BUILDER FIGHTS AUDIT CHARGES; BELMONT OVERBILLING ALLEGATIONS DISPUTED.

Byline: Greg Gittrich Staff Writer

The lead developer of the Belmont Learning Center has challenged key findings in the audit of the nation's costliest high school and accused the Los Angeles Unified School District's top investigator of ignoring significant evidence.

As part of a legal action that seeks to terminate its business relationship with the district, Temple Beaudry Partners released a lengthy prepared statement Tuesday rejecting charges by LAUSD investigator Don Mullinax that it overbilled for work by more than $2 million.

The Temple Beaudry consortium, led by Kajima Urban Development, claimed the district is in default on its contract and has run up $5 million in unpaid bills since it halted payments in July.

Mullinax, who released his audit of Belmont on Dec. 14, stood by his findings. The investigator said the developer's rebuke of his work was expected, but completely without merit.

In the prepared statement, the consortium argued the billings cited by Mullinax were ``submitted under the direction and guidance of the school district's (outside) legal counsel'' and were later revised according to an LAUSD administrator's orders.

``We were surprised and concerned that the auditor chose to withhold that information from his report,'' said Kenneth J. Reizes, a project executive for the developer.

Reizes claimed Mullinax never interviewed the district's outside legal counsel about the bills and failed to pick up records relating to the suspected financial abuses that Kajima produced in response to a subpoena from his office.

``For those reasons alone, his findings are suspect,'' Reizes said.

Mullinax denied the developer's contention that the outside legal counsel wasn't interviewed during his three-month investigation. He said there is enough evidence to back up the conclusion that six subcontractors overbilled the district by submitting unsubstantiated payment requests through the lead developer.

``We have documents showing the overbillings, and the subcontractors have agreed in writing (about) the overbillings and changed the requests. They readjusted the bills only because the district's staff caught it,'' Mullinax said.

``We have sufficient evidence to draw the conclusion that there is probable cause to show that they overbilled us. We subpoenaed the other documents because we are concerned there may be more overbillings.''

The business relationship between the developer and the nation's second largest school district started to sour in June, after a Daily News investigation revealed Kajima gave the Los Angeles Fire Department incomplete data about environmental hazards at the 35-acre Belmont site.

Mullinax referred evidence of the possible crime to local, state and federal law enforcement authorities in September, shortly after releasing his initial report on safety issues at Belmont.

On Nov. 30, the school board voted unanimously to fire the developer and declared a state of emergency at the partially completed school, which sits atop an oil field seeping potentially deadly and explosive gases.

The board blamed the consortium for failing to meet several deadlines to board up the campus and stop construction. While the district has sunk about $175 million into the project, it remains uncertain if the complex will be completed.

Temple Beaudry Partners has repeatedly denied any wrongdoing, and a spokesman said Tuesday that the consortium has notified LAUSD administrators that the school district is in default of the development agreement for Belmont.

According to Reizes, the developer filed a legal demand to resolve the matter, as required by the original business deal signed in 1997.

Pushing the two parties closer to a legal showdown, the action was taken in response to a series of defaults by the district and its claims about the performance of the development team, Reizes said.

``The district . . . now wants to cloak its own failures by making false accusations about the performance of the development team and its subcontractors,'' Reizes said.

In a Dec. 17 letter to the school district, Temple Beaudry Partners argued that the district:

Failed to pay more than $5 million for work dating back to July;

Falsely accused the development team of overbilling;

Falsely accused the development team of failing to perform its contractual duties and misleading the Fire Department;

Failed to sign and pay billing requests totaling more than $18 million,

Provided ``arbitrary, vague and misleading'' instructions on deadlines regarding environmental site issues, slowdown work, and other aspects of the project.

Those instructions led to the confusion over the billings, the developer argued.

After the school board's decision to slow down construction at Belmont in July, Wayne Sheridan, a consultant for the district's outside legal counsel Weston, Benshoof, Rochefort, Rubalcava & MacCuish, advised the developer to include additional costs in its billings, Reizes said.

While the board set aside $2.2 million to cover labor costs to weatherproof the campus, the additional billings were needed for the materials, Reizes said.

Later, the district's project manager, Edwin Weyrauch, reviewed the billings and directed them to be revised downward, Reizes said, adding the consortium complied and submitted updated bills in November.

John M. Rochefort, a partner at Weston, Benshoof, said the developer's assertions that Sheridan directed the consortium to overbill bill the district are ``all categorically false and appear to be an act of desperation.''

LAUSD administrators have 30 days to respond to the developer's claim that the district defaulted on the development agreement.

Unless the two parties reach a settlement to end their business partnership within 90 days or agree to extend negotiations, the matter will be referred to binding arbitration.

The school board is expected to revisit the fate of Belmont by February.