Monday, July 22, 2013

(San Mateo) Grand jury: Mosquito district manager and board enabled employees to steal

By Bonnie Eslinger, Palo Alto Daily News -

Through poor management and lack of oversight, leaders of the San Mateo County Mosquito and Vector Control District enabled two employees to embezzle almost $800,000, according to a scathing report by a civil grand jury.

From 2009 to 2011, the district's former finance director, Jo Ann Dearman, and her bookkeeper assistant, Vika Sinipata, gave themselves extra pay, fraudulently took time off, used district credit cards for personal use, and made extra contributions to deferred compensation accounts that were electronically transferred into their personal accounts, according to the grand jury report issued Thursday and the San Mateo County District Attorney's Office.

The two women earlier this year pleaded no contest to multiple charges, including felony embezzlement. Dearman was also known as Joanne Seeney.

Blame for the thefts is shared by the district's manager, Robert Gay, and the district's 21-member board, the civil grand jury states in its report.

"The Manager and the Board's finance committee did not recognize red flags in financial reports that should have revealed the embezzlement far sooner," the report states.

As if to reinforce the grand jury's conclusion, the district's insurance company denied a claim to reimburse it for losses related to the thefts.

In an April 11 letter from a district-hired lawyer to an attorney for The Hartford insurance company cited by the grand jury, it's noted that one reason Hartford denied the claim was because the district failed to do a background check on Dearman when she was hired. A check would have revealed she was already facing charges for embezzling from another employer.

Dearman also took family medical leave from the district to serve jail time for that previous theft, the grand jury found.

Although senior district employees tried to speak to members of the board of trustees about financial irregularities, their warnings weren't heeded, the grand jury report states.

"The trustees put total trust in the Manager to fulfill the mission of the District and seemed oblivious to the business operations and its problems," according to the report.

The grand jury recommends that the board require monthly financial reports from the district manager and take other steps to improve oversight of the district's operations and $6 million annual budget.

It also asks the county's Local Agency Formation Commission, which oversees special tax-funded districts, to reconsider a proposal it rejected in July 2012 to dissolve the mosquito and vector district and transfer its functions to the county's Environmental Health Department.

Gay was out of the office Friday and unavailable to comment about the grand jury report. Assistant Manager Brian Weber, who has been with the district only 10 months, said the agency has put into place all the controls now suggested by the grand jury. It also began requiring background checks and has "taken all possible measures" to protect against future embezzlement, he said.

The scandal was uncovered after one trustee, Betsey Schneider of San Carlos, began to question some of the district's expenses. On Friday, Schneider said she had not read the entire grand jury report but feels its criticisms are spot on.

"It's a shared responsibility. The board did not look into things, they did not challenge anything they heard, we kind of nodded all our heads and accepted what we were told," she said.

The embezzlement resulted in a wake-up call, she said, noting that the board today has many new members.

"This would never happen again," she said.

On Friday, Dearman and Sinipata were scheduled for sentencing, but both cases were continued, according to the district attorney's office.

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