The Humboldt County Civil
Grand Jury has interjected itself directly into the county's auditor-controller
race.
Less than a week before
Election Day, the Humboldt County Civil Grand Jury poured gasoline on what was
already considered to be the county’s most contentious political race
yesterday, issuing a largely scathing report stating incumbent Auditor-Controller Karen Paz
Dominguez’s office’s failure to file timely state and federal reports has
already caused the county to lose more than $2.3 million in “non-recoverable
funds,” while placing more than $9.7 million in funding at “significant risk.”
The move of releasing such a report mere days before its subject is up for
re-election drew immediately questions, prompting the Grand Jury foreperson to
issue a follow-up press release today clarifying that the report is the result
of months of interviews and “exhaustive research” and was simply released when
done and approved, with the Grand Jury’s actions and decision making at no
point “informed by politics.”
In response, acting in her
official capacity as auditor-controller but with her campaign videographer set
up before her on the courthouse steps (his computer plugged into the generator
powering the speaker at her lectern), Paz Dominguez held an hour-long press
conference this afternoon, answering “any and all” questions, including some
about how voters should view this report. She issued a full-throated denial of
essentially all aspects of the report that were critical of her office, saying
she is aware of no funds lost by the county due to delinquent financial
reports, and that if any funds have been lost, there would be subsequent
opportunities for seeking reimbursement. As Paz Dominguez spoke, flanked by the
county’s assistant auditor-controller, First District Supervisor Rex Bohn, with
whom Paz Dominguez has repeatedly butted heads over the years through a series
of cross allegations, sat on the courthouse steps looking on.
Immediately after Paz
Dominguez finished the press conference, a process server officially served her
with the county’s cross complaint civil lawsuit, which the board directed
county counsel to file May 10, while also directing the county’s lawyer not to
defend Paz Dominguez in a lawsuit brought by the California Attorney General
against both her and the county over delinquent fiscal report filings with the
state. (The county's cross-complaint reportedly makes the same allegations as
the state's, while also accusing Paz Dominguez of misappropriating public funds
when she paid a consultant for coaching services.)
There’s a lot to unpack —
and Paz Dominguez has provided the press with scores of documents she says
refute assertions in the Grand Jury report, which we have yet to sift through —
but we’re going to try to give a brief rundown of the basics we know at this
point, with both the Grand Jury’s published report and a version annotated by
Paz Dominguez, disputing various claims, at the bottom of this post.
The Report
Grand Jury Foreperson Jim
Glover described the investigative report as one of the most “exhaustive” in
“recent years,” saying it follows “dozens of hours of interviews and
inquiries.” Titled “Distrust, Disagreements, Dysfunction,” the report looks at
the county’s notoriously troubled fiscal operations, finding that while Paz
Dominguez stepped into an office rife with challenges and inadequacies, her
office’s poor communication and interdepartmental distrust have marred her
tenure, leading directly to missed reporting deadlines and the loss of county,
school district and city funds. Exacerbating and enabling these issues, the
Grand Jury found, the Humboldt County Board of Supervisors failed to intervene
in a timely manner to find solutions and effectively exercise its supervisory
duties.
“County departments and
the board are at continual loggerheads with the auditor-controller because of
ineffective communication and procedural changes,” the report states. “No
consensus has been reached to resolve these issues. County services are in jeopardy
due to overall financial dysfunction exacerbated by a breakdown of
interdepartmental trust and communication on the part of the
auditor-controller.”
The report makes clear
there are deep rooted issues within Humboldt County’s fiscal systems and points
to some significant improvements made, but repeatedly identifies instances in
which “deficiencies in the performance of the auditor-controller” have
exacerbated those issues, leading to missed reporting deadlines and errors that
cost the county and other local government entities hundreds of thousands of
dollars.
More specifically, the
report states the Grand Jury received “verifiable information” that the county
has “permanently lost” funds from a variety of federal and state reimbursements
and grants due to its outstanding and now long overdue 2019-2020 fiscal year
single audit. Additionally, the report states the county has paid penalties and
fees to the IRS for late payroll tax reports and payments, lost interest
apportionments and credit card late fees, noting the county employees’ credit
card account was at one point suspended when payment was 96 days overdue.
Additionally, local school
districts and other entities have been impacted, according to the report. It
alleges, due to auditor-controller errors, the Fortuna Union High School
District suffered a cash shortage of nearly $200,000, forcing it to obtain
supplemental bond funding. Another alleged error by the auditor-controller’s
office resulted in the Fortuna district, College of the Redwoods and the
Humboldt County Office of Education being collectively underpaid $475,304,
while alleged “regular delays” in the Auditor-Controller Office's transferring
funds from treasury accounts to school and special districts “have put payrolls
at risk.”
Further, the report
alleges that delinquent Single Audits, Financial Transaction Reports and Cost
Allocation Plans have put $9.7 million in state and federal funds at risk for
things like grants for housing residents with disabilities, rural health
clinics, workforce development, Mental Health Services Act funding,
transportation project funding and future interest related to payroll.
An Alarming and Unusual Disclosure
The report also begins
with a potentially alarming disclosure, noting it made an “informal inquiry
into allegations of willful misconduct by the auditor-controller” and, late in
its investigation as this report was approaching completion, found “sufficient
information that would require” it to conduct a formal investigation of those
allegations. The Grand Jury will continue that line of inquiry, the report
notes, and “can consider its legal options, up to and including an accusation.”
The accusation referenced
would fall under California Government Sections 3060 through 3075, which
provide that a civil grand jury can file a formal accusation of “willful or
corrupt misconduct” against an elected official and seek their removal from
office. Such an accusation would be delivered to the district attorney and, if
the elected official denies the misconduct alleged, tried in superior court
before a jury, “conducted in all respects in the same manner” as a criminal
case, with a conviction resulting in the official’s removal from office.
It’s an extraordinarily
rare action. And mention of such an inquiry by the Civil Grand Jury — whose
investigations and and processes are legally shrouded in secrecy — is in and of
itself extraordinary.
Paz Dominguez’s Response
The auditor-controller was
unequivocal in disputing the report’s findings, saying she “has seen no
evidence” the county has lost any funds and that if anything has been lost, it
can likely be reimbursed. Further, she asserted that there is no proof that
hundreds of thousands of dollars in late fees and penalties lost are
unrecoverable, and definitely no evidence that an additional close to $10
million is at risk.
She classified much of the
report's contents as “hearsay,” saying they are the same talking points that
have been repeated frequently by some members of the Board of Supervisors and
appointed officials who have long pushed back against the Auditor-Controller’s
Office asserting its independent authority.
“What I will say is a
report is only as good as the information provided to its authors,” Paz
Dominguez said, arguing grand jurors seem to have only interviewed the same
people who have been vocal in warning of lost funds and laying the blame for
blown deadlines at her office’s feet.
Asked during the press
conference why so many have pointed blame at her office — the questioner
pointing to no-confidence votes from the Board of Supervisors and the Fortuna
Union High School District, a critical letter signed by 13 of the county’s 19
department heads, the state lawsuit and now the Grand Jury — Paz Dominguez said
the answers are different for each. Some, she said, probably think they are
doing the right thing but have been lied to, explaining, “I hate to say it, but
if you repeat a lie 14 times, some people are going to believe it.” Others, she
said, are motivated by vendetta.
She charged that her office
is making constant improvements. It is functioning better than ever before,
leading to improved morale and performance, saying that payroll, “torn and
tattered” when it was returned to her office, is now running smooth. The
failure to timely closely books for previous fiscal years, she said, is partly
the product of not wanting to harm special districts, schools and county
departments, saying arbitrarily closing the books before receiving all
appropriate documentation could impact their funding.
She said the biggest
challenge facing her office is staffing level and other departments and outside
entities failing to get it timely documentation needed to perform its various
functions. Among the few findings in the Grand Jury report Paz Dominguez indicated
she agreed with were ones stating the Board of Supervisors should have done
more to intervene and reconcile differences between hers and other departments,
and that the county administrative officer should make sure all other
departments timely file the documentation she needs to meet financial reporting
deadlines.
“That’s perhaps the most
important one,” Paz Dominquez said of the CAO.
Paz Dominguez also said
she was only interviewed once by the Grand Jury at the investigation's start in
August, then had a follow-up meeting May 26 after the report was complete.
A Rocky Rollout
It seems clear something
was amiss in the Grand Jury’s rollout of this report. According to numerous
sources, including Paz Dominguez, the Grand Jury had informed some county
officials earlier this week that the report would be distributed to local media
at noon today and provided them an advance copy for review, prompting Paz
Dominguez to send out an invitation Wednesday night to a press conference
scheduled for 2 p.m. at the Humboldt County Courthouse called “in anticipation
of a pending headline event.”
But the report was then
posted to the Humboldt County Civil Grand Jury’s website sometime early
Thursday. Asked about the report Thursday afternoon, Paz Dominguez said she was
directed not to discuss it until the grand jury’s anticipated release time of
noon today, though she said she was “aware the [County Administrative Office]
published it early.”
Asked how she knew it was
the CAO that published the report “early,” Paz Dominguez said she knew because
the “grand jury just told” her, saying she was told the “webmaster posted the
report early” before noting the county’s IT department falls within the CAO’s
office.
The Journal then inquired
with the CAO’s office, which said it was unaware of any instructions regarding
the posting of the report. The Journal then obtained the Grand Jury’s email
request to IT. Sent from Glover to the county webmaster email at 6:46 a.m.
Thursday, the request, in its entirety, reads as follows: “Good Morning! Please
post the attached report to the Grand Jury Reports listing on our webpage. The
title of this report is: Distrust, Disagreements, Dysfunction. Thank you, Jim
Glover, Foreperson.”
No further direction — or
embargoed release date and time — seems to have been provided.
It's also worth noting
that the 2017-2018 Civil Grand Jury announced a new policy governing its
release of reports in June election years under which no reports would be
released from the second Monday of February until after Election Day. Contacted
about the policy, Glover told the Journal that was "of great to concern to
us many months ago" but the county has a different presiding judge now and
is producing reports whenever they are cleared for release without restriction.
(It was Judge Joyce Heinrichs then, and Judge Greg Elvine Kreis has since taken
over the role.)
"That might change in
the future with yet a different judge," Glover wrote, "but those are
the guidelines we are operating under presently."
The Grand Jury’s Methodology
According to its website,
the 2021-2022 Humboldt County Civil Grand Jury comprises 18 members (see the
full list at the bottom of this post). According to prior Journal coverage,
when the Grand Jury convenes each year, it splits into a half-dozen or so
committees in varying subject areas, and then sifts through complaints and
requirements to determine what inquiries and investigations will be undertaken.
The report notes the
underlying investigation in this case was launched after the Grand Jury
received “complaints of financial inefficiencies, ineffective communication and
a lack of cooperation with various governmental entities on the part of the
Auditor-Controller and the Auditor-Controller’s Office. (The Journal first
reported the existence of the investigation in November, after Fortuna Union
High School District Superintendent Glen Senestraro told his Board of Trustees
the Grand Jury was looking into allegations of “deficiencies” and “poor
service” after the board voted in September to send in an official complaint.)
According to the report,
the Grand Jury’s investigation included interviews with “complainants,” elected
county officials, county department heads and county fiscal managers.
Additionally, the Grand Jury states it reviewed documents provided by witnesses,
including emails and financial reports, pertinent state and federal statutes,
prior financial reports and correspondences from the state Controller’s Office,
Attorney General’s Office and Department of Finances. Additionally, the report
states the Grand Jury reviewed Board of Supervisors meetings and “conducted
internet research related to generally accepted accounting principles.”
According to past Journal
reporting, a Grand Jury committee’s report undergoes three layers of review
before it is released. First, the Humboldt County counsel looks it over to
assess liability concerns — not for the county as a whole but for the jury
itself. Then, the Humboldt County Superior Court’s presiding judge is supposed
to give it another review through the same lens or delegate the task to another
judge. With the legal feedback in hand, the report then comes back to the full
Grand Jury for review and a vote on whether to publish it, with 12 votes needed
to move forward with releasing a report publicly.
In his email to the media
announcing release of the report, Glover noted that “due to the complexity of
this report,” the report took longer to complete than most.
“It is the practice of any
Grand Jury for reports to be released as soon as they are completed and
authorized by the court, thus today’s release,” he concluded.
Conclusion
The Humboldt County Civil
Grand Jury has taken the unusual step of releasing a relatively scathing report
days prior to the election, including in it an ominous and even more unusual
mention of an ongoing investigation. Paz Dominguez, the subject of said
investigation, meanwhile, has basically maintained this is the result of the
echo chamber created by her detractors, who are generally just pushing back on
the Auditor-Controller’s Office for at long last doing its job. We’ll continue
to dig through the documentation Paz Dominguez has provided, and pledges to
continue to provide.
In the meantime, find the
Grand Jury’s full report here, Paz Dominguez’s annotated version here and a
folder containing the referenced documents the auditor-controller has released
here.
Members of the 2021-2022
Humboldt County Civil Grand Jury:
Eugene Biggins
Stephanie Boers
Wendy Butler
Katherine Eagan
Kelly Eckberg
Kevin (Tuck) Engelman
Jim Glover
Michele Fell
Frederick Hebert
Victoria Joyce
Robert Kapus
Lyn Klay
Jim Knerl
Shannon Koczera
Linda Kuiper
Gabrielle Long
Jay Molofsky
Bob Phibbs
North Coast Journal
Thadeus Greenson
June 3, 2022
No comments:
Post a Comment