Grand Jury Accuses Supervisors Smith and Colfax of Intentional Misappropriation
by Mark Scaramella, May 7, 2008
After last year's Mendocino County Grand Jury reported that Supervisors Kendall Smith (Fort Bragg) and J. David Colfax (Boonville) had been overcharging the County for travel and hadn't paid the money back, the Grand Jury turned up the heat last month in a follow-up report that identifies two supervisors as thieves.
The Supervisors reimburse themselves for travel to meetings, workshops and conferences. They also reimburse themselves for their commutes to their Ukiah offices, making them among the very few persons living in Mendocino County who get paid to drive to work.
Last year the Grand Jury concluded that "some Supervisors have a casual and loosely defined understanding of what is considered to be 'official County business,' resulting in substantive travel policy abuse."
Result: For 2006-2007 Supervisor Smith, who lives in Fort Bragg, claimed $14,658 in travel expenses. Supervisor Colfax, who lives in Boonville, claimed $14,315 in expenses. Accordingly, the Supervisors' expense budget jumped from $49,000 in the 2005-06 fiscal year to more than $100,000 in one year — and is still growing.
Clearly annoyed at being ignored, the Grand Jury took up the issue again, this time upping the ante.
"A review of the Supervisors' claims revealed: persistent abuse of the Travel Policy by [Supervisor Smith] from January 2005 through November 2006; questionable weekend travel reimbursement claims by [Supervisor David Colfax]; policy misinterpretation and a paucity of claim documentation that was readily acknowledged by [Supervisor John Pinches]; and that the First and Second District Supervisors have routinely submitted clear and properly documented travel expense claims."
Pinches immediately agreed to make amends. We assume he will.
Last year Fourth District Supervisor Kendall Smith told the Grand Jury that she'd pay $3,087 back, even though she lamely claimed that the Grand Jury "did not include all pertinent factors." (Factors like, maybe, "I'm not getting enough money for this stupid job.")
But Smith didn't pay. And it was only after she reneged that the Grand Jury referred the matter to District Attorney last year. The Grand Jury had gone out of its way to give Smith an opportunity to reimburse the taxpayers for what amounts to theft but, after saying she'd fork over, refused to.
When the Grand Jury interviewed Smith they asked whether she had any back-up data to explain her travel overcharges. Smith first said she "forgot" to bring it. Later in the same interview Smith confessed that she didn't have any back-up data. Nor, she said, did she have a meeting calendar that might have justified her travel by confirming when and where she went on the public's business.
Without any backup, the Auditor couldn't determine anything more than the estimated "minimum" $3,087 overcharged by Smith because she supplied absolutely no records with dates, destinations, trip purpose or receipts. In trying to come up with an estimate of what Smith owed, the auditor generously asked Smith herself for a formula in lieu of the records. Smith told the Auditor that 27% of her mileage claims were for trips not traveled. She said that she stayed overnight in Ukiah at a private home on nights she didn't travel from and to Fort Bragg. But she charged the taxpayers for the trips home she never made.
The Grand Jury out-and-out "rejected" that 27% formula last year. But the Auditor conveniently didn't know that the Grand Jury had rejected it. So the Auditor did her own calculation using a modified version of Smith's estimate and came up with $3,676 owed. Smith then magically produced rent receipts showing a $100 a month room rental to the owner of the private home where she stayed in Ukiah. (Yeah, sure.) Even the Auditor didn't buy that transparent dodge and said that Smith could only charge by the day at $3.33 per. Which is how the Auditor came up with the "minimum" $3,087 owed, giving Smith the benefit of the doubt.
Further straining to justify her nickle-nosing public till-tapping, Smith resorted to semantics. She said she "interpreted" the travel policy's "per diem" phrase to mean — in her contorted thinking, anyway — that she should be paid per day of work whether she travels or not. Then, after being told by the Auditor that was a "misinterpretation," Smith went back the next year to make the misinterpretation of "per diem" even though she knew it was unacceptable. Officials are only reimbursed for actual travel costs, a fact not open to interpretation even if the phrase "per diem" is drawn from an extinct language.
When asked by last year's Grand Jury to compensate the County for phony reimbursement claims, Smith again declined to make the repayment, as she had previously agreed to do. Smith now says that the policy is "confusing," and that her unique per diem approach was "common procedure," and that she had many expenses as a result of her job including "tires, pet care and meals away from home."
Tires are already covered by the standard mileage allowance. Pet care, in-county meals and other incidentals are not reimbursable under any known county travel policy.
In the Grand Jury's first outright sarcasm in recent memory, "the 2007 Grand Jury observed no 'confusion' as to this interpretation except on the part of the Fourth District Supervisor." All the other Supes that the Grand Jury queried, supervisors past and present, agreed. Of course.
This year the Grand Jury sternly reminded Supervisor Smith that she previously had said she would pay the money back but hadn't. In fact, the request that Smith pay back the minimum was even repeated in a letter from DA Lintott to Smith on March 24, 2008 after last year's grand jury report. Again, no response from Supervisor Smith.
The Grand Jury acknowledges that Supervisor Smith may spend more for her commute than the other Supervisors, but "...it in no way justifies the documented falsification of expense reports by [Smith] to claim mileage reimbursement when she stayed in Ukiah and incurred little or no expense either for travel or for lodging."
Fifth District Supervisor J. David Colfax also came in for some unusually specific criticism: "...as an ethical matter, and one of transparency, the Grand Jury asked [Colfax] to explain the purpose of his extensive claims for weekend travel. The response from [Colfax] was to supply 'At-A-Glance' calendars for the period of 2005 through 2006 that did not explain in any substantive degree the reasons for his travel."
(This explains why Colfax petulantly asked for his calendar back at a Supes meeting a few weeks ago. The Grand Jury had had to subpoena it.)
"Although [Supervisor Smith] had some weekend travel but was unable to describe for the Grand Jury the purpose of her travel, [Colfax] refused to explain the purpose of his extensive weekend travel and refused to provide any backup documentation until a subpoena was issued for his records. The subpoenaed documents did not support his travel claims."
"The Grand Jury also confirmed that [Colfax] regularly claims extensive weekend travel without documenting the county business being conducted. Most of the notations in his original documentation do not show what business was discussed. Where there is a notation of why [Colfax] was traveling, the notation shows attendance at social events, concerts, county fairs and political gatherings that are not covered under any travel policy, old or new. In fact, [Colfax] traveled 41 weekend days out of a possible 105 in 2005. For 2006, [Colfax] traveled 36 weekend days out of a possible 105. None of the other Supervisors have claimed an amount of weekend travel even remotely in this range. [Colfax]'s travel on weekends was in excess of the total weekend travel by all other Supervisors combined for the same period."
This year's Grand Jury also questioned some aspects of the Board's revised Travel Policy that took effect in January 2008.
They specifically criticized (again) the Board's new self-created stipend option — which allows Supervisors to take a lump sum travel reimbursement each month if they want to without any supporting documentation — saying that such money is taxable income which costs the county extra in withheld taxes and retirement calculations, as well as the Supes who get less after taxes which increases the cost to the Supervisor and county.
The Board's own travel policy explicitly requires supporting documentation for all travel reimbursement claims. But the Clerk of the Board, who conveniently approves all the claims of her bosses, hasn't required such backup since 1999.
The Grand Jury even included Clerk of the Board Kristy Furman's note saying that she was the person "auditing and processing all Supervisor requests for reimbursements..." in which Furman says the auditor never told her that she (Furman) was "misinterpreting" the board's already generous travel policy. Ms. Furman's letter ends with, "...It is irresponsible to knowingly allow a flawed policy to remain in place and to then punish those who believe they are abiding by such a policy."
Furman thus attempts to shift the blame from her bosses to the Auditor. Trouble is, the two Supes in question are in violation of their own policy and Furman hasn't required the necessary backup documentation since 1999.
Current and past auditors have always required receipts to document in-county lodging expenses; and the Clerk of the Board collected lodging receipts prior to 1999 but, says the Grand Jury, "has not done so on a regular basis since 1999."
Next the Grand Jury complained about the DA's failure to do anything about the misappropriations.
"While these behaviors are inconsistent with the Board's Travel Policy and fall far short of established ethical standards, [DA Meredith Lintott] has opined to the Grand Jury that its extensive evidence of false claims does not prove intent and, hence, may be insufficient for successful legal action.
"Other reasons that were offered by the DA for failure to investigate were the cost and lack of staff to pursue recovery of these funds. The Jury respectfully disagrees with this analysis, but acknowledges that the disruption and financial costs that would result from legal action would further penalize Mendocino County taxpayers."
In light of DA Lintott's failure to act, this year's Grand Jury took pains to include the full text of California Penal Code Section 932 in their report:
"Suit to recover money due county; Grand jury's order as authority: After investigating the books and accounts of the various officials of the county, as provided in the foregoing sections of this article, the grand jury may order the District Attorney of the county to institute suit to recover any money that, in the judgment of the grand jury, may from any cause be due the county. The order of the grand jury, certified by the foreman of the grand jury and filed with the clerk of the superior court of the county, shall be full authority for the district attorney to institute and maintain any such suit."
They also included a copy of DA Lintott's initial refusal to prosecute dated August 22, 2007. "...because the amount claimed is less than $5,000." Lintott claimed that "evidence of specific intent to defraud" would need to be proved for the County to prevail in a case against Smith. In the evidence provided, the DA said, she found nothing to support a "specific intent to defraud" in Supervisor Smith's claims. If knowingly claiming and keeping money you're not entitled to isn't a "specific intent to defraud," what is?
Additionally, the Grand Jury included a copy of Lintott's response to last year's Grand Jury which said, "The District Attorney submits the opinion that criminal charges against Supervisor Kendall Smith are not supported by the evidence." That letter from the DA also cites Government Code Section 893232.4 which "outlines the remedies available for misuse of public funds or falsifying expense claims" — Loss of reimbursement privileges, restitution to the local agency, civil penalties for misuse of public resources pursuant to 8314 (taxpayer lawsuit), prosecution pursuant to penal code 424.
In that letter, Lintott said the DA only prosecuted criminal charges, an untrue statement and one more indication that Lintott isn't fully aware of her responsibilities.
Lintott went to great lengths to cite obscure court cases which seem to say that prosecution requires that the recipient of the wrongfully received money "control public funds," and that in this case Smith didn't misuse funds she "controlled."
Which is also untrue, as the Supervisors and their Clerk of the Board make clear as the former spends and the latter approves without either keeping a record.
In a Grand Understatement the Grand Jury concludes, "Thus, the 2007 Grand Jury has found that [Smith and Colfax] have remained, regrettably, non-responsive to the Jury's requests."
The Grand Jury's formal recommendation: 1. As a matter of accountability and transparency, [Colfax] make public a full and clear disclosure of the purpose of his extensive weekend travel. And 2. The Fourth District Supervisor repay to the County of Mendocino the amount of $3,087 that was established by the Auditor to represent travel reimbursement overpayments.
Mendo will go broke before either of these things happen.
When local welfare recipients make false claims resulting in overpayments the County either docks their subsequent payments to collect the amount of the overpayment or, if the overpayment is large enough, the DA files charges without regard to "intent." (Welfare recipients can make their "intent" defense to a judge.) In this case, the County could simply dock Smith's pay for the largest amount they can calculate including a sizable penalty and let her take the withholding action to court.
If the Supes are going to give themselves generous stipends for their commute, then they might as well take it to the obvious next level and reimburse Supervisor Colfax for his 1.3 mile trips to the Boonville Hotel; Supervisor Pinches for periodic trips to check on activity in the Eel River Canyon; Supervisor Wattenburger for trips to and from any Department of Forestry office; Supervisor Smith for trips to Congressman Mike Thompson's office, and Supervisor Delbar should be reimbursed every time he pays a visit to the local Farm Bureau office for his marching instructions.
However we would not reimburse the Supervisors for going anywhere they can walk to. Trips down hall to the CEO's office, for example, would not be reimbursable.