Los Angeles, California (CNN) -- A Los Angeles County grand jury has indicted the former city administrator of Vernon, California, an industrial city that borders scandal-plagued Bell, on three felony counts after an investigation into questionable business practices.
Court documents show that Donal O'Callaghan has been indicted on two counts of conflict of interest and a count of public officer crime related to the misappropriation of public funds.
The Los Angeles County District Attorney's Office says the counts against O'Callaghan, 54, involve an alleged misappropriation of more than $140,000.
"The law prevents public officials from making contracts the have a personal interest in and Mr. O'Callaghan made a contract that paid his wife money," said deputy District Attorney Max Huntsman. "We're alleging he paid her more than $140,000."
The grand jury was looking into business deals between O'Callaghan and his wife, Kimberly McBride.
According to Vernon city records, the city hired McBride in 2009 as a $40-per-hour consultant and for "administrative account services."
"It's preposterous that he was indicted for the hiring of his wife, which was done with the knowledge and consent of the city attorney and the City Council of Vernon," defense lawyer Mark Werksman told CNN.
"We are seeing an overreaction and hysterical response to the scandal in neighboring Bell," he said. "They are looking for examples of municipal government corruption behind every bush. But it isn't here."
Huntsman disagreed with Werksman's contention.
'I think it's a reaction to Vernon, which has a long history of criminal behavior by public officials. We heard complaints against Mister O'Callaghan, looked into the law and found a basis for the charges," Huntsman said. "The fact that it coincides with criminal charges against officials in Bell has to do with raised public awareness about corruption in municipal governments."
O'Callaghan, who was not taken into custody, pleaded not guilty and posted a $50,000 bond, Huntsman said. His next court date is December 3. If convicted, his maximum sentence is four years and eight months in prison, prosecutors said.
The former official was placed on administrative leave August 26 and resigned his city position October 14.
The California attorney general's office also has launched an investigation into questionable business practices in the industrial city.
Vernon has a population of a little less than 100 people, according to the Los Angeles Almanac. But Vernon is home to more than 1,800 businesses, including Farmer John, Tapatio Hot Sauce and Seven For All Mankind Jeans, stacked into just five square miles.
The former city manager of Bell, along with four City Council members, two former council members and a former assistant city manager, were arrested in September and face charges that include misappropriation of funds, conflict of interest and making or receiving illegal loans.