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Wallace makes first court appearance 

While the former South San Luis Obispo County Sanitation District administrator John Wallace prepares to fight the criminal charges leveled against him, at least one California municipality says it is still comfortable doing business with his engineering and design firm.

Wallace appeared in San Luis Obispo County Superior Court on Feb. 7 for an arraignment. It was his first court appearance since he was charged with violating conflict-of-interest laws during part of his tenure as the sanitation district’s administrator. Wallace did not enter a plea, but was granted an extension on his arraignment, which is now slated for March 22.

Even as Wallace prepares to have his day in court, the engineering and design firm he founded in 1984, the Wallace Group, continues to do business. The firm, which still lists Wallace as both president and principal on its website, has apparently given one of the municipalities it contracts with a heads-up about the allegations.

“They did let us know that there was going to be some news coming out about that,” said Bill Avera, city manger for the city of Hollister.

Avera said the city has contracted with the Wallace Group for various services beginning in 2009. Since October, the firm has been working with the city to address issues surrounding an equipment failure that led to a wastewater spill into the San Benito River, according to reports from the Hollister Free Lance.

Though he said he’d never met Wallace himself, Avera indicated to New Times that the city would continue using the company, as the matter of Wallace’s guilt or innocence had not been resolved in court.

“We understand the difference between an allegation and a conviction or a verdict,” he said.

The Wallace Group figured prominently in a 2016 independent audit commissioned by the South SLO County Sanitation District to investigate conflict of interest allegations surrounding Wallace’s tenure as administrator. According to the audit, the Wallace Group was paid to provide services for the sanitation district while Wallace himself was acting as administrator. Billing from the Wallace Group rose from 81 hours and $3,600 per month in 1999, to more than 600 hours and $70,000 per month by the end of 2010, according to the audit. During that period, the Wallace Group received more than $6 million for administrative fees, engineering fees, and major budget item projections.

Avera said he remained confident in the company’s work for Hollister.

“That work has always been done to the city’s standards,” he said. “I would expect that until there’s something different, we will continue to use them.”

A Wallace Group spokesman did not answer questions from New Times about whether the accusations against Wallace had hurt the company’s business or contracts but released a statement saying that Wallace acted with legal approval by the sanitation’s district’s board and “in plain view of the public and regulators.”

“He is dismayed by the unprecedented action and confident the facts of the case will clear the air,” the statement said.

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