Sloppy invoices and a lack of cooperation from City of Industry officials derailed the Los Angeles County district attorney’s nearly three-year investigation into alleged fraud and corruption by the city’s former mayor, according to a newly released letter from the D.A.’s Office.

District Attorney Jackie Lacey opened the investigation into former Mayor David Perez in 2015 after an internal audit by the firm KPMG found Perez and his companies had made $326 million from contracts with the city over the past two decades.

The criminal inquiry focused on potentially excessive billing by Perez’s maintenance company, Zerep Management; the use of a city-owned property by Perez’s private recycling company; and the dredging of a river in the San Gabriel Mountains by Zerep that resulted in the destruction of protected habitats.

Lacey ended the three-pronged investigation last month without filing any charges, according to a letter sent to the Los Angeles County Board of Supervisors. A spokesperson for Lacey declined to answer additional questions about the case.

Lacey’s staff combed through KPMG’s audit, a subsequent state controller’s audit and more than 75,000 pages of public records as part of its review, according to the letter.

Industry’s lax accounting has created barriers for investigators over the years. In 2016, the state controller found at least $12.6 million of the invoices paid to Zerep lacked basic details or authorization. However, the state’s auditors concluded the problem was systemic and not limited to one company. Industry brought its finance department back in-house and hired internal auditors as a result of the controller’s recommendations.

The sloppy documentation from prior years was equally insurmountable for the District Attorney’s Office.

“Based on the information included on the submitted invoices, it could not be determined if expenditures identified in the invoices were reasonable, within the scope of the project, and commensurate with the work performed,” stated Alan Yochelson, the head deputy district attorney, in the letter. “The KPMG and State Controller’s audits reached a similar conclusion.”

Investigators hit another roadblock while looking at allegations that Perez personally directed Zerep and CNC Engineering to create berms along a portion of the San Gabriel River in the Angeles National Forest. The dredging at Follows Camp, a former campground and RV park owned by Industry, damaged 2.4 acres of the river, ruined habitats for a protected fish and resulted in a $5 million fine from the California State Water Resources Control Board.

Investigators concluded the companies did not pull any permits or conduct any environmental studies before carrying out the job. The city later settled the fine from the state.

If Perez acted alone, it would have constituted a misappropriation of public funds because his company was paid at least $4,500 for its part.

But when investigators tried to determine if the City Council had approved the work in a closed session, two current City Council members and a former city manager refused to be questioned. Then, city officials cited attorney-client privilege exemptions to block the release of documents “that could possibly cast light on this issue,” according to the letter.

Mark Radecki, the city’s current mayor, oversaw the dredging at Follows Camp. In a 2014 letter explaining the work, Radecki said Perez directed him to carry it out. The following year, his brother and the former city manager, Kevin Radecki, claimed neither he nor the City Council authorized the dredging.

The District Attorney’s Office never reached the truth.

“In the absence of complete and reliable information, a determination as to whether or not the directive to create berms along the San Gabriel River at Follows Camp resulted in a misappropriation of funds cannot be established beyond a reasonable doubt,” Yochelson wrote.

The only conclusive determination the district attorney’s probe made was that another Perez company, Grand Central Recycling, was legally authorized to operate on city-owned land without paying rent. In exchange, Industry benefited from free recycling services and state tax credits. Though city officials later contested the length of the arrangement, the District Attorney’s Office did not believe it was criminal.

In a statement, Stephen Larson, an attorney representing the Perez family, said all of the allegations have been exhaustively examined and discredited.

“Despite spending years and untold amounts of taxpayer money investigating, having numerous people testify before the grand jury, and reviewing thousands of documents, the D.A.’s Office has found nothing to charge and declared the case closed,” Larson said.

A spokesperson for the district attorney would not confirm the grand jury hearing. But several sources close to the matter acknowledged the hearings took place in 2016, though they did not know who was called to testify.

Los Angeles County Supervisor Hilda Solis, who asked Lacey to investigate Perez in 2015, expressed disappointment that the investigation was “hindered by the lack of information available for review.”

“The responsibility for transparent governance falls directly on the City of Industry and I do not believe they have met the appropriate standard that the public demands,” she said in a statement.

Anyone who refused to to be interviewed should have been forced to testify before the grand jury, according to Stan Goldman, a professor of criminal law and legal ethics at Loyola Law School. Only those who believed the evidence would incriminate them as well could refuse, he said.

The letter, by itself, reads like a “white flag,” he said.

“The way it reads, it looks like, ‘Hey, we tried, we couldn’t get any info, we’re giving up,’ ” Goldman said after reviewing a copy of the letter provided by the Southern California News Group. “It’s rare that you see a prosecutor say that we can’t get witnesses to cooperate. This isn’t a gang shooting in a neighborhood where everyone is worried.”

The Perezes were one of the first families in Industry and, for decades, their businesses have been closely tied to the city government, which serves about 200 residents and brings in more than $170 million in annual revenues. While the companies provided trash and maintenance services, family members served on the City Council, Planning Commission and other boards. They frequently donate to local charities and have seats on the boards of nonprofits, including the city’s long-standing convalescent home.

Several city officials worked directly for Perez, or for subcontractors used by his companies, before ending up in government positions.

The most recent investigation isn’t the first time prosecutors have examined Perez’s contracts with Industry.

In 2009, former District Attorney Steve Cooley’s office investigated a complaint that Perez’s contracts constituted a conflict of interest. The case was closed in 2011 after investigators determined Perez had abstained from voting on anything tied to his family and that his contracts were in place before he took office. In one instance, the City Council extended a Zerep contract by 25 years shortly before Perez was elected.

Another D.A.’s investigation occurred in 2014 based on allegations that were similar to the most recent probe, according to March 2017 letter.

Perez stepped down from the City Council in 2012 for health reasons, but, even today, he’s often accused of exerting his influence behind the scenes. His nephew, David M. Perez, now runs Valley Vista Services, the family’s trash hauling company, and leads the city’s chamber of commerce.

Industry ended the Zerep contract in 2014 and began reviewing the payments as soon as Perez resigned, according to an interview with Kevin Radecki in 2015. A review by this newspaper found Zerep charged nine times more money for street sweeping than contractors in larger, neighboring cities.

“Once he stepped down, there was no longer a fear of retaliation or repercussion. Before there was,” Kevin Radecki said.

The council at the time also filed a lawsuit accusing him of corruption, but a slate of candidates backed by the Perez family swept the election that year. The case filed by their predecessors was later dropped. They even sued Industry’s former city attorney, accusing her of filing the corruption lawsuit solely to try to influence the June 2015 election.

Immediately after the election, Kevin Radecki was fired as city manager by the new council led by his brother, Mark.

Valley Vista Services still has an exclusive agreement with the city. The family and its companies own about half of the limited housing in the city.

Earlier this year, the city’s now fired reform monitor, William Lockyer, alleged the Perez family convinced planning commissioners to shut down the city’s first ew housing development in decades because new residents would dilute the family’s share of voters. Lockyer was fired days after making the allegation publicly. The City Council has never provided a reason for his firing.

There is already a new push for another investigation.

Last week, state Sen. Ed Hernandez sent a letter to Lacey’s office asking her to take another look at the former mayor. He also has asked California’s attorney general to investigate.

“I believe this time will be different because officials in the City of Industry have not only continued to engage in the same behavior that triggered the interest of the D.A. in 2015, they have gone even further,” Hernandez said in a statement.

“The city has failed to make any serious change in the face of a state controller’s audit, continued a deeply flawed contracting process, and they have engaged in active efforts at subverting reform, including the firing of Bill Lockyer, City Manager Paul Phillips, and a number of others. All of these actions warrant further investigation.”

In a statement, Industry Mayor Mark Radecki said the city has not wavered in its commitment to reforms. Industry officials want to work with Hernandez and other elected representatives, he said.

Larson, the family’s attorney, denied Hernandez’s allegations.

“It is unfair and deplorable that elected officials victimize, for their own political gain, good people like the Perez family who have contributed so much to the betterment of their community,” Larson said. “This pointless goose chase is an embarrassment and should stop.”