City Attorney responds to Mario Juarez’s accusations

So in case you’re like, living in a cave or something and haven’t noticed, the District 5 race has turned all sorts of nasty. Mario Juarez had his office windows broken last weekend (his windows had been broken repeatedly in the past, well before he was ever running for office, prompting Ignacio to install a security camera on the office). Anyway, despite this, and despite the fact that Ignacio De La Fuente’s campaign office also had windows broken earlier in the campaign, Juarez all but straight up accused Ignacio’s campaign of doing it, and the local media totally bought his sob story. De La Fuente sent out a classy response, and Juarez responded by claiming that the lawsuit (PDF!) he settled with the City for breach of contract and fraud was political intimidation.

Juarez sent a message to a District 5 listserv denying the charges on the Oakland City Crook website and included this statement about his settlement with the City:

My attorney had no doubt that I would prevail in a lawsuit, but the fight was projected to cost $300,000 in legal fees to me. Spending that kind of money would have bankrupted us – forcing closure of our business and putting more than 60 people out of work.

So, I made a business decision to settle with the City, essentially paying back the amount we had been paid for the contract.

And that was just too much, so the City Attorney’s office sent this response to Juarez, and it’s just so awesome that even though I know I’m going to regret posting about this because of the irritating comments it will generate, I just have to share the entire thing:

Mario Juarez entered a contract with the City of Oakland in 2002 to collect on past due debts. Under this contract the City didn’t just hire Juarez as its agent, the City actually assigned the debts to Juarez. These debtors would then be legally required to pay money directly to Juarez. Juarez was then obligated under his contract with the City to pay the City 51% of any amounts he actually collected on the assigned debts.

Nearly a year passed with the City seeing little if any money from Juarez. In response to City staff inquiries about the status of debt collection, Juarez prepared a letter setting forth some problems with some of the information he had been given about some of the debtors. These problems were mostly things like incorrect addresses, phone numbers, and the like – the very type of problems that led the City to want to use a debt collector like Mario Juarez to find and collect the debts in the first place

The City, as was its right under the contract, asked to see Juarez’ files to determine whether he had actually collected any of these debts and whether the City was owed any money. Juarez refused to allow inspection of the files. This stand-off went on for a long time, years in fact, until finally the City had no choice but to bring suit against Juarez on November 16, 2006. That suit was settled when Juarez agreed to pay the City more than $30,000 that the taxpayers were owed out of the debts Juarez had collected.

There are three important points to make here about the truth of this situation:

1) Juarez says he didn’t fight the lawsuit because the legal fees would have “bankrupted us.” He leaves out the fact that he was already in bankruptcy at the time he signed the contract with the City in 2002. He was in bankruptcy again at the time the City sued him for its money in 2006.

2) Juarez says his settlement with the City “essentially” paid “back the amount we had been paid for the contract.” Juarez glides over the fact that the City had not paid him anything under the contract. The contract didn’t work that way; it was a contingency contract in which money flowed from Juarez to the City. Whatever complaints Juarez might have had about the condition of the judgment debt files the City had assigned to him, those problems have NO BEARING WHATSOEVER on whether he was obligated to pay to the City 51% of whatever debts he had actually collected. He refused to show the City his records and he refused to hand over the money the City was owed.

3) The City Attorney’s Office takes no position on the District 5 election. John Russo, the City Attorney, does not make any endorsements in any City of Oakland elections. We have no comment about any of the other stories and charges that have been made about Mr. Juarez.

We address this specific case only because Mr. Juarez has chosen — recklessly — to allege that the City Attorney’s Office brought this suit due to “dirty politics” and political interference. Mr. Juarez did not file his official candidacy statement until March 2008. Regardless of when Mr. Juarez first conceived that he might run for City Council, no one in the City Attorney’s office had any idea that he would be a candidate in this race at the time the dispute between Juarez and the City began in 2003. Nor did anyone in the City Attorney’s office have any reason to think Juarez might be a candidate when the complaint was filed against Juarez in late 2006. To set the record straight, there was no political pressure whatsoever brought on the City Attorney’s Office to file this case. Juarez’s allegation that there was, and its implicit suggestion that the City Attorney’s Office can be made to bring cases which have little or no merit, is false.

Apparently, in trying to deflect attention from his attempt to stiff the taxpayers of Oakland, Juarez has concocted a paranoid fantasy in which he was the victim of his own scam. He also has shown no hesitation to impugn the ethics and defame the reputations of the professionals in the City Attorney’s Office who worked, successfully, to get from Juarez some of the money that he tried to steal from the taxpayers. I am posting the full Juarez/City of Oakland contract, the City’s Nov. 2006 complaint against Juarez and Juarez’s bankruptcy file (dates included) on our web site: www.oaklandcityattorney.org. We hope that interested parties will review the relevant passages of the contract and the lawsuit and draw their own conclusions about the veracity of Juarez’s bogus allegations.

9 thoughts on “City Attorney responds to Mario Juarez’s accusations

  1. Joanna/OnTheGoJo

    It is indeed awesome! As a past bill collector, I’d be curious as to how much money in uncollected debt Mr. Juarez was assigned. I’d also like to know if other parties bid on the assignment of this debt – which one would assume would be the case, but this is Oakland, so if he got a sweetheart deal, then all the more reason that his actions should be under scrutiny.

    I have to say – I don’t really know Mr. Juarez other than what I’ve read here, but even though I don’t personally care for Mr. De La Fuente, I’d still be inclined to vote for him over Mr. Juarez just because of this one contract.

  2. Surfways

    It is rather interesting to note that those who supported Juarez also supported Dellums. I need to find out who actually nudged Dellums to run, and supported Juarez.

  3. Jonathan C. Breault

    This intensely specific, pointed documentation of Mario Juarez’s delusional behavior is so well written that it ought to be must reading for every District 5 voter. When perusing the “endorsement list” for Mr Juarez all I can say what is in the kool aid that these folks have been consuming? I mean, it is transparently obvious that folks well known but shall remain unacknowledged by me are keen on getting Ignacio de la Fuente out of office but couldn’t they find somebody more well qualified than Mr. Juarez. I mean, this is pitiful. Tragic, pitiful, and a sorry commentary on Oakland politics. This guy is mortifying.

  4. Californio

    Why would Oakland pay this guy 49% of balances received? Most bone fide collection agencies charge 30-40% Did he have some specific skills, did he have some connection to the debtors, what? This is a good question for John Russo, I think, and unless there’s a good answer, it tells you a lot about how our city government is being run.

  5. Jim Ratliff

    Is that a standard type of contract for a debt collector? Typically I would think that, if the City assigned debts to someone, that someone should pay consideration up front to the City. In such a case, since the up-front consideration is “sunk,” the debt collector has much more powerful incentives to try to collect the debt (i.e., because the debt collector retains every incremental dollar of debt collected).

  6. Max Allstadt

    It would be nice if Sanjiv Handa chimed in here. He gave me an explanation in byzantine detail yesterday, and it made it sound less damning, but only a little bit. Can’t remember the nuts and bolts though.

  7. Joanna/OnTheGoJo

    I’ve been a debt collector in my past, although after just a few months of personal debt collection I had more fun with corporate collections. This was about 20 years ago and in a different state so laws may be different.

    It can work many different ways, but in this case, it comes off as though they just gave the debt to a company with the expectation that any collected amounts would be paid back at some specific percentage. Obviously I don’t know all the details of this particular contract. Sometimes you know you aren’t going to collect much and that collections will be difficult so you set the rate of return lower. ie, the city gets 10c on the dollar. But that gets set PRIOR to collecting any debt and if the actual collection costs are higher, then that’s the loss of the collector.

    When I was on the parking task force I learned that the city doesn’t make hardly any effort to collect on tickets – they simply turn over the past-due tickets to a third party. What a waste! I’d say they should get 85% return on these types of debts because you know the collection rate is high. Consider that you can’t sell your car or renew the license & registration without getting up to date on any tickets. You can’t update your driver’s license if you have fines outstanding. So it’s a much easier collection than say, credit card debt that is unsecured.

    I think they should at least make some effort and wait longer to turn over these debts to a third party because many will get collected. But we like to give contracts away here in Oakland… or that’s my perception.