manslaughter case?
Fazlollahi was charged with orchestrating a bribery scheme involving 14 different companies.
The Department of Justice complaint addressed conduct between 2017 and June 2018. The scheme unraveled after Cemex, a company from which Fazlollahi solicited a bribe for stamped concrete for his backyard, reported the extortion attempt to law enforcement.
The bribery conspiracy also involved Noushin Dehnadi, an employment attorney who was indicted with Fazlollahi. She was also convicted.
Kevin Bland, a well-known employer attorney who specializes in OSHA-related cases, said that he repeatedly heard from potential clients that “Fazlollahi wanted them to use her rather than me.”
All the criminal charges against Fazlollahi involved cases in which he forced employers to hire Dehnadi with the promise that he would eliminate fines and citations at informal conferences. Dehnadi then paid him thousands in cash.
Current and former Cal-OSHA officials said they believed the problems at the Santa Ana office were more extensive, involving more than 14 cases with Dehnadi.
One other case did not involve Dehnadi. The involved the 2015 death of a day laborer Morales, who had been hired to paint the exterior of an apartment complex and fell to his death.
Another division of Cal-OSHA had recommended criminal charges for negligence leading to the death. Fazlollahi eliminated the two accident-related citations which were the crux of the case, causing the Orange County district attorney to drop the inquiry, according to emails, interviews and a review of hundreds of pages of documents.
Fines slashed
The DOJ’s criminal charges against Fazlollahi involved bribes involving 14 different companies, paid through kickbacks involving Dehnadi.
While the DOJ’s investigation focused on the bribery scheme, an examination of the underlying cases related to bribes shows that Fazlollahi reduced fines involving grievous injuries, including amputations.
Fazlollahi, for example, steered Irvine-based Orange Bakery in 2017 to Dehnadi, according to court documents. After he acknowledged in a plea deal that he received a kickback from Dehnadi, Fazlollahi reduced a $45,000 fine to $2,000. The bakery was not charged and assisted with the prosecution.
The fines were connected to an employee who, according to a Cal-OSHA accident report, “sustained severe lacerations on his hand” cleaning a baking machine that lacked proper lockout tagout procedures, meaning it could be turned on while cleaning.
The following year, two months after Fazlollahi’s arrest, a more grievous accident occurred at Orange Bakery. It was caused by similar safety violations.
A national OSHA website that lists fines and violations states: “The employee’s right hand was underneath the cutter when it came down and amputated several fingers.”
The company was fined $50,800 this time.
Why was he still employed?
Loupe said that “it raises a lot of questions” that Fazlollahi was kept on salary for an additional year following his arrest, and then given over $201,000 in other pay above and beyond his usual salary.
Melton said his continued employment was because of the DOJ criminal case.
“Richard Fazlollahi was promptly placed on Administrative Time Off (ATO) in 2018 after his arrest,” Melton said in an email. “At the specific request of the Office of the Attorney General, however, which was handling the investigation and prosecution, DIR refrained from undertaking its own investigation or proceeding with disciplinary action so as not to interfere with the Attorney General’s action.”
Melton did not respond to follow-up questions about who at the DOJ told Cal-OSHA to refrain from its own investigations.
The Attorney General’s Office said in an emailed response to questions about Cal-OSHA’s assertion that “we generally do not comment on investigations, closed or ongoing.”
The Bee filed a public records request with Cal-OSHA for documents related to $201,000 in other pay Fazlollahi received in 2019. The agency responded that it had located records, but said they were being withheld because they are exempt from disclosure. The Bee has asked for a list of documents that the agency withheld, and for the specific reasons they are exempt under California public records law.
Multiple current and former California officials, including Widess, took issue with Cal-OSHA’s rationale for continuing to pay Fazlollahi.
A current high-level state official who oversees personnel and administrative decisions at a state agency called Cal-OSHA’s statement “wrong for a bunch of reasons.”
The official, who asked to remain anonymous because they are not authorized to make public comments, said that they had worked with the DOJ several times in cases involving misconduct. “The justice department collaborates when an agency has clear cause to terminate who has clearly violated rules,” the official said. “It is both straightforward and standard practice to bring a case to the state personnel board.”
The official said they were confident that Cal-OSHA could have parted ways with Fazlollahi, ceasing payments to him within 60 days.
“Corruption is not a ticket for cheeseburgers in paradise,” the official said. “It shouldn’t lead to a two-year paid vacation at taxpayer expense.”
The hire that followed
Following Fazlollahi’s sentencing, Erika Monteroza, the California Department of Industrial Relations spokeswoman, told the trade publication Cal-OSHA Reporter: “This criminal case is an example that demonstrates our commitment to cooperate fully in investigations of criminal wrongdoing of our own department. We take allegations of impropriety seriously.”
Despite that no-tolerance-to-corruption statement, Cal-OSHA hired Okonkwo. Fazlollahi’s former supervisor, regional manager Peter Riley, led a hiring committee. Riley retired in 2020.
Chris Kuhns, who was a senior criminal investigator at Cal-OSHA’s Bureau of Investigations, was also one of the candidates for the position. He and others at the BOI, said they were frustrated with low pay and Cal-OSHA not re-categorizing their positions for higher pay, had decided to apply for better-paying jobs in the civil enforcement division.
The decision to seek jobs in enforcement led to unexpected tensions between the staff of the BOI and the enforcement division led by Lee, according to interviews with former BOI staff and documents related to an investigation of the BOI employees. All four employees of the department were then under an internal investigation, accused of lying about their qualifications, according to interviews and documents.
Kuhns said a simple Google search revealed an LA Times story about Okonkwo being accused of skimming money and creating bogus contracts. “At first, I thought it was an embarrassing mistake, someone had botched the reference check,” he said. “The guy hadn’t started.”
Kuhns said he emailed, before and after the Okonkwo hiring, several high-level Cal-OSHA officials, including Lee.
Julio Alfaro, another criminal investigator at the BOI aimed even higher, writing then Gov.-Elect Gavin Newsom in December 2018, a few days after Okonkwo’s start date.
In his letter to Newsom, Alfaro identified himself as a “whistleblower” and sent documentation about the Okonkwo hire and staffing shortages.
“I would greatly appreciate an opportunity to sit down and discuss with you the problems plaguing the DIR and Cal-OSHA in particular.”
Alfaro sent a similar letter to then-Assemblyman Rob Bonta in December 2018. Alfaro said he met with a Bonta staff member in his Bay Area office.
Loupe said he understands why the BOI investigators were upset. “Rather than hire a perfectly qualified person,” he said, “the person they hired only qualifications appeared to be felonious.”
Cal-OSHA investigators try to understand the new hire
The BOI investigators obtained, through a public records request, Okonkwo’s application for employment.
The application shows Okonkwo cited among his qualifications his experience at the school where he was alleged to have been engaged in fraud.
The associate safety engineer position Okonkwo was vying for requires either a safety engineering degree, or six years of professional experience. Okonkwo’s main qualifying experience was eight years at the non-profit that ran the charter school.
Okonkwo stated on his application that he had managed construction projects to ensure projects were delivered “safely, on-time, on-budget and with high-quality results.”
A review of building permits shows no evidence of significant construction conducted by the school or its organization. The small 40-child charter school occupied the site of a former childcare facility owned by the Okonkwo family. The Los Angeles Building Department issued a change of occupancy permit in 2006 from a childcare facility to a charter school.
In 2016, the California Fair Political Practices Commission fined Okonkwo’s mother, Kendra Okonkwo (the founder of the school), $16,000 for signing self-dealing leases worth over $170,000 annually for the charter school building she owned without disclosing the conflict.
She was also fined for construction contracts for $61,000 to construct an ADA ramp which had been ordered by building officials.
The FPPC said Kendra Okonkwo’s “governmental decision would have a material financial effect on her real property because bringing Okonkwo’s property into compliance with the ADA would likely increase the fair market value of the rental property.”
According to Jason Okonkwo’s resume, as Director of Operations, he supervised construction contracts and projects.
”What happened with the Okonkwo hire, is symptomatic of a bigger problem with Cal-OSHA enforcement,” Loupe said. “People can make up elaborate work history to obtain a lucrative job, and no one bothers to see if the application checks out It’s a system that lends itself to cronyism.”
At Cal-OSHA, Okonkwo was employed as an Cal-OSHA enforcement officer for 11 months, and, according to a list of inspections provided by DIR, was involved in 28 cases.
Melton said in an email: “DIR and Cal/OSHA must follow the merit-based hiring process and applicable labor and employment laws. California law generally prohibits asking candidates about criminal arrest history or discriminating against candidates who are not convicted of a crime.”
Melton added that “DIR does not comment on personnel issues. We can confirm Jason Okonkwo was hired on December 3, 2018, and separated from DIR on November 1, 2019.” The separation date was two weeks after Okonkwo’s guilty plea.
A reference tied to the fraud scheme
According to court documents, a state audit and interviews with three former officials at the school, DIR or Cal-OSHA could have found publicly available documents that led to Okonkwo’s arrest, allegations of threatening behavior and that he had not been forthcoming about his work experience.
Okonkwo was convicted for creating fake invoices for $200,000 in school supplies that were never ordered and funneling the proceeds into family coffers.
The 2014 publicly available audit performed by the Fiscal Crisis and Assist Team of the California Department of Education, which led to criminal charges against Okonkwo, describes a “self-dealing” operation that involved well over a million dollars flowing through companies connected to Okonkwo’s family.
The audit determined that “sufficient evidence exists to demonstrate that... management and governing board has failed to cooperate with its oversight agency; is engaged with fiscal mismanagement; violates California conflict of interest laws by engaging in related party transactions and self-dealing; and has breached its fiduciary responsibility and duty of care.”
Investigators file complaints
Kuhns, who currently works for Cal-Recycle, said he wrote Lee and other officials at DIR in the weeks before Okonkwo’s start date warning the hire would compromise Cal-OSHA’s integrity.
In March, 2019, three months into Okonkwo’s tenure, Kuhns wrote a formal complaint to Gailmarie Ignacio, DIR’s Human Resources manager.
In the letter, which Kuhns provided to The Bee, Kuhns said that even a “ basic inquiry” would have “revealed that Mr. Okonkwo is currently awaiting trial in Los Angeles County Superior Court for felony embezzlement of public funds in excess of $200,000.00.”
Three months after Kuhns filed his complaint with the head of DIR’s HR division, Kuhns and Alfaro said all four employees at the BOI (three investigators and a supervisor) were told in June 2019 that Lee wanted to meet with them.
“It was really strange,” Alfaro said, “because enforcement and the BOI are separate divisions, we were not supervised by Debra Lee, but obviously as chief of enforcement she carries a lot of weight. It wasn’t the kind of meeting we could refuse.”
At the meeting, Alfaro and Kuhns said that Lee shared a “work expectations memo.” Among the expectations in the document: “You are expected to direct communications and concerns to your immediate supervisor. It is generally unacceptable to bypass a level of supervision and go directly to a higher level.”
Copies of the workplace memo show that Alfaro and Kuhns declined to sign, with a note saying that they needed to consult with their union representative. Both Alfaro and Kuhns said that they believe that the document and Lee’s insistence that they sign it was connected to the concerns they had raised over the Okonkwo hire and about staffing shortages.
Widess said that it is “very concerning” that multiple former criminal investigators are alleging that they were retaliated against. “Retaliating against whistleblowers is unacceptable,” she said. “People should feel safe to come forward to share their concerns, without fear of retribution.”
Widess said that she thought that Lee should be asked about the allegation of retaliation at her confirmation hearing.
DIR’s Melton denied the work expectation memo or Lee’s involvement involved any kind of retaliation.
“The characterization of a work expectations memo as punitive in nature is inaccurate,” he said in an emailed statement. “Sharing workplace expectations with our teams is about fostering collaboration and effective internal communication; it is not disciplinary in any way, and the words punishment or discipline do not appear in these types of memos.”
Alfaro and Kuhns said BOI was under investigation for over a year by DIR’s director’s office. Ultimately DIR cleared the BOI employees of any wrongdoing. Kuhns provided a letter he received dated Aug. 24, 2020. The letter stated “on August 2, 2019, you participated in an investigatory interview…The investigation was closed with a finding of unfounded. No further action, including discipline, will be taken.”
Melton did not directly respond to questions about the internal investigation. In a statement Melton said, “All employees are provided the California State Auditor Whistleblower Hotline annually and informed of their rights and safeguards under the California Whistleblower Protection Act.”
Cases under scrutiny
Okonkwo pleaded guilty to felony misappropriation of public funds on Oct. 15, 2019. Two weeks later, on Nov. 1, he was separated from Cal-OSHA.
Los Angeles County’s DA spokeswoman Vanusse Dunn said: “The Los Angeles County District Attorney’s Office believes that its successful prosecution of the defendant in this case served to protect the public from further corruption, both as to this defendant and as to others who are aware of our efforts in this case.”
Cal-OSHA denies the agency did anything inappropriate with the Okonkwo hire.
“We are supposed to be keeping the public safe,” Loupe said. “But the ugly truth is that for people who have a sense of true north, Cal-OSHA is neither a welcoming or safe place right now.”
This story was originally published August 7, 2024 at 5:00 AM.
