Former Hercules City Manager Nelson Oliva is being sued by his former employer as they seek to recover $3.2 million that the City claims was illegally directed to Oliva’s family business. But in a cross-complaint filed with the courts, Oliva says that the City still owes him $112,500 (plus interest) for failing to fulfill their part of a separation agreement.

According to the filing, Oliva, who stepped down in 2010 after the financial plight of the City was discovered while he was on medical leave, had a separation agreement that would pay him one year’s base salary. That $225,000 was to be paid in two installments. The first was paid, the second withheld.

Between payments, the City discovered evidence that they claim proves Oliva never relinquished control of his consulting firm, NEO Consulting. He had previously claimed that he transferred authority to his daughters, and the business was kept at an arm’s length. However, evidence showing he remained active in the company would amount to a violation of the California Government Code.

Oliva has claimed that the city knew of all of his dealings and approved them, one of numerous affirmative defenses being levied for him in court.

Read the full story at the San Jose Mercury News.