"Everyone thinks our reserves are healthy, but we really only have $1.1 million," he said. "We are not as well off as we have been telling the world."
When the Debt Bonds are issued it is done in part based upon the representations of the Former City Manager Tom Schwab and the City Council and the City Attorney Harper. The missrepresentations could rise to the level of intential misrepresentation and that would not be legal in business and should not be legal in government management.
Will the Federal Regulators be knocking on door steps of City Hall? Will they haul in Schwab like they do CEO's who rip off investors? Time will tell.
Current City Manager Betsey Adams may be able to save the City's and Schwab's bacon by paying off the worst of the transgression the misappropriation of funds. But, the debt holders may require more than just interest payments on the bonds and the cost of litigation may kill more than the assets of the Redevelopment Agency, but also the City as well.
As with other CEO's who were held liable Mr. Schwab may lose his house and cars and a portion of his retirement fund as a result of his part of the over statement of Grand Terrace's resources.
Perhaps this is why the City Council Meeting was not broadcast on CH3. The fewer people knowing about the City's real financial situation the safer Mr. Schwab and his minions feel.