HERCULES -- California Attorney General Kamala Harris has notified Hercules that her office will not conduct a criminal investigation of former officials responsible for the city's financial meltdown in the late 2000s, leaving current officials disappointed and frustrated.

"Our office respectfully declines your request to conduct an investigation," Harris said in an April 15 letter to Hercules Mayor Myrna de Vera and the rest of the City Council. "It is our general policy that local governments are primarily responsible for resolving complaints involving local government employees or agencies."

Harris' refusal, delivered in a letter penned on her behalf by Deputy Attorney General Catherine Brown, came in response to the council's petition in February to Harris and Contra Costa County District Attorney Mark Peterson urging them to investigate former Hercules City Manager Nelson Oliva and other officials who may have played a role in failed development schemes and other questionable financial dealings.

Among Hercules' more costly failures are the mixed-use New Town Center that never broke ground, its $12 million primary project fund depleted; and the housing-and-retail complex Sycamore North, half-finished and stalled after the city spent upward of $32 million in redevelopment money. The project recently sold to a developer for $1.1 million.


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More than 300 individuals signed the petition online or in person at City Hall.

Harris' office did not respond to an inquiry from this newspaper, nor did Peterson.

Several Hercules officials contrasted what they saw as the state's lackadaisical approach to corruption in their city with the enthusiasm the state displayed in pursuing city officials in the Southern California city of Bell, where a corruption scandal erupted shortly before Hercules' problems surfaced at the close of the last decade.

"I am highly disappointed that the citizens of Hercules are being denied an opportunity to have all of the facts brought into the light of day," Hercules Councilman Bill Kelly said Monday. "The citizens of Bell have seen former officials sentenced to jail. The federal government has spent years making cases against state senators. Hercules is being ignored. I cannot help but wonder what forces are at play which are preventing appropriate action here."

Oliva, who was city manager from April 2007 to January 2011, was fined $70,000 by the state Fair Political Practices Commission in November for conflicts of interest and unreported gifts. The same month, Oliva and his family company, NEO Consulting, agreed to settle a lawsuit with the city for $3.2 million, although much of it will likely never be collected. The amount represents the sum of city contracts for housing, loan management, construction management and administrative services that Oliva executed with NEO while he was city manager.

The FPPC also found that Oliva, despite claiming he had divested himself of his interest in NEO when he became city manager, used company credit cards to buy $235,000 worth of airline tickets, groceries, restaurant meals, parking, hotel rooms, car rentals and other items.

No one else associated with Hercules' plunge into near-bankruptcy — former officials, consultants, development partners or others — has been held financially accountable, and no charges have been brought. The FBI has been investigating, notwithstanding the agency's refusal to confirm or deny it was doing so. A Contra Costa deputy district attorney told this newspaper in late 2011 that the FBI agreed to review the case because its public corruption unit seemed best suited to investigate.

"This has gone on for too long," Councilman Dan Romero said Monday. "Someone needs to get off their stool. Somebody needs to answer to the public. This community is asking for justice."

Romero linked the prosecutorial zeal four years ago in Bell, and the apparent lack of it today in Hercules, with election-year politics. In 2010, then-Attorney General Jerry Brown was running for governor. This year, Harris appears a shoo-in for re-election.

In Bell, seven former city officials were convicted on a variety of corruption charges, among them former City Manager Robert Rizzo, who awarded contracts without city council approval and presided over a city treasury that ladled out exorbitant compensation, including Rizzo's $1.5 million annual salary and benefits, according to news reports.

Rizzo was sentenced to 12 years in state prison and ordered to make restitution of $8.8 million. He was also sentenced to 33 months in federal prison on tax fraud charges and ordered to pay $256,000 in restitution to the federal government, according to the Los Angeles Times

Five former council members face a maximum of four years of incarceration when they are sentenced later this year, and former Assistant City Manager Angela Spaccia was sentenced in April to 11 years and eight months in state prison.

Contact Tom Lochner at 510-262-2760. Follow him at twitter.com/tomlochner