Report I2005-2 Summary - September 2005

Investigations of Improper Activities by State Employees

January 2005 Through June 2005

HIGHLIGHTS

State employees and departments engaged in improper activities, including the following:

Embezzled $132,523 in state funds.
Authorized holiday pay for a contractor's employees, costing the State $57,788 for services it did not receive.
Failed to account for 10,980 hours of union leave time at a cost to the State of $395,256.
Improperly received $5,072 in travel-related costs.
Incurred over $1,000 in additional flight costs with stopovers that did not involve state business.
Directed subordinates to perform work on a personal project while on state time, costing the State nearly $8,000.

RESULTS IN BRIEF

The Bureau of State Audits (bureau), in accordance with the California Whistleblower Protection Act (Whistleblower Act) contained in the California Government Code, beginning with Section 8547, receives and investigates complaints of improper governmental activities. The Whistleblower Act defines an "improper governmental activity" as any action by a state agency or employee during the performance of official duties that violates any state or federal law or regulation; that is economically wasteful; or that involves gross misconduct, incompetence, or inefficiency. The Whistleblower Act authorizes the state auditor to investigate allegations of improper governmental activities and to report publicly on substantiated allegations. To enable state employees and the public to report these activities, the bureau maintains the toll-free Whistleblower Hotline: (800) 952-5665 or (866) 293-8729 (TTY).

If the bureau finds reasonable evidence of improper governmental activity, it confidentially reports the details to the head of the employing agency or to the appropriate appointing authority. The Whistleblower Act requires the employer or appointing authority to notify the bureau of any corrective action taken, including disciplinary action, no later than 30 days after transmittal of the confidential investigative report and monthly thereafter until the corrective action concludes. This report details the results of the 10 investigations that the bureau completed alone or jointly with other state agencies between January 1, 2005, and June 30, 2005, that substantiated complaints. This report also summarizes actions that state entities took as a result of investigations presented here or in earlier bureau reports. Following are examples of the substantiated improper activities and actions the agencies have taken to date.

CALIFORNIA MILITARY DEPARTMENT

A supervisor at the California Military Department (Military Department) used Social Security numbers belonging to former military personnel and others to initiate payments to individuals with names corresponding to those of his family members; he deposited most of these payments into his personal bank account. The supervisor also failed to stop payments to a retired service member who had died and then stole the deceased individual's retirement checks. In total, the supervisor embezzled at least $132,523 in state funds over an eight-year period, including $111,507 from the emergency state active-duty payroll, $12,393 from the Military Department's revolving fund, and $8,623 from the retired state active-duty system.

After we reported our findings to the Military Department, it requested that the California Highway Patrol (CHP) conduct a criminal investigation. The supervisor admitted embezzling state funds when questioned by CHP investigators, who later issued a warrant for the supervisor's arrest.

DEPARTMENT OF HEALTH SERVICES

The Genetic Disease Branch (branch) of the Department of Health Services improperly paid a contractor for holiday time and improperly purchased equipment under contracts for personal services and computer services. The branch authorized payment for 13 holidays to a contractor's workers over a one-year period, costing the State $57,788 for services it did not receive. The branch also circumvented state procurement procedures when it purchased computers, fax machines, and printers totaling $40,698 under service contracts.

DEPARTMENT OF CORRECTIONS

The Department of Corrections (Corrections) failed to adequately account for employee use of union leave time.¹ Corrections charged nearly 56,000 hours against the time bank for hours that union members spent conducting union-related activities between May 2003 and April 2005. However, Corrections did not track the hours available in a time bank composed of leave hours that union members donated. As a result, it released employees to work on union business without knowing whether the time bank had balances sufficient to cover the requests. We identified 10,980 hours, worth $395,256, during the same time period that Corrections failed to charge against the time bank.

DEPARTMENT OF FORESTRY AND FIRE PROTECTION

A Department of Forestry and Fire Protection (CDF) conservation camp manager directed sponsors of inmate work projects to deposit over $12,500 in state funds into accounts with local vendors. In addition, although we did not visit all 39 conservation camps, it is our understanding that this is an accepted practice used by 16 of the 18 camps located in CDF's northern region, even though the practice violates state laws prohibiting holding funds outside of the State Treasury. In addition, the manager and, to a lesser extent, a manager of another conservation camp, mismanaged state funds by failing to document project costs and payments adequately.

EMPLOYMENT DEVELOPMENT DEPARTMENT

In violation of state law, a former executive in the Employment Development Department (EDD) used state resources and state employees to assist him in writing a book for personal purposes. While working at EDD, the executive used his subordinates during regular work hours to edit and review a book he authored for personal purposes. The executive also used his state computer to edit the book, send e-mails to his subordinates about editing the book, and send e-mails to outside parties requesting their review and information on possible book publishers. The time that employees in EDD worked on the book represents approximately $7,930 in state wages.

DEPARTMENT OF CORRECTIONS

Following the direction of her supervisor, a Corrections employee changed the location of her headquarters on her travel claims so that she could receive reimbursements for travel expenses she was not entitled to receive.² However, the supervisor lacked the authority to make such decisions, and we found no documentation in the employee's personnel file indicating that the change was officially approved. As a result, the employee violated state travel regulations and received $5,072 in commute and other travel-related costs that she was not entitled to receive.

UNIVERSITY OF CALIFORNIA, LOS ANGELES

An official at the University of California, Los Angeles (UCLA), arranged seven out-of-state business trips so that she could stop over at locations where she did not have a business purpose. In most instances, the official visited her family residence in the Midwest. Because the official arranged her travel for personal purposes, UCLA paid over $1,000 in additional flight costs that it would not otherwise have incurred.

¹After we completed our investigation, Corrections underwent an organizational change and effective July 1, 2005, is now part of the California Department of Corrections and Rehabilitation and is called Adult Operations and Adult Programs.

²After we completed our investigation, Corrections underwent an organizational change and effective July 1, 2005, is now part of the California Department of Corrections and Rehabilitation and is called Adult Operations and Adult Programs.