Latest / Crime Bloodlines / The Boy, 43 Linens, and the Councilman Who Took Cash

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The Boy, 43 Linens, and the Councilman Who Took Cash · Crime Bloodlines

0:03
Speaker 1: On the morning of July 9th, 2011, a 15-year-old boy
0:08
Speaker 1: cut through a service alley behind the Torrance Hotel in
0:11
Speaker 1: Kelmore and stopped cold. Stacked against the brick wall, bundled
0:15
Speaker 1: in clear poly wrap, were 43 linen sets, burgundy and gold.
0:21
Speaker 1: The crest of the Harborview Club pressed into each one.
0:24
Speaker 1: They had no business being there. The boy's name was
0:27
Speaker 1: Scott Henderson. He had seen that crest before, years earlier.
0:31
Speaker 1: At a Harborview event, when he knocked over a water
0:33
Speaker 1: glass and a server rushed over with one of those
0:35
Speaker 1: exact monogrammed cloths, he remembered the color. He pulled out
0:39
Speaker 1: his phone and took two photographs. That small act, two
0:42
Speaker 1: photos on a Tuesday morning, would eventually put a city
0:45
Speaker 1: council member in federal court, send a laundry company owner
0:48
Speaker 1: to prison for nine years, and unravel a protection scheme
0:51
Speaker 1: that had been running, quietly and profitably, for more than
0:55
Speaker 1: a decade. But none of that was visible yet. What
0:59
Speaker 1: was visible was 43 linen sets in the wrong place,
1:03
Speaker 1: on the wrong morning, belonging to the wrong building entirely.
1:06
Speaker 1: Scott told his father. His father told a friend at
1:09
Speaker 1: the city clerk's office. And somewhere across Kelmore, a man
1:13
Speaker 1: named Pete Garza woke up the morning after his nephew's
1:16
Speaker 1: birthday party with no idea that he had just made
1:19
Speaker 1: the single most consequential mistake of a very careful operation.
1:22
Speaker 1: Kelmore sits in the flat interior of the Midwest, inland
1:26
Speaker 1: from any major waterway. Population roughly 220,000. It is not
1:30
Speaker 1: the kind of city that draws attention. Light manufacturing along
1:34
Speaker 1: the river corridor. A logistics hub connecting three interstate routes.
1:38
Speaker 1: Warehouses and loading docks that feed distribution networks most residents
1:43
Speaker 1: never think about. It is the kind of city where
1:45
Speaker 1: the same faces show up on the same committees for
1:47
Speaker 1: 20 years. Where a contract renewal moves through a subcommittee
1:50
Speaker 1: without a single news story. where a business on Dunbar
1:53
Speaker 1: Industrial Parkway can operate for a decade without anyone outside
1:56
Speaker 1: the industry knowing its name. That anonymity was the point.
2:00
Speaker 1: Consolidated Textile Services had operated from that parkway address for
2:04
Speaker 1: 14 years by the summer of 2011. On paper, it
2:07
Speaker 1: was unremarkable. A commercial laundry service, the kind every city needs,
2:11
Speaker 1: and no one romanticizes. It held contracts with 41 restaurants,
2:16
Speaker 1: 9 hotels, and 4 private clubs. It employed 17 drivers
2:20
Speaker 1: and 8 facility workers. Pickup schedules, delivery routes, invoices, payroll.
2:26
Speaker 1: The kind of business that functions invisibly, as long as
2:29
Speaker 1: the linens arrive clean and on time. Bruce Smith had
2:33
Speaker 1: owned it for all 14 of those years. He was 50,
2:37
Speaker 1: eight years old, a youth soccer coach on weekend mornings,
2:41
Speaker 1: a regular at his church's Wednesday services. He had bought
2:44
Speaker 1: the business for $ 240, 000, part loan, part funds whose origin
2:48
Speaker 1: was never established. He was the kind of man who
2:51
Speaker 1: remembered first names. who showed up at school fundraisers, who
2:54
Speaker 1: nobody would have looked at twice. That was also the point.
2:57
Speaker 1: What the books had consolidated did not show. What the
3:00
Speaker 1: invoices were designed to obscure was a structure running underneath
3:04
Speaker 1: the legitimate operation. Routes that moved product to locations not
3:08
Speaker 1: on the delivery manifest. Payments described as municipal coordination with
3:13
Speaker 1: no vendor attached, no receipt, no contract. Cashier's checks rotating
3:18
Speaker 1: across three different banks, so no single institution would flag
3:22
Speaker 1: the patterns. The scheme had been operational since at least 2009,
3:25
Speaker 1: and according to financial records reviewed during the investigation, possibly earlier.
3:31
Speaker 1: The man who made that structure work on the civic
3:33
Speaker 1: side was Ray Tullen. Tullen was 52 years old, a
3:37
Speaker 1: city council member for the 4th District, 11 years in
3:40
Speaker 1: the seat. He sat on the Municipal Contracts Subcommittee. He
3:43
Speaker 1: understood scheduling. He understood which inspector got assigned to which review.
3:48
Speaker 1: He understood how a competitor's renewal could be timed to
3:51
Speaker 1: create a gap that Consolidated would fill. In exchange, according
3:54
Speaker 1: to evidence entered at trial, his home received free linen service.
3:58
Speaker 1: So did a rental property. So did a lake cabin.
4:02
Speaker 1: None of it was invoiced. All of it moved through
4:05
Speaker 1: a Harborview Club account that, on the surface, looked like
4:08
Speaker 1: a standard client billing arrangement. The person who knew exactly
4:12
Speaker 1: how all of it was recorded and what was being
4:14
Speaker 1: left out was a 44-year-old office manager named Cheryl Novak.
4:18
Speaker 1: Cheryl had worked at Consolidated for nine years. She managed
4:22
Speaker 1: the invoices. the routes, the payroll. She was the one
4:26
Speaker 1: who maintained the municipal coordination, ledger, a column of payments
4:29
Speaker 1: that had no corresponding vendor, no receipt, no contract, and
4:33
Speaker 1: no explanation that would survive a single hour of audit scrutiny.
4:37
Speaker 1: According to her own account, she had understood what she
4:40
Speaker 1: was looking at for approximately four years before the summer
4:42
Speaker 1: of 2011. She had not reported it, but she had
4:45
Speaker 1: kept records, meticulous ones, stored in a fireproof box at
4:50
Speaker 1: a storage unit rented under her maiden name, where no
4:53
Speaker 1: one at Consolidated would ever think to look, that box
4:56
Speaker 1: would become the spine of the entire case. But in
4:59
Speaker 1: July of 2011, it was still sitting in a storage unit,
5:03
Speaker 1: undisturbed while 43 linen sets waited in a hotel alley
5:07
Speaker 1: for a pickup that was now one day overdue. Tony
5:10
Speaker 1: Breslin drove the Northside Hotel route every Tuesday. His job
5:13
Speaker 1: was straightforward. Pick up soiled linens, log the weight, return
5:17
Speaker 1: clean sets by Thursday. Consolidated Textile Services had a contract
5:21
Speaker 1: with Harborview Club that specified Monday and Wednesday service. Tony
5:25
Speaker 1: was on the road Tuesday and Thursday. That discrepancy sat
5:28
Speaker 1: in his own handwritten weight logs for two years before
5:31
Speaker 1: anyone looked at them closely. When investigators from the Kelmore
5:34
Speaker 1: DA's Financial Crimes Unit finally pulled those logs, they found
5:38
Speaker 1: something that a Tuesday-Thursday route could not explain. The pickup
5:42
Speaker 1: weights at Harborview ran 8-10% heavier than what the invoices billed.
5:47
Speaker 1: More linen was moving than Consolidated was charging for, and
5:50
Speaker 1: it was moving on the wrong days. There is a
5:53
Speaker 1: specific kind of confusion that comes from a number being
5:56
Speaker 1: almost right. Not wrong enough to trigger an alarm. Just
5:59
Speaker 1: wrong enough, once you know to look, to make everything
6:02
Speaker 1: else unravel. The routing anomaly connected to a second image.
6:05
Speaker 1: Every Tuesday night, Consolidated had permission to use the loading
6:09
Speaker 1: dock at the Torrance Hotel on the east side of Kelmore.
6:12
Speaker 1: Glenn Faber, the hotel's manager, had agreed to it in
6:14
Speaker 1: late 2009. He called it temporary overflow staging. In exchange,
6:20
Speaker 1: Consolidated's invoices to the Torrens dropped by roughly $ 9, 000 over
6:25
Speaker 1: the next 18 months. Faber's texts with Bruce Smith were
6:28
Speaker 1: recovered during the investigation. They established the arrangement in writing.
6:33
Speaker 1: So on Tuesday nights, Linens were moving through a hotel
6:36
Speaker 1: dock that had no public contract with Consolidated. They were
6:39
Speaker 1: being staged there, and someone was supposed to collect them.
6:42
Speaker 1: That someone was Pete Garza. Garza was a former municipal
6:45
Speaker 1: facility supervisor who had retired from city employment in 2006.
6:49
Speaker 1: He drove an unmarked van. He received payments between $ 400
6:53
Speaker 1: and $ 700 per month, delivered via cashier's checks drawn from
6:57
Speaker 1: three rotating banks. No two consecutive payments came from the
7:00
Speaker 1: same institution. In Cheryl Novak's books, these payments were recorded
7:05
Speaker 1: under a column labeled Municipal Coordination. There was no vendor
7:08
Speaker 1: name attached, no receipt, no contract, just a number, a date.
7:13
Speaker 1: and a check reference that pointed back to a bank
7:16
Speaker 1: that would have no record of the transaction's purpose. Garza
7:18
Speaker 1: collected the linens from the Torrens dock and delivered them
7:21
Speaker 1: to addresses connected to Ray Tullen, Tullen's home, a rental
7:25
Speaker 1: property he owned, a lake cabin. The linens arrived, laundered, pressed,
7:29
Speaker 1: and logged under the Harborview Club account as if they
7:32
Speaker 1: were part of a normal commercial cycle. None of it
7:35
Speaker 1: was billed to Tullen directly. The paper trail bent back
7:38
Speaker 1: on itself and disappeared. On July 8th, 2011, Pete Garza
7:43
Speaker 1: did not make his pickup. His nephew's birthday party ran long.
7:47
Speaker 1: It was a family obligation, uncomplicated and ordinary, and it
7:51
Speaker 1: fell on the one Tuesday night that 43 Harborview Club
7:53
Speaker 1: linen sets, burgundy and gold monogram, barcoded, bundled in clear
7:57
Speaker 1: poly wrap, sat in the service alley behind the Torrance
8:00
Speaker 1: Hotel and waited. They were still there the following morning
8:03
Speaker 1: when Scott Henderson cut through the alley on his way
8:06
Speaker 1: somewhere else. The linens stayed in that alley because one
8:09
Speaker 1: man went to a birthday party. that is, the distance
8:12
Speaker 1: between an operation running invisibly, for years, and a 15-year-old
8:16
Speaker 1: taking two photographs on his phone. Eric Callahan received the
8:20
Speaker 1: case in late July of 2011. He worked financial crimes
8:23
Speaker 1: for the Calmore DA's office. He spent the first three
8:26
Speaker 1: months not interviewing anyone. Instead, he rebuilt the city's contract
8:30
Speaker 1: records from scratch. Renewal dates, inspection schedules, the timing of
8:34
Speaker 1: when Consolidated's competitors had their bids reviewed. What he found
8:38
Speaker 1: was statistically improbable. The scheduling Across four years, Broken consolidated
8:43
Speaker 1: its favor at a rate that did not fit random distribution.
8:46
Speaker 1: Callahan subpoenaed Consolidated's records. There is a thing that happens
8:51
Speaker 1: when investigators pull business records, and the records are too clean.
8:54
Speaker 1: Every payment categorized. Every route logged. Every invoice matched. Cheryl
9:00
Speaker 1: Novak was a meticulous bookkeeper. The problem was that her
9:03
Speaker 1: ledger was only clean on the surface. Under municipal coordination,
9:07
Speaker 1: the entries were precise. Dates, amounts... check references, but the
9:12
Speaker 1: column had no anchor in the real world. There was
9:15
Speaker 1: no municipal contract, no vendor registration, no service agreement. The
9:19
Speaker 1: numbers were real. The category was invented. Callahan described the
9:23
Speaker 1: moment he identified the ledger as the point where the
9:26
Speaker 1: investigation changed direction. It stopped being a contract irregularity case
9:30
Speaker 1: and became something else. Then Cheryl Novak walked in with
9:34
Speaker 1: an attorney. Her proffer came in March of 2012. She
9:37
Speaker 1: had been interviewed the previous month. She arrived with documentation.
9:42
Speaker 1: Routing discrepancies cross-checked against Breslin's weight logs, the full, municipal
9:46
Speaker 1: coordination ledger, going back to 2009. Garza's name and billing
9:50
Speaker 1: anomalies in the Harborview account that matched Tullin's property records precisely.
9:55
Speaker 1: She had kept all of it in a fireproof box
9:57
Speaker 1: stored at a unit rented under her maiden name. She
9:59
Speaker 1: had known... for four years. Her own explanation was that
10:03
Speaker 1: keeping accurate records was not the same as participating. That
10:06
Speaker 1: argument did not keep her out of a civil proceeding,
10:08
Speaker 1: but it did mean the record survived, intact, in a
10:11
Speaker 1: location no one at Consolidated would have searched. The box
10:15
Speaker 1: she carried in contained three years of evidence that should
10:17
Speaker 1: have been destroyed. It wasn't. Everything about this case pointed
10:21
Speaker 1: toward a network, insulated by its own complexity. Smith at
10:25
Speaker 1: the center, Garza as the buffer, Tullen protected by two
10:28
Speaker 1: layers of administrative distance. The structure was designed so that
10:31
Speaker 1: no single piece of evidence connected all three men directly.
10:34
Speaker 1: Callahan acknowledged publicly that Garza's cooperation was limited. Smith denied
10:39
Speaker 1: knowing the specific mechanics of how Garza passed payments to Tullen.
10:43
Speaker 1: Tullen's free linen services were routed through a legitimate client account.
10:47
Speaker 1: If the case had gone to trial without Novak's records,
10:50
Speaker 1: Each layer could have argued. It knew only its own corner.
10:53
Speaker 1: Picture what that defense looks like from the inside. Smith
10:57
Speaker 1: runs a laundry company. He has a bookkeeper. He pays
11:00
Speaker 1: a former city employee for what he calls municipal coordination.
11:03
Speaker 1: He does not, he says, know exactly where that money goes,
11:07
Speaker 1: or what Garza does with it. Garza picks up linens
11:10
Speaker 1: from a hotel dock on Tuesday nights and delivers them
11:12
Speaker 1: to addresses he was given. He is retired. He drove
11:16
Speaker 1: a van. He received cashier's checks. Tullin uses a linen service.
11:21
Speaker 1: It comes through a club account. He sits on the
11:24
Speaker 1: contract subcommittee, yes. But the contract decisions involve many people.
11:28
Speaker 1: The scheduling could be coincidence. That version of events collapses
11:32
Speaker 1: at a single point. The weight logs. Breslin's pickups at
11:36
Speaker 1: Harborview were heavier than what Consolidated invoiced. That gap, 8
11:41
Speaker 1: to 10% consistent across two years, meant linen was moving
11:44
Speaker 1: that was never billed. Unbilled linen moving on the wrong days.
11:48
Speaker 1: staged at a hotel that had no legitimate reason to
11:50
Speaker 1: host it, collected by a man receiving payments from a
11:53
Speaker 1: column with no vendor attached, delivered to properties owned by
11:56
Speaker 1: the man who controlled contract scheduling. Each link was deniable.
12:00
Speaker 1: The chain was not. But the strongest recontextualization came from
12:04
Speaker 1: a woman who had never worked at Consolidated. Sandra Kipp
12:07
Speaker 1: was 61 years old. She ran a catering operation on
12:10
Speaker 1: the eastern side of Kelmore. In 2004, seven years before
12:14
Speaker 1: Scott Henderson's photographs, Bruce Smith had visited her kitchen. He
12:18
Speaker 1: presented a pitch for linen services. She declined. Smith returned, unannounced,
12:23
Speaker 1: with a second man whose identity was never established in
12:25
Speaker 1: the record. He implied, according to Kip's account, that health
12:29
Speaker 1: inspections could become inconvenient. That paperwork had a way of
12:32
Speaker 1: going missing. Kip did not report it. She wrote it
12:35
Speaker 1: down instead. The date, the words, a physical description. She
12:39
Speaker 1: kept that note for seven years. Three weeks after Smith's
12:42
Speaker 1: photograph appeared in the Kelmore paper following his arrest, She
12:46
Speaker 1: walked into the DA's office and handed it over. The
12:49
Speaker 1: judge cited her account explicitly when sentencing Smith to nine years.
12:53
Speaker 1: Not because it proved the linen scheme, because it established
12:56
Speaker 1: something the Ledgers could not. That coercion had been part
12:59
Speaker 1: of the method from the beginning. The municipal coordination payments
13:03
Speaker 1: were not a parallel arrangement that grew alongside a legitimate business.
13:07
Speaker 1: They were the business. The free linen service to Tullin's
13:10
Speaker 1: properties was not a gift. It was a purchase, and
13:14
Speaker 1: Sandra Kipp's handwritten note written in 2004 and carried for
13:17
Speaker 1: seven years, was the document that said so in plain language.
13:21
Speaker 1: The sentencing hearings ran through the winter of 2012 into
13:24
Speaker 1: early 2013. They did not happen all at once. Each
13:29
Speaker 1: person in the arrangement had their own day in court,
13:31
Speaker 1: their own attorney, their own moment of reckoning inside the
13:34
Speaker 1: same Kelmore courthouse where contracts had once been quietly renewed
13:37
Speaker 1: without a second look. Bruce Smith was convicted on seven counts,
13:41
Speaker 1: bribery of a public official, tax fraud, and wire fraud.
13:45
Speaker 1: The judge sentenced him to nine years. Smith had maintained
13:49
Speaker 1: through the proceedings that he never explicitly arranged a quid
13:52
Speaker 1: pro quo, that he did not know the specific mechanics
13:55
Speaker 1: of how Garza moved the money. The jury found that
13:58
Speaker 1: distinction unconvincing. Sandra Kipp's account was already in the record.
14:03
Speaker 1: The judge made clear it shaped the sentence. Ray Tullin
14:06
Speaker 1: had resigned his city council seat in April of 2012
14:10
Speaker 1: before formal charges arrived. He had held the fourth district
14:13
Speaker 1: seat for 11 years. He left without public statement. His
14:17
Speaker 1: indictment came on three counts of bribery and one count
14:20
Speaker 1: of official misconduct. In January of 2013, he entered a
14:24
Speaker 1: guilty plea. The court sentenced him to four years. He
14:27
Speaker 1: served 22 months. Pete Garza, the retired municipal facility supervisor
14:32
Speaker 1: who had moved cashier's checks and linens between men who
14:34
Speaker 1: never met directly, was convicted on two counts of bribery facilitation.
14:38
Speaker 1: His sentence was suspended. Three years of supervised release. The
14:42
Speaker 1: investigation record described his cooperation as limited. Investigator Eric Callahan
14:47
Speaker 1: said so publicly, Whatever Garza knew about the full architecture
14:51
Speaker 1: of the arrangement, he did not provide it in full.
14:54
Speaker 1: Glenn Faber was not charged. He resigned from Torrance Hotel
14:57
Speaker 1: Management in the fall of 2012. The texts between him
15:01
Speaker 1: and Smith were recovered and entered into the record. The
15:04
Speaker 1: prosecutors determined that sufficient evidence of his knowing participation in
15:07
Speaker 1: the scheme's purpose had not been established. He had opened
15:11
Speaker 1: his loading dock on Tuesday nights and accepted invoice reductions.
15:14
Speaker 1: Whether he understood what he was facilitating, the record could
15:18
Speaker 1: not resolve. Cheryl Novak received no prison time. She paid
15:22
Speaker 1: a civil penalty. Her bookkeeping license was suspended for three years.
15:27
Speaker 1: She had managed the books at Consolidated Textile Services for
15:29
Speaker 1: nine years, had known about the concealment for four of them,
15:33
Speaker 1: and had kept her records in a fireproof box at
15:35
Speaker 1: a storage unit under her maiden name until the moment
15:38
Speaker 1: she decided to cooperate. She resumed normal life in the
15:41
Speaker 1: fall of 2013. The distinction she had drawn, that keeping
15:45
Speaker 1: accurate records was not the same as participating, was not
15:49
Speaker 1: a defense the court accepted in full, but it shaped
15:51
Speaker 1: the outcome. Sandra Kipp was not charged. She had been
15:55
Speaker 1: a witness, not a participant. Her 2004 handwritten note entered
16:00
Speaker 1: the sentencing record and never left it. The 43 linen
16:04
Speaker 1: sets with the Harborview Club's burgundy and gold monograms were
16:08
Speaker 1: held as physical evidence through the duration of the trial.
16:10
Speaker 1: They were returned to the club in the spring of 2013.
16:14
Speaker 1: When the club's events director received them, she checked the
16:16
Speaker 1: internal logs. According to those logs, the linens had been
16:20
Speaker 1: marked as returned years earlier. The club had no record
16:23
Speaker 1: of the gap. Its own system showed no absence. Nobody
16:26
Speaker 1: could explain that. There is something about the 43 linens
16:29
Speaker 1: that does not let go. Not because of what they proved.
16:32
Speaker 1: Callahan's team built the case on ledgers, weight logs... Cashier's
16:36
Speaker 1: checks and Cheryl Novak's fireproof box. The linens were the
16:40
Speaker 1: first thread, not the strongest. But they were the things
16:44
Speaker 1: Scott Henderson, photographed on a July morning in 2011 when
16:47
Speaker 1: he was 15 years old, and recognized a crest from
16:51
Speaker 1: a moment years earlier when he had knocked over a
16:53
Speaker 1: glass of water at the Harbor View Club. He told
16:56
Speaker 1: his father, his father told someone in the city clerk's office,
17:00
Speaker 1: and the whole machinery of what Consolidated Textile Services had
17:03
Speaker 1: quietly built across 14 years began to come apart. What
17:07
Speaker 1: makes this case worth sitting with is not the sophistication
17:10
Speaker 1: of the scheme. It was not sophisticated. It was patient.
17:14
Speaker 1: A loading dock opened on Tuesday nights. An invoice column
17:17
Speaker 1: with no vendor attached. Cashier's checks from three rotating banks.
17:22
Speaker 1: Free service to a council member's lake cabin. Never invoiced.
17:25
Speaker 1: Never questioned. It worked because each individual piece had a
17:29
Speaker 1: plausible surface. The dock arrangement sounded like logistics overflow. The
17:33
Speaker 1: column could have been an administrative shorthand. The scheduling anomalies
17:37
Speaker 1: were statistically improbable, but not impossible in isolation. What the
17:41
Speaker 1: scheme required, above everything else, was that no single person
17:44
Speaker 1: ever pull on more than one thread at a time.
17:47
Speaker 1: Scott Henderson pulled two threads at once, without knowing either
17:50
Speaker 1: of them existed. The case settled the immediate legal question.
17:54
Speaker 1: Seven counts, nine years, guilty pleas, supervised release. It did
17:59
Speaker 1: not settle every question. The second man who walked into
18:02
Speaker 1: Sondra Kipp's kitchen in 2004 was never identified. The origin
18:06
Speaker 1: of part of Smith's initial $ 240, 000 purchase price was never traced.
18:11
Speaker 1: Garza's full account of what he knew was never produced.
18:15
Speaker 1: There are cases where the paperwork closes and the picture
18:18
Speaker 1: stays incomplete. Sandra Kipp carried a handwritten note for seven
18:21
Speaker 1: years before she decided the record needed it. She did
18:24
Speaker 1: not carry it because she was waiting for the right
18:26
Speaker 1: moment strategically. She carried it because she wrote things down,
18:29
Speaker 1: and she did not throw them away. That habit. Ordinary. Unheroic.
18:34
Speaker 1: Slightly stubborn. turned out to be the document that gave
18:37
Speaker 1: the judge the language for a nine-year sentence. The linens
18:40
Speaker 1: were returned to the Harborview Club in the spring of 2013.
18:42
Speaker 1: The club's own logs showed no gap. Somewhere in the
18:47
Speaker 1: distance between what the logs recorded and what actually happened,
18:51
Speaker 1: 14 years of a Kelmore arrangement had lived, moved, and
18:54
Speaker 1: finally stopped. This show is made by Oboe Media.