The State Worker

Whistleblower says California fired him for revealing nepotism at tax agency. Now he’s suing

A California government executive who funneled information about nepotism and wasteful spending to auditors is suing his former employer,alleging he was fired because he cooperated with the investigations that prompted the disbanding of a 138-year-old state tax agency.

Mark DeSio, the former communications director for the Board of Equalization, filed his lawsuit this week in Sacramento Superior Court. He’s seeking compensation for his lost wages and punitive damages.

DeSio was a key source for an audit that found about 20 percent of the Board of Equalization’s employees had a relative on staff and that family connections appeared to help an assemblyman’s daughter and the husband of an agency employee land jobs in its public information office.

He also participated in a Department of Finance audit that found elected Board of Equalization members misusing state workers for events that appeared to be political in nature, such as parking cars for a women’s empowerment conference in Orange County hosted by Board of Equalization member Diane Harkey.

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DeSio was not the only whistleblower at the Board of Equalization. Tension built for years between political appointees at the agency and civil servants, which contributed to news stories about questionable spending and calls for audits from the Legislature. The Bee in 2016, for instance, reported that the agency spent $130,000 on furniture for board member Jerome Horton’s office.

Other reports in Bloomberg BNA and The Los Angeles Times pointed to so-called behested payments in which California businesses contributed to charities favored by the Board of Equalization members who at the time held sway over their disputes with state tax collectors.

DeSio’s revelations came at a critical moment, though,because they fueled the final investigations that prompted the Legislature in June 2017 to strip the Board of Equalization of almost all its power and staff.

That vote led the state to create the new California Department of Tax and Fee Administration to collect sales and special taxes, and the Office of Tax Appeals to settle disputes between taxpayers and tax collectors. The Board of Equalization still exists, but with a narrow mandate.

DeSio was dismissed after the breakup from the California Department of Tax and Fee Administration. In his lawsuit, he alleges that colleagues mistreated him and his staff members because they knew he participated in the investigations. DeSio was an at-will employee appointed by Gov. Jerry Brown’s administration and the department did not have to give him a reason when it dismissed him.

“California’s State Board of Equalization and its successor, the California Department of Tax and Fee Administration, were infected with staff members who, among other things, improperly hired unqualified family and friends, misused state resources for personal gain, and repeatedly tried to cover up these betrayals of the public trust and retaliated against those brave enough to shine a light on these illicit activities,” DeSio’s lawsuit reads. He’s represented by Lawrance Bohm and Erik Roper of Bohm Law Group.

“When one brave, ethical deputy director began reporting these improper and illegal activities to government agencies like the Department of Finance and the Department of Justice, first his colleagues ostracized him, and then they retaliated against him by terminating his employment,” the lawsuit continues.

Brown in 2016 called for a Department of Justice investigation into the Board of Equalization. DeSio in his lawsuit said he met with justice department agents and gave information to them.

The Attorney General’s office has not disclosed any of its findings from its inquiry. In April, it rejected a Public Records Act request from The Sacramento Bee seeking its report. The justice department cited an attorney-client privilege exemption in the state’s disclosure law. The governor is its client.

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