Capitol Alert

Lobster tail and fine wine: How California county fair workers misused taxpayer money

State Auditor Elaine Howle (AP Photo/Rich Pedroncelli)
State Auditor Elaine Howle (AP Photo/Rich Pedroncelli) AP

California county fair employees used their employer’s credit cards to spend tens of thousands of dollars on unauthorized travel, lavish meals and alcohol, according to a newly released report from the State Auditor’s Office.

The report, titled “Gross Mismanagement Led to the Misuse of State Resources and Multiple Violations of State Laws” details a list of violations committed by employees of a district agricultural association, which is an independently funded operation overseen by the California Department of Food and Agriculture.

The auditor’s report did not name the district agricultural association where state money was misused. A spokeswoman for the auditor’s office said that the association name was being withheld to protect the anonymity of whistleblowers.

“We can’t provide the specific district agricultural association because doing so, would essentially disclose the identity of some of individuals we discuss,” said spokeswoman Margarita Fernandez.

California has 54 district agricultural associations that organize fairs and other special events. They are overseen by the California Department of Food and Agriculture and historically were supported by the state general fund. That funding ended in 2011, but they continue to use state-owned equipment and resources.

“We found that the association’s chief executive officer and maintenance supervisor grossly mismanaged state resources and neglected their duties to ensure that employees comply with state laws governing supervision and time and attendance reporting,” California State Auditor Elaine Howle wrote in her introduction to the report.

“Examples of the improper acts we found include employees taking home state property and misusing state resources, drinking alcohol on state grounds, a lack of critical internal controls to prevent inappropriate and excessive travel-related purchases, unnecessary charges for interest and late fees, and a waste of state funds.”

The audit of association finances from 2016 to 2018 found more than $318,000 in financial discrepancies, including more than $132,000 worth of credit card purchases with no supporting receipts, more than $30,000 for excessive and illegal out-of-state travel expenses, nearly $2,000 in “wasteful tips that far exceeded the maximum allowable reimbursement rate,” and more than $1,200 in “inappropriate purchases of alcohol.”

Association employees also misused credit cards to pay for expensive, and boozy, dinners, the report showed.

A receipt from one such dinner showed the association credit card paying $400 for five butcher’s cuts, $125 for a lobster surf dinner, $95 for a lobster tail, and more than $600 in alcohol, including one $96 bottle of wine.

In addition, the report found that several association maintenance employees worked side jobs during their regular work shift, sometimes with the direct knowledge of the maintenance supervisor, unnamed in the report.

In one example, cited in the report as “particularly egregious,” an employee designated as “Employee A” would show up to work to punch in, use a state vehicle to go work a side job, and then show up at the end of the day to punch out.

The employee did so with management’s blessing, according to the report.

The report also found that the maintenance supervisor routinely used a state-owned vehicle to commute from home to work, and for personal business. When asked about it, the supervisor said that he took the truck home “at most two times a week” to pick up work materials.

“However, based on our observations and witness statements, he used the state-owned vehicle nearly every day as if it were his personal truck,” the report found. “Therefore, the evidence suggests that the maintenance supervisor was dishonest about the frequency with which he used the state-owned vehicle.”

The supervisor also allowed an employee with a DUI conviction requiring an interlock ignition device to use a state-owned truck as a personal vehicle.

The audit contends that the CEO and the association’s nine-member governing board failed to provide proper oversight of association employees, “and in some instances, they either directly engaged in or approved of improper activities.”

The audit’s recommendations included calling for disciplinary action against the CEO, maintenance supervisor and employees identified as engaging in “improper governmental activities.”

The audit also recommended that the association recoup any money spent by employees on inappropriate purchases, and to recoup the cost of the maintenance supervisor’s regular daily use of a state-owned vehicle.

The report recommended that the CDFA “consider exercising its authority to assume any or all rights, duties, and powers of the board of the association.”

The CDFA, in response, said it was “premature” to assume authority over the association, but that the CEO was required to attend a training course and that the CEO and board would be apprised of CDFA policies, procedures, accounting guidelines, and online training resources, as well as requirements pertaining to in- and out-of-state travel.

The association, in its response, stated that a 2011 reduction in staffing left the workforce “’stretched,’ and it could no longer provide adequate training about policies and procedures.”

The association declined to discipline the CEO but said that employees would receive discipline “with guidance from CDFA human resources staff.”

The association said it was working with the CEO and board “to come up with a fair and equitable method for determining the amount and manner of reimbursement to the state for any inappropriate expenditures.”

The full report can be read here.

Related stories from Sacramento Bee