Thursday, July 12, 2012

(Santa Barbara Co) Criminal probe of LHCDC urged

A failed nonprofit housing provider that was the focus last month of a civil grand jury report, should now be investigated for possible criminal wrongdoing, according to two Lompoc community leaders.

Longtime community activist Joyce Howerton and Lompoc City Councilwoman Cecilia Martner have asked the Santa Barbara County District Attorney’s Office to impanel a criminal grand jury to investigate management of the Lompoc Housing and Community Development Corp. (LHCDC).

The organization, which at one time owned and managed 42 properties and parcels in the Lompoc Valley, now is in the process of dissolving and divesting itself of its holdings. LHCDC is accused of mismanaging millions of county and city dollars which resulted in the temporary closure of two homeless shelters and the failure of multi-family complexes it managed.

The District Attorney’s Office is monitoring the LHCDC situation and awaiting completion of a county forensic audit, which could be used as evidence in criminal court, Jerry N. Lulejian, chief deputy district attorney, North County, said Tuesday.

by Bo Poertner/Associate Editor -

In a strongly-worded letter dated July 9, Howerton and Martner asked District Attorney Joyce Dudley to take the necessary steps to thoroughly investigate LHCDC.

“To have an organization whose main purpose is to serve the homeless and the very poor go for years with no investigation of missing records for HUD, State, City and County funds is unconscionable,” the women’s request stated in part.

“With millions of dollars unaccounted for, shelters closed, low income/no income people being displaced, banks coming in and taking possession of property, we believe this goes beyond simple mismanagement and deserves a criminal investigation.”

In a written response, Lulejian stated, “We have been monitoring this situation for some time now and are glad to see that the County has begun a thorough forensic audit of LHCDC’s spending of government funds. You and the media are asking the right question when you and they ask where the government money went. The answer to this question is of critical importance to deciding whether any criminal acts might have taken place.

“The reason we have not officially begun a criminal investigation is that a forensic audit is necessary to demonstrate exactly how government money was spent. Clearly, we will need to know how government money was spent in order to determine if any mismanagement of government funds was criminal in nature or the product of non-criminal negligence.”

Lulejian said Tuesday that if the county had not begun a forensic audit, the District Attorney’s Office would have to do one to determine whether criminal prosecution was warranted. It is a critical preliminary step, he said.

County Auditor-Controller Bob Geis said Tuesday that he has restarted a forensic audit but has been delayed while he audited the dissolution of Redevelopment agencies throughout the county. He said the forensic audit might take a year to complete.

Howerton said a criminal investigation is needed because accountability for the failure to provide adequate low-cost housing and other services for the community’s poor, despite the use of millions of dollars of the public’s money, is missing.

“We think someone needs to be held accountable for this,” said the former Lompoc mayor. “What we hear is that no one knows what happened because they can’t find the files. That’s just not good enough. It makes the city of Lompoc and the county look like a bunch of fools.”

Lulejian said that even if LHCDC’s financial records have been destroyed, a successful investigation could be conducted and prosecution could proceed if warranted.

“They can’t make it go away and they can’t cover it up and make it disappear,” he said. “It’s impossible.”

An 18-page civil Grand Jury report in June, which focused primarily on the government’s role, criticized the city of Lompoc and Santa Barbara County for a “failure of oversight” of LHCDC, which was operated under the direction of Executive Director Sue Ehrlich.

In their letter to Dudley, Howerton and Martner said, “The County Civil Grand Jury looked at part of the issue and found that as early as 2003 LHCDC was in trouble, though failed to examine the LHCDC’s records or to report the amounts given to it by various government sources and for what those funds were used.

“It is time to stop talking and take action. Lompoc has the highest unemployment rate in the county, with many people living just above poverty level.”

Martner, who is on vacation, could not be reached for comment, but she was acting as a private citizen rather than a city official in requesting the criminal investigation, Howerton said.

“I think since the civil Grand Jury took a look at it and did a piece of it, it’s very realistic (to believe) that there will be a criminal grand jury,” Howerton said Tuesday. “This needs to be put to rest.”

In their letter, Howerton and Martner said the need for a criminal investigation is urgent because of widespread community speculation about LHCDC and the lack of government oversight.

“There is quite a bit of speculation in the community that elected officials directed county and city staff to ‘give them what they want,’ and given that over the years millions in taxpayers’ money was given to this organization, most coming from the County and City governments ... we believe whether there is truth to this must be investigated.

“Santa Barbara County Auditor Bob Geis found out a year ago that LHCDC had failed to provide annual financial reports to the county since 2007. Ultimately he got three years of checkbooks after he threatened to cut off funding. He found the nonprofit had no accounting system and virtually no records of its activities. Shortly after, county counsel found that 4th District Supervisor (Joni) Gray’s law firm had been receiving legal fees from the corporation while she was voting on LHCDC issues before the county board of supervisors. Further, Gray’s executive assistant was the president of the board of LHCDC.”

The Lompoc Record reported Friday that Supervisor Gray’s assistant, Susan Warnstrom, announced her retirement last month without comment or explanation. Gray, who is involved in a close re-election race against Orcutt farmer Peter Adam, also declined to comment about Warnstrom’s retirement.

Howerton and Martner concluded: “We believe the community deserves some answers and taxpayers deserve to be reimbursed by or have the satisfaction of punishment of those responsible for the misuses of public funds.”

Their request for a criminal investigation gained immediate public support in the form of an online petition at urging Dudley to investigate LHCDC. By mid-afternoon Tuesday, the petition contained well over 300 names.

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