A cascade of legal memos, accusations of corruption and an investigation into the use of public funds has triggered a leadership crisis in Stockton, pitting city councilmembers against each other and the interim city manager in an escalating public dispute.
The showdown marks the latest turn in months of controversy at City Hall, where tensions over spending decisions, personnel actions, and transparency have steadily escalated.
According to city records, press releases and internal correspondence obtained by Stocktonia, the conflict intensified in the last week or so, culminating in an ongoing investigation into the use of public funds and a pending decision on whether to reappoint interim City Manager Steve Colangelo.
Questions raised about Wild ‘N Out Live funding
On Tuesday, news reports based on internal city emails revealed that the city of Stockton spent $50,000 to subsidize a live entertainment event in which the city’s vice mayor was one of the featured performers to make up for a financial loss due to slow ticket sales.
The city tapped its Risk Mitigation Fund in order for the Wild ‘N Out Live show at Adventist Health Arena to go forth as planned on May 24. The “epic night of comedy, music, and wild freestyle battles,” as the performance was marketed, was the live-version offshoot of a long-running MTV sketch comedy and rap show. Stockton Vice Mayor Jason Lee, a recurring cast member, was billed as one of the live performers.
Tina McCarty, director of Stockton’s Economic Development Department, said she “approved the use of up to $50K to help the promoter of Wild ‘N Out with potential losses, encouraging the show to continue without cancellation,” in a July 5 email to Deputy City Manager Chad Reed.
She added that the city’s contribution “allowed the show to feel more comfortable with their potential loss including the need to drop pricing to encourage greater attendance.”
As news of the emails broke Tuesday, Lee issued a statement in which he alleged that surfacing the emails was an act of political retribution for his role in trying to ferret out budgetary and financial irregularities at City Hall.
He questioned why the city manager’s office waited two months to request information about the event.
ICM announces investigation
Later that day, the city of Stockton issued a news release announcing an internal investigation into the $50,000 expenditure from the Risk Mitigation Fund.
The statement, signed by Colangelo, said the funds had been used “without the City Manager’s knowledge or approval” and that reports of a “sitting Councilmember actively engaged between city staff and event promoters” had raised “serious concerns.”
The release said the investigation would determine “how these funds were authorized, who was involved, and whether any City policies or procedures were bypassed.”
Lee has described the investigation as retaliation and politically motivated to distract from what he says is really going on at City Hall. He has also said that the process to approve the funds followed city protocol and that he did not personally profit from the Wild ‘N Out event.
Lee sends memorandum to Stockton city attorney
The previous week, Lee had sent a memorandum to City Attorney Lori Asuncion alleging “credible allegations of retaliation against executive leadership staff, potential corruption, and violations of law” by Colangelo.
The 10-page memo included detailed claims that multiple senior leaders had been placed on leave or notified they would be; one deputy city manager had gone on stress-related sick leave; and two senior directors had indicated plans to resign. It further alleged that Economic Development Director Tina McCarty had been targeted in what Lee described as a politically motivated attack.
McCarty approved city funds to be used to support the Wild ‘N Out event.
Lee wrote that Colangelo’s actions, if substantiated, could violate California’s open meetings law, whistleblower protections under state labor law, federal civil rights statutes, and the Stockton City Charter.
He urged immediate steps be taken to prevent further abuses, including freezing all personnel actions, issuing a directive to Colangelo to “notify him in writing that any retaliation, corruption, unauthorized disclosures, or unilateral executive actions without proper notice to the Mayor or Council will subject him to personal liability” and to “clarify that indemnification may not extend to willful misconduct.”
Lee calls special Audit Committee meeting
The week kicked off Monday with a special Audit Committee meeting convened at Lee’s request to address the issues outlined in his memorandum. The agenda included an update from ASM Global, the company that operates Stockton’s Adventist Health Arena, with presentations on performance and marketing.
During the meeting, Vice Mayor Lee questioned Deputy City Manager Chad Reed about the investigation Colangelo had announced regarding the Wild ’N Out Live event. Reed responded that he had no information about the matter beyond knowing it was initiated by Colangelo due to “third party concerns.”
Lee also called city management officials to the podium, asking Reed directly if he had any questions about the event and stating that Economic Development Director Tina McCarty had provided consistent information on the matter. No officials came to the podium.
“Of course not,” Lee said regarding the absence of city manager staffers.
Councilmembers accuse ICM of possible fraud
On Wednesday, Lee and Councilmember Mario Enríquez held press conference outside Stockton City Hall announcing they would be requesting City Council to direct the city attorney to forward allegations against Colangelo to the California attorney general’s office.
The councilmembers leveled several accusations at the interim city manager, including possible budgetary fraud and bullying city staff who speak out when they have concerns.
Direction to the city attorney will also include looking into politically motivated investigations, retaliation, and documenting Brown Act violations, Enríquez said.
“Because transparency is important, ethics is important, and true integrity is important, because we have to ensure that the public has trust in our local government. There’s been too much noise, too much static, distracting us from the work,” Enríquez said. “And we have to be able to be honest with ourselves, to say we are doing the work, and we have to hold everybody accountable, regardless of what position you have.”
Villapudua also sends memorandum to city attorney
Later that day, the city sent out via email a letter from Councilmember Brando Villapudua to City Attorney Lori Asuncion entitled “Demand for Legal Review, Charter Enforcement, Forfeiture Proceedings, and Conflict Investigation Relating to Vice Mayor Jason Lee.”
In the letter, Villapudua alleged that Lee’s involvement in the May event may have constituted a City Charter violation, a Brown Act infraction, which governs transparency of public government meetings, and conduct “incompatible with continued service.” He called for legal review and potential enforcement actions.
“This request is grounded not in speculation but in a growing body of evidence, admissions, and behavior by the Vice Mayor that directly undermines the legal, ethical, and operational integrity of our City government,” Villapudua wrote.
The letter was sent less than a week after Lee’s own memorandum against Colangelo.
Colangelo to be reappointed
Colangelo’s six-month contract as interim city manager is set to expire Saturday. The previous week, the council opted to not reup the contract and reappoint Deputy City Manager Will Crew as acting city manager until a new interim city manager contract could be agendized at its next meeting, which is Tuesday.
However, Tuesday’s meeting agenda shows that Colangelo could once again step back into the city chief executive spot. This would mark the fourth time the city manager position has changed hands this year.
Crew also served as acting city manager following former City Manager Harry Black’s forced resignation in January. Colangelo was appointed soon after and took over for Crew a few weeks later.
The council will discuss Colangelo’s reappointment during Tuesday’s closed-session discussion. Any action taken in closed session will be announced publicly afterward.
Then the council will vote during public session on offering Colangelo a new three-month contract at his current salary. The contract is on the council’s consent agenda, where multiple items are often passed with a single vote without discussion. However, councilmembers can pull items for discussion and a separate vote.
At Wednesday’s press conference, Lee said he’d support Crew in continuing as acting city manager until a permanent candidate can be found, praising his experience and describing him as an “asset” to the city’s leadership team.
“Will is a stellar employee who has done phenomenal work in all areas of this city. I’ve grown to respect him and his integrity. But more importantly, Will, I believe, is the bridge to bring our staff together to be able to help this council stay united and to continue to move the work forward,” Lee said. “I can’t speak to Will if he wants to do it until then or not. There’s a lot of mess behind me that has to be cleaned up.”