[Updated after the jump: The Central City “independent” oversight board consisted of Varela's own friends and sister — and failed to notice a $2 million private-contractor charge to the charity's account. Good lord. We couldn't make this stuff up. Originally posted on Oct. 25 at 6:49 p.m.]

Oh, the shame! Looks like another public servant may have been funneling community funds into his own account — and this time, poor dying children were at stake. (Sort of.)

The Center for Public Accountability revealed their latest suspect this morning: Gilbert Varela, chief executive of Central City Community Health Center. The charity runs low-cost clinics for the needy in South Los Angeles, Anaheim and Stanton, and receives 90 percent of its $7 million annual budget from taxpayers.

Even with a $312,000 annual salary, Varela must have somehow thought himself among the needy:

Former Central City accountant John Soto is accusing the CEO of using Central City health-care funds to bolster the rest of his for-profit businesses.

Yikes. Doesn't get much worse than that. In response, the Central City board alleges that “Central City owed money to Dr. Varela and was merely using an unconventional way to pay him back” (as reported by chief investigator Ted Rohrlich).

Credit: The Center For Public Accountability

Credit: The Center For Public Accountability

But seeing as the board is composed of Varela's friends, it's hard to take anything they say very seriously. Especially when there's no record of any loans from Varela beyond $22,000 in 2003, and nobody can really agree on the numbers anyway.

The accusatory Soto, of course, was fired as soon as he brought the suspicious expenses to Varela's attention, on grounds of not meeting Central City's job requirements. As Soto's lawyer so snidely put it:

“Unless [Central City's] job requirements required him to join in the conspiracy to bilk taxpayers and charitable foundations out of money to help poor people receive health care, [Soto] fully and ably met [them].”

So now we've got both city employees AND swindling charity hoarders to worry about? No wonder California's in a $90 billion hole.

Update: The Center for Public Accountability released Part Two of its shocking Central City report yesterday, somehow uncovering even more juicy corruption than the first part.

Truth bomb No. 1: Central City's oversight board is composed primarily of Varela's friends — even his sister, Helen. Which, according to chief investigator Rohrlich, is a big no-no. “Federal regulations and Central City's bylaws bar a brother or sister of an employee from serving on the board,” he writes.

Board members' close ties with Varela may have something to do with their ignorance (feigned, most likely) to the web of financial sketchiness behind the wholesome exterior of the publicly funded clinics.

Aside from the fact that the board sets Varela's $312,000-per-year salary at “nearly twice the average of medical directors of clinics of Central City's size” (according to their own salary study, which Rohrlich obtained) and more than three times the salary of the previous executive director, Central City has often misreported the number in grant applications to the federal government.

“In one of the applications,” reads the report, “Central City told prospective funders from the Department of Heath and Human Services that it paid its chief executive only $220,000 a year.”

Aside from his own ridiculous paycheck, Varela is linked to the receiving end of just about every one of Central City's outgoing checks — whether it be a medical group, a consulting firm or private contractor. Oh, and then there's the $2.1 million Central City paid to a psychology firm that none of the board members have even heard of: that of Beverly Hills-based psychologist Marion Arom.

Unsurprisingly, Arom could not be reached for comment.

Advertising disclosure: We may receive compensation for some of the links in our stories. Thank you for supporting LA Weekly and our advertisers.

LA Weekly