CSA
Summary
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Investigations
of Improper
Activities by State
Employees:
March 2002 Through July 2002
November 2002
I2002-2
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November 13, 2002 Investigative Report I2002-2
The Governor of California
President pro Tempore of the Senate
Speaker of the Assembly
State Capitol
Sacramento, California 95814
Dear Governor and Legislative Leaders:
Pursuant to the California Whistleblower Protection Act, the Bureau of State Audits
presents its investigative report summarizing investigations of improper governmental
activity completed from March 2002 through July 2002.
Respectfully submitted,
ELAINE M. HOWLE
State Auditor
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CONTENTS
Summary 1
Chapter 1
California Conservation Corps:
Abuse of Power, Personal Use of State Funds, and
Questionable Overtime 5
Chapter 2
California Department of Forestry and
Fire Protection: Economically Wasteful Decisions 21
Chapter 3
Veterans Home of California, Yountville:
Improper Billings to Medicare 31
Chapter 4
Governor’s Office of Emergency Services:
Excessive Wages, Overtime, and Travel Costs 37
Chapter 5
California State University, Northridge:
Unauthorized Bank Account 45
Chapter 6
Department of General Services, Office of State
Publishing: Misuse of State Equipment and
Inadequate Documentation of Overtime 49
Chapter 7
Update on Previously Reported Issues 53
Department of Transportation, Case I980141
Appendix A
Activity Report 57
Appendix B
State Laws, Regulations, and Policies 61
Appendix C
Incidents Uncovered by Other Agencies 67
Index 71
California State Auditor Investigative Report I2002-2 1
SUMMARY
RESULTS IN BRIEF
The Bureau of State Audits (bureau), in accordance
with the California Whistleblower Protection Act (act)
contained in the California Government Code, beginning
Investigative Highlights . . . with Section 8547, receives and investigates complaints of
improper governmental activities. The act defines “improper
State employees engaged in
governmental activity” as any action by a state agency or
improper activities, including
employee during the performance of official duties that violates
the following:
any state or federal law or regulation; that is economically
þ Verbally and physically wasteful; or that involves gross misconduct, incompetence, or
abused employees.
inefficiency. To enable state employees and the public to report
þ Filed an improper claim these activities, the bureau maintains the toll-free Whistleblower
to pay a vendor $515 Hotline (hotline). The hotline number is (800) 952-5665.
in state money to repair
a computer that was
If the bureau finds reasonable evidence of improper
the employee’s personal
property. governmental activity, it confidentially reports the details
to the head of the employing agency or to the appropriate
þ Received credit for
appointing authority. The employer or appointing authority
questionable overtime
is required to notify the bureau of any corrective action
claims.
taken, including disciplinary action, no later than 30 days
þ Made economically after transmittal of the confidential investigative report and
wasteful decisions.
monthly thereafter until the corrective action concludes.
þ Improperly billed Medicare
$55,000 for visits that This report details the results of the six investigations
the staff physician did not
completed by the bureau and other state agencies on our
make.
behalf between March 1, 2002, and July 31, 2002, that
þ Continued to incur involved substantiated complaints. Following are the
excessive overtime costs by substantiated improper activities and actions taken to date.
claiming commute time as
time worked.
þ Opened an unauthorized
CALIFORNIA CONSERVATION CORPS
bank account and
commingled state and
A manager verbally and physically abused employees.
personal funds.
Among other incidents, the manager cursed at and pushed
þ Misused state equipment
one subordinate and engaged in a physical altercation with
for personal projects.
another employee. The same manager filed an improper
claim to pay a vendor $515 in state money for repairs to
a computer that was his personal property. The California
Conservation Corps took steps to fire the manager, but he
retired before the termination could take effect. In addition,
California State Auditor Investigative Report I2002-2 1
a supervisor received credit for questionable overtime claims
she submitted to the manager after he had retired from state
service and no longer was authorized to approve such claims.
CALIFORNIA DEPARTMENT OF FORESTRY AND
FIRE PROTECTION
California Department of Forestry and Fire Protection (CDF)
officials made economically wasteful decisions when they
allowed an executive to obtain a pilot’s license at CDF’s expense
and to fly CDF aircraft. The cost to CDF for the executive’s flight
training was approximately $9,151. Based on the billing rate
CDF charges to other entities for the use of its aircraft, the cost
of the executive’s nontraining flight hours was $78,116. The
executive retired from state service before we completed our
investigation.
VETERANS HOME OF CALIFORNIA, YOUNTVILLE
The Veterans Home of California, Yountville (home), made
improper billings to Medicare. The information system
the home uses to bill insurers showed that one doctor
saw patients 2,614 times over a two-year period, but we
concluded that the doctor did not see the patient in question
in 1,792 of those visits. Further, as of January 22, 2002,
the home had billed Medicare $131,000 for 1,488 of these
visits, but $55,000 was for 887 visits that we concluded the
doctor did not make. The Department of Veterans Affairs
(DVA) reports that it is actively working to upgrade its billing
system and is working with its billing agent to resolve any
charges billed and reimbursed incorrectly. Further, the DVA
states that it will ensure it obtains the signature of the
attending physician/technician to maintain proper practices
and Medicare compliance.
GOVERNOR’S OFFICE OF EMERGENCY SERVICES
In April 2000 we reported that poor supervision and
inadequate administrative controls enabled employees
in the fire and rescue branch of the Governor’s Office of
Emergency Services (OES) to commit various improprieties,
including claiming excessive overtime and travel costs. One
of the employees has continued to incur excessive amounts
2 California State Auditor Investigative Report I2002-2 California State Auditor Investigative Report I2002-2 3
of overtime. During fiscal year 1999–2000, the employee
received $35,743 (36 percent of his wages) for overtime, and
he received $40,523 (38 percent of his wages) for overtime
in fiscal year 2000–01. The employee incurred this overtime
in part because OES permitted him to claim his commute as
work time even though the employee lived at least two hours
from his assigned work area. This issue was brought to the
attention of OES in 1998 and again in 2000, but it continued
to allow him to claim his commute as work time. Recently,
OES reported that the employee has been reassigned to
a work area where he lives. OES also reported that it has
established administrative controls concerning overtime
authorization and that it has counseled all branch employees
that nonemergency overtime will not be incurred without
prior authorization.
CALIFORNIA STATE UNIVERSITY, NORTHRIDGE
The director of a research center at California State University,
Northridge (CSUN), opened an unauthorized bank account in
connection with his administration of the center, commingled
personal and university funds, and paid personal expenses from
the account. Checks from the account totaling $9,520 were
written directly to the director or to cash, or were used to pay for
the director’s personal expenses. CSUN closed the center.
DEPARTMENT OF GENERAL SERVICES
Employees misused state equipment and may have abused
overtime and failed to charge leave balances. All allegations
could not be evaluated properly due to a lack of timely
and/or specific information and a lack of documentation.
The Department of General Services (DGS) took adverse
action against an employee who misused state computers
to access sexually suggestive Web sites and said it will take
steps to improve controls over the use of state equipment.
In addition, the DGS agreed to implement a formal overtime
system.
This report also summarizes actions taken by state entities as a
result of investigations presented here or reported previously by
the bureau.
2 California State Auditor Investigative Report I2002-2 California State Auditor Investigative Report I2002-2 3
Appendix A contains statistics on the complaints received by
the bureau from March 1, 2002, through July 31, 2002, and
summarizes our actions on those and other complaints pending
as of July 31, 2002. It also provides information on the cost of
improper activities substantiated since 1993 and the corrective
actions taken as a result of our investigations.
Appendix B details the laws, regulations, and policies that
govern the improper activities discussed in this report.
Appendix C provides information on actual or suspected
acts of fraud, theft, or other irregularities identified by other
state entities. Section 20080 of the State Administrative
Manual requires state agencies to notify the bureau and the
Department of Finance of actual or suspected acts. It is our
intention to inform the public of the State’s awareness of such
activities and to publicize that agencies are acting against
wrongdoers and working to prevent improper activities.
See the Index for an alphabetical listing of all agencies addressed
in this report. n
4 California State Auditor Investigative Report I2002-2 California State Auditor Investigative Report I2002-2 5
CHAPTER 1
California Conservation Corps: Abuse
of Power, Personal Use of State
Funds, and Questionable Overtime
ALLEGATION I990174
A manager at the California Conservation Corps (CCC)
verbally and physically abused employees and used state
funds for personal gain.
RESULTS AND METHOD OF INVESTIGATION
We investigated and substantiated these allegations and other
improper activities. We found that the manager mistreated and
intimidated employees for more than a decade. Initially, most
incidents involved verbal abuse, such as inappropriate yelling
or cursing at employees. The manager later resorted to physical
abuse as well. Even though the CCC knew for years of the
manager’s verbal abuse of employees, we found little evidence
that it had taken action against the manager until he began
physically assaulting employees.
In one instance, an investigator hired by the CCC substantiated
a complaint that the manager had cursed at and pushed
a subordinate. During the time the external investigation
began, the CCC conducted its own internal investigation
and substantiated other allegations involving the manager.
The CCC disciplined the manager, but his abusive treatment
continued. Approximately two months after it completed its
internal investigation of the manager, the CCC determined
that he had engaged in yet another physical altercation with an
employee. As a result, the CCC took steps to fire the manager,
but the manager retired from state service before his termination
became effective.
In addition, the manager filed an improper claim to pay a
vendor $515 in state money for repairs to his personal computer.
Furthermore, a supervisor received credit in the form of
compensatory time off for questionable overtime claims she
submitted to the manager for his approval months after he
had retired from state service and no longer was authorized
4 California State Auditor Investigative Report I2002-2 California State Auditor Investigative Report I2002-2 5
California Conservation Corps
to provide such approval. We found that many documents
she provided did not sufficiently support her overtime claims,
contained erroneous information, or included claims for
overtime that she was not entitled to receive.
To investigate the allegations, we reviewed grievance and
complaint files maintained by the CCC and documents
related to the CCC’s internal and external investigations of
the manager. We also reviewed applicable state laws and the
CCC’s policies pertaining to violence in the workplace, injury
and illness prevention, accounting procedures, and travel. In
addition, we reviewed federal and state guidelines regarding
workplace violence issues. Finally, we interviewed the manager
and individuals who knew him or had witnessed his interaction
with employees. After interviewing the manager and other
individuals who provided important information verbally, we
gave them a written summary of their statements and asked
them to make any necessary changes. We also requested that
they sign the statements under penalty of perjury to ensure
their accuracy. The manager and a supervisor, identified in this
report as supervisor 1, refused to sign their statements. Although
we report our understanding of what they told us, we have less
confidence in the accuracy of our understanding because of their
unwillingness to confirm these statements and to certify them
under penalty of perjury.
BACKGROUND
The CCC’s mission is to engage young men and women,
primarily between 18 and 23 years of age, in meaningful work,
public service, and educational activities that assist them
in becoming more responsible citizens while protecting
and enhancing the State’s environment, human resources,
and communities. In addition to performing conservation
work such as planting trees, clearing streams, building trails,
developing parks, working on energy conservation projects,
making forest improvements, assisting in plant nursery
operations, and restoring wildlife habitat, the CCC responds
to emergencies caused by fires, floods, earthquakes, and other
natural disasters.
At the time of the incidents in this report, the CCC’s
organizational structure consisted of 11 service districts that
include 16 residential centers and more than 40 nonresidential
satellite facilities throughout the State. The manager cited in
6 California State Auditor Investigative Report I2002-2 California State Auditor Investigative Report I2002-2 7
California Conservation Corps
this report oversaw the operations of one of the CCC’s service
districts and was responsible for the development and well-being
of employees under his supervision as well as for promoting and
maintaining a positive living and working environment.
THE MANAGER INTIMIDATED AND MISTREATED
EMPLOYEES
The manager mistreated certain employees and, in the course
of doing so, violated provisions of the CCC’s Violence in the
Workplace Protection Plan (workplace protection plan).1 The
purpose of the workplace protection plan is to express clearly
and emphatically the CCC’s “zero tolerance” philosophy
by implementing policies and procedures for dealing with
acts or potential acts of violence in the workplace.2 Every
Despite the fact that CCC employee is responsible for helping to maintain a safe working
knew of the manager’s environment by following the policies and procedures outlined
behavior, it did not do in the workplace protection plan. In addition, the workplace
enough to stop or correct protection plan states that the CCC will not tolerate acts of
it until after it learned violence committed by or against employees or members of
he had begun to assault the public while on state property or while conducting state
subordinates physically. business at other locations. Such actions are grounds for
immediate disciplinary action and may lead to dismissal. The
workplace protection plan defines workplace violence as an act
or behavior that is physically assaultive; is intensely focused on
a grudge, grievance, or romantic interest in another person; is
communicated or reasonably perceived as menacing or as being
a threat to harm or endanger the safety of another individual;
involves destroying property or throwing objects in a manner
reasonably perceived to be threatening; or is a communicated
or reasonably perceived threat to destroy property. In addition,
federal guidelines define workplace violence as including abuse
of authority, intimidating or harassing behavior, and threats. In
spite of these guidelines, and despite the fact that the CCC knew
of the manager’s intimidating approach, it did not do enough
to stop or correct his behavior until after it learned that he had
begun to assault subordinates physically.
1 For the purposes of this report, references to employees include individuals who
hold the title corpsmember, special corpsmember, or individuals who are civil
service employees.
2 For a more detailed description of the laws, regulations, and policies governing activities
discussed in this chapter, see Appendix B.
6 California State Auditor Investigative Report I2002-2 California State Auditor Investigative Report I2002-2 7
California Conservation Corps
THE MANAGER HAD A HISTORY OF INTIMIDATION
During our review of employee grievances and complaints filed
against the manager, we found several examples that revealed
the manager’s confrontational and authoritative style. As Table 1
shows, these incidents cover approximately 13 years before the
manager abruptly retired in December 1999. We describe these
incidents in more detail later in the report.
TABLE 1
Grievances and Complaints Filed Against the Manager, 1986 to 1999
Incident Date of Incident Allegation Action Taken
1 Approximately May 1986 Insubordination, CCC ordered a suspension without pay for five working
to May 1987 discourteous treatment, days.
willful disobedience
2 November 23, 1993* Harassment: yelled and No action noted.
screamed at an employee
3 December 15, 1993* Threatened an employee No action noted.
4 Various dates, Discrimination, created a State Personnel Board investigated but did not
approximately April 1995 hostile work environment, substantiate the charge of discrimination. It did
to January 1996 yelled and cursed at an find that the manager engaged in unprofessional
employee (employee A) in behavior and that the behavior created a hostile work
front of peers environment.
No action on investigative findings noted.
5 November 25, 1998 Intimidated an employee No action noted. However, a CCC personnel analyst
(employee B), yelled at her recommended to the personnel manager that the
union representative manager be strongly encouraged to participate in
counseling for anger management.
6 April 13, 1999 Physical assault: pushed CCC hired an external investigator to investigate
and cursed at an employee allegations; the investigation substantiated the
(employee C) allegations. These findings led to disciplinary action as
discussed under incident 8.
7 May, 1999 Discourteous treatment, CCC initiated an internal investigation sometime in or
failed to provide clear after June 1999; the investigation substantiated the
instructions to an charges. These findings led to disciplinary action as
employee (employee D) discussed under incident 8.
8 August 25, 1999 Discourteous treatment, Included allegations in ongoing internal investigation.
yelled at an employee After external and internal investigations substantiated
(employee E) various allegations, the CCC ordered a salary reduction
equivalent to a 10-day suspension and participation
in anger management and conflict resolution classes,
and it made a management referral to the employee
assistance program on the manager’s behalf.
9 December 8, 1999 Physical assault: struck an CCC initiated an internal investigation; on
employee (employee F) December 21, 1999, it notified the manager
that he was on paid administrative leave
effective December 24, 1999, until his
January 13, 2000, dismissal date; the manager
retired December 30, 1999, before his scheduled
termination date.
*Available documentation did not specify an incident date. These dates represent the date the employee filed his or her complaint.
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California Conservation Corps
As shown in the table, more than 13 years before the manager
separated from the State after his physical altercation with an
employee on December 8, 1999, the CCC investigated and
suspended the manager without pay for five working days effec-
tive June 1, 1987, for insubordination, discourteous treatment,
and willful disobedience. Specifically, on May 14, 1986, when a
former CCC executive attempted to discuss several issues with
the manager, the manager became rude and noncommunicative.
He also made disrespectful comments to the executive. Later, on
April 17, 1987, on behalf of the executive, an employee relayed
instructions to the manager on how to handle a particular issue,
but the manager repeatedly and adamantly told the employee
that he would not follow the executive’s orders. On or about
May 1, 1987, the executive specifically asked the manager how he
intended to handle the matter, but even after repeated inquiries
the manager flatly refused to answer the executive’s questions.
For the next six years, we were not able to locate any grievances
or complaints filed against the manager. Some of this may be
due to the fact that he resigned from the CCC effective on
December 31, 1990, and did not return until January 21, 1993.
Not long after his reinstatement, there is some indication that
the manager continued his confrontational, aggressive style.
One complaint, filed on November 23, 1993, charged that the
manager’s constant yelling and screaming made the workplace
unbearable for several employees. On December 15, 1993,
another employee alleged that the manager made what could be
construed as a threat. We were unable to locate any additional
documentation related to these complaints or to determine
whether the CCC took any action.
When we asked the manager about these incidents, he told us
that he remembered the incident involving the executive in
1987, but said that it started when the executive began pointing
his finger at him. The manager also said that, although he recalls
not discussing or answering some of the executive’s questions,
he did not recall the executive ever asking anything specific of
The manager’s supervisor him. Regarding the two complaints filed in 1993, the manager
wrote in his evaluation said he could not recall receiving any feedback on at least one of
that the manager’s the complaints and that nothing ever materialized from either
“tough love” approach of them.
to addressing concerns
with staff might not be However, there is some indication that the manager’s
appropriate in some supervisor knew that the manager had problems with staff.
instances. In a performance report dated December 22, 1993, his
supervisor wrote that, although the manager’s experience,
8 California State Auditor Investigative Report I2002-2 California State Auditor Investigative Report I2002-2 9
California Conservation Corps
knowledge, and skills were an asset to the CCC, his “tough
love” approach to addressing concerns with staff might
not be appropriate in some instances. Such comments,
and the fact that he specifically addressed the issue of
diplomacy even though this was not a category listed on the
performance report, indicate that the supervisor was aware of
the questionable manner in which the manager sometimes
communicated with and treated employees.
We spoke with the manager’s supervisor, who had known the
manager for approximately 20 years and who had worked
The manager’s supervisor under him at one time. He admitted that he had known that
knew some employees some people were intimidated by the manner in which the
were intimidated manager communicated. Although he said he did not recall
and that complaints any details, the supervisor noted that complaints regarding
against the manager the manager usually involved his aggressive style of verbal
involved his aggressive communication. He stated that he was not aware of any
communication style. incidents of a physical nature between the manager and
employees until July 1999, when the manager admitted to an
external investigator that he had pushed an employee.3 The
supervisor added that he handled problems that arose from
the manager’s method of communicating mainly by having
informal discussions with him.
The performance report mentioned earlier is the only instance
we found in which the supervisor documented his concerns
regarding the manager’s method of communicating with
employees. The supervisor told us that after he completed
this evaluation, he noted considerable improvement in the
manager’s communications with employees. Thus, he did
not feel the need to provide formal written instructions or
training that might help the manager improve his methods
of communicating with employees until sometime in 1999,
when he learned that the manager had been involved in
several disputes with employees. However, we found two other
instances that occurred after the 1993 performance report
and before 1999 in which the manager continued to mistreat
employees but apparently was not disciplined. The following
sections describe these complaints and how they were handled.
3 We discuss this matter later in our report.
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California Conservation Corps
Employee A
On May 9, 1997, the State Personnel Board (personnel board),
on behalf of the CCC, completed an investigation involving
a discrimination complaint filed against the manager by
employee A. Employee A also alleged that the manager,
through his harassing behavior, created a hostile work
environment and that the manager’s supervisor did nothing
to stop the manager’s behavior even after allegedly having
witnessed it firsthand. Specifically, employee A claimed that
the manager yelled and cursed at her in front of coworkers
and peers, made harassing phone calls, and engaged in other
behaviors that established a hostile work environment.
Although the personnel board concluded that the evidence
did not support the employee’s charge of discrimination, it
did determine that many of the comments the manager made
to employee A during meetings were unprofessional and that
his behavior created a hostile environment.
In discussing one particular meeting, the manager’s
supervisor told the personnel board that both the manager
and the employee had engaged in “strong dialogue” and that
the manager had called the employee a liar several times.
He said the manager and the employee typically talked in
“loud voices” and added that it was his opinion that the
manager’s behavior was not uncharacteristic or unreasonable
“compared to his behavior in prior meetings.” Based on his
knowledge of the manager’s past behavior, his supervisor
told the personnel board he did not believe the manager had
taken advantage of employee A, nor did he feel compelled to
intervene. Such comments indicate that the supervisor not
Although the State only knew about the manager’s behavior but also chose to
Personnel Board accept it even though it appears to violate the CCC’s “zero-
reported instances of tolerance” policy for violence, threats, harassment, and
unprofessional conduct intimidation in the workplace.
and suggested that it
address these issues, the Furthermore, even though the personnel board cited instances
CCC failed to discuss of unprofessional conduct and suggested that the CCC address
them with the manager these issues to prevent future allegations of discrimination,
and his supervisor. the CCC apparently never informed the manager about all the
personnel board’s findings. Both the manager and his supervisor
told us that although they had learned that employee A’s
complaint was not substantiated, they never learned of any
other findings related to the personnel board’s investigation.
We also spoke with a manager and an analyst from the CCC’s
personnel office who were familiar with the issues surrounding
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California Conservation Corps
the complaint. However, they could provide no evidence that
the CCC ever discussed the issues cited by the personnel board
with the manager or his supervisor.
Employee B
In another example, a union representative filed a grievance
against the manager on behalf of another employee,
employee B, on December 8, 1998. According to the grievance,
the manager inappropriately denied the union representative
the chance to assist employee B in discussing another grievance,
became belligerent and started yelling, and threatened to
have the representative removed from a meeting held on
November 25, 1998. The manager asserted that because the
issues raised by the employee did not constitute a grievance,
she did not have the right to representation, and he told us
his decision was based on advice he received from the CCC’s
labor relations officer. The manager also denied yelling at the
representative during the meeting or threatening to remove him
if he continued to disrupt the meeting.
Although the CCC did eventually take disciplinary
action after substantiating various allegations involving
the manager, the grievance filed against the manager
on employee B’s behalf was not part of the basis for the
disciplinary action taken. When we asked the manager’s
supervisor about the incident, he indicated that he had done
nothing more than discuss the matter with the manager.
THE MANAGER’S ABUSE LATER TURNED PHYSICAL
According to state guidelines for workplace security, employees
with a history of assault or who have exhibited belligerent,
intimidating, or threatening behavior to others present a risk of
violence in the workplace. In addition, the guidelines suggest
that employers establish a clear anti-violence management
policy; apply the policy consistently and fairly to all employees,
The CCC did little to hold including supervisors and managers; and provide appropriate
the manager accountable supervisory and employee training in an effort to prevent
for his actions. workplace violence. As we believe the previous examples
demonstrate, the CCC did little to ensure that the manager, and
therefore the CCC itself, followed these guidelines. Because the
CCC did so little to hold the manager accountable or to provide
consequences for his actions, and in spite of his attendance
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California Conservation Corps
at Violence in the Workplace training on June 19, 1999,
the manager not only continued to mistreat and intimidate
employees verbally but also resorted to physical assault.
The CCC Received Complaints About the Manager
Between April and June 1999, the CCC received at least one
phone call and three letters alleging, among other things, that
the manager had manhandled and pushed an individual and
had yelled at others. The CCC responded to the first three
The CCC responded to complaints by notifying its human resources division and,
complaints that the in two of those cases, the divisional office that oversaw the
manager physically manager’s activities. All three complaints were from anonymous
abused an employee sources and did not contain much specific information. On
by having an external May 10, 1999, the CCC received a more specific complaint
investigator do an that not only reiterated the allegation that the manager had
investigation. physically and verbally abused employees but also provided
specific dates and names of those involved as well as potential
witnesses. This provided the CCC with what it believed was
sufficient information to proceed with an investigation. Because
of the sensitive nature of the complaints, the CCC decided to
use an external investigator to review the allegations.
Employee C
The investigation essentially focused on allegations that the
manager and other employees under his direction continually
harassed one employee until she resigned and that the manager
had used profane language and pushed another employee,
employee C. Although the investigator was not able to
substantiate the harassment charges, he did substantiate the
allegation that the manager had used profane language and
pushed an employee.
During an interview with the investigator on June 28, 1999,
the manager admitted that he had pushed employee C and
said he may have used profanity during a confrontation
with the employee on April 13, 1999. The manager told the
investigator that the incident started after someone called
for him because there was a problem between employee C
and another employee. When explaining how he handled
the matter, the manager said that a lot of what he did was
instinctive and that he took pride in being able to read
young people. The manager said he believed employee C
needed a “good jolting.” After the altercation, the manager
said he and employee C had a real “heart to heart” talk and
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California Conservation Corps
that the jolt had brought a lot out of him as intended. We
believe the manager’s statements demonstrate his willingness
to use verbal and even physical intimidation as a strategy for
resolving problems with employees.
Employee D
In June 1999, around the time the external investigation into
the incident with employee C began, the manager’s supervisor
decided to have CCC conduct its own internal investigation in
response to additional allegations involving the manager. One
allegation involved an employee, employee D, who alleged that
An internal CCC the manager had threatened and intimidated her and that his
investigation concluded actions constituted harassment. The employee also complained
that the manager not that the manager had directed her to accomplish certain tasks
only treated an employee but failed to provide clear instructions. The CCC’s internal
discourteously, but also investigation substantiated these allegations, concluding that
failed to provide her with the manager not only treated employee D discourteously on
a clear understanding of several occasions, but also failed to provide her with a clear
what he expected of her. understanding of what he expected of her.
Employee E
Before the CCC completed its review of the allegations raised
by employee D, a representative of yet another employee,
employee E, filed a grievance against the manager on
September 8, 1999. According to the grievance, the manager
called employee E into his office on August 25, 1999, to discuss
an issue related to a vehicle inspection sheet. As the employee
attempted to explain, the manager began yelling at him in an
intimidating fashion and accused him of lying. At one point,
the manager stood up over the employee and pointed his finger
at the employee while continuing to yell at him. The manager
said he did not raise his voice and denied having told employee
E that he was lying. However, another employee, whom the
manager had called to his office as the discussion between he
and employee E ensued, described their conversation as heated
and loud. She told the CCC that she believed the manager
treated employee E in a discourteous and disrespectful manner.
14 California State Auditor Investigative Report I2002-2 California State Auditor Investigative Report I2002-2 15
California Conservation Corps
The CCC Took Action Against the Manager
On October 3, 1999, the CCC completed its internal
investigation, and on November 18, 1999, it notified the
manager of its findings as well as the findings from the external
investigation. The CCC concluded that on several occasions the
manager’s behavior toward employees was inappropriate and
unprofessional. Specifically, the CCC found that the manager:
• Shoved employee C and used profanity toward him.
• Provided vague and unclear instructions to employee D.
• Treated employee E discourteously when he yelled at him in
his office.
• On at least one occasion had been known to yell at employees
and slam his fist on the table.
The CCC told the manager that he was expected to intervene
when an employee became irate, rude, or outrageous in his or
her behavior, not to participate in such behavior himself. The
CCC then imposed the equivalent of a 10-day salary suspension,
ordered the manager to participate in anger management and
conflict resolution classes, and referred the manager to an
employee assistance program.
Employee F
Despite the actions just described, the abuse persisted. The
CCC determined that the manager had engaged in yet
Despite having been another physical altercation with an employee, employee F,
previously disciplined on December 8, 1999. Both individuals sustained injuries as a
for abusive behavior, result of their fight. However, the CCC could not determine
the manager engaged who started the altercation. Both the manager and employee F
in yet another physical claimed the other had started it, but both lacked witnesses
altercation with an to support their statements. The CCC concluded that even if
employee. employee F had started the altercation, the manager failed to
take sufficient steps to defuse the situation properly. He also
admitted striking the employee. As a result, the CCC took steps
to fire the manager in January 2000, but the manager retired
from state service on December 30, 1999, before his termination
became effective.
The CCC terminated employee F in December 1999 for his
involvement in the altercation. On January 3, 2000, employee F
appealed, but the manager’s supervisor upheld the termination.
14 California State Auditor Investigative Report I2002-2 California State Auditor Investigative Report I2002-2 15
California Conservation Corps
In explaining his decision, the manager’s supervisor wrote that
there were no witnesses available to support employee F’s claim
that the manager had initiated the altercation. He also referred
to the CCC’s policies regarding violence in the workplace and
stated that acts of violence are not tolerated.
THE MANAGER CHARGED A PERSONAL EXPENSE TO
THE STATE
In violation of state law and CCC policy, the manager filed an
improper claim and succeeded in getting the CCC to pay for
$515 in repairs to a laptop computer that he owned. California
law prohibits state officers and employees from using state
resources such as state funds for private gain or advantage. State
law also provides that every person who, with intent to defraud,
presents any false or fraudulent claim for allowance or payment
to an officer authorized to make the allowance or payment can
be punished by imprisonment, by fine, or both. In addition,
CCC policy prohibits employees from using state purchasing
procedures to obtain services or property for personal use.
The manual also requires the approval of the information
systems manager for purchases exceeding $499 that pertain
to computer hardware.
In October 1999, the manager approved his own $515 request
for funds to pay for a computer repair. Because the request
The State paid $515 for related to a repair of computer hardware, it also was approved
repairs to the manager’s by a member of the CCC information systems staff, who told us
personal laptop computer. he approved the request after the manager told him the funds
were needed to repair one of the CCC’s computers. The CCC
disbursed a check for that amount payable to the vendor.
The vendor signed and returned a disbursement voucher to
the CCC, indicating that it had received the check. That was
the extent of the supporting documentation the CCC required
from the vendor. We obtained additional documentation from
the vendor that indicated the repair work actually was done
on the manager’s own laptop computer, not a CCC computer,
which the manager later confirmed. The manager told us he
did not remember ever being questioned about the request
or telling anyone that the funds would be used to fix a CCC
computer. Further, he said he initiated the request because he
used his home laptop computer to conduct state business when
working at home or on travel assignments. However, the CCC
had issued the manager a laptop computer before his request
16 California State Auditor Investigative Report I2002-2 California State Auditor Investigative Report I2002-2 17
California Conservation Corps
for funds. He returned the laptop after the CCC issued him a
newer desktop computer for his office. The manager explained
that he no longer needed the state-issued laptop after receiving
the new desktop computer. Consequently, we question why he
felt he needed to use his own laptop to conduct state business.
Likewise, we do not believe it is reasonable for the State to pay
for the repair to the manager’s personal laptop computer.
A SUPERVISOR RECEIVED CREDIT FOR QUESTIONABLE
AND UNALLOWABLE OVERTIME
A supervisor, supervisor 1, revised monthly attendance reports
and overtime request forms and sent them to the manager for
The claims for overtime his approval as support for her overtime claims, even though the
lacked sufficient supporting manager had retired and no longer was authorized to approve
documentation, contained such claims. In addition, the information she provided lacked
erroneous information, and sufficient supporting documentation, contained erroneous or
included hours for which incomplete information, or included claims for overtime that
the supervisor was not the supervisor was not entitled to receive. After she obtained
entitled to receive overtime. the manager’s approval, she submitted her revised attendance
reports to CCC’s headquarters for final review and approval. The
CCC then credited the supervisor for approximately 187 hours
of compensatory time off, or $5,353, based on her current rate
of pay.
The Supervisor Sought and Obtained Unauthorized Approval
of Overtime
Supervisor 1 told us that when she began her employment with
the CCC under the manager, he told her she was not entitled
to claim any overtime. As a result, she did not think she could
claim any overtime worked. However, the manager’s successor
subsequently informed her that she could claim overtime. She
told us that she then spoke with the manager’s former supervisor
about the matter and that he told her she could claim any
overtime she previously had worked as long as she received the
manager’s approval. The manager’s former supervisor, however,
told us that at no time did he discuss with supervisor 1 any
overtime claims for periods before December 1999 (the date the
manager retired), nor did he review such claims or tell her she
could submit them if she obtained the manager’s approval. He
added that if supervisor 1 believed she was entitled to additional
overtime, he would have expected her to file a grievance and
discuss the matter with himself or with the manager’s successor.
16 California State Auditor Investigative Report I2002-2 California State Auditor Investigative Report I2002-2 17
California Conservation Corps
When we spoke with the manager’s successor, he told us that
he recalled having a discussion with supervisor 1 regarding
overtime in which she told him that his predecessor, the
manager, had told her she was not entitled to overtime. He then
informed her that her job classification did allow her to claim
overtime. According to the manager’s successor, supervisor 1
then asked him what might be done in the event that she had
worked overtime previously, and he responded that he could
not provide her with a definitive answer other than to say that
it probably would require further review by the CCC’s personnel
office. He says that he never heard anything more from her
The manager approved about it. Nevertheless, during April, May, and June 2000,
revised overtime supervisor 1 revised 14 different attendance reports to reflect
attendance reports after overtime she supposedly worked from July 1998 through
he had retired and was November 1999. Supervisor 1 then submitted these reports to
not authorized to provide the manager for his approval. This occurred four to six months
such approval. after he had retired from state service, so he no longer was
authorized to provide such approval.
According to the supervisor at CCC’s headquarters who
is responsible for ensuring that CCC attendance reports
contain the appropriate information, whom we will refer
to as supervisor 2, supervisor 1 contacted one of supervisor
2’s staff and requested instructions for submitting corrected
attendance reports for overtime worked in prior periods.
The staff member told supervisor 1 that she would need to
submit corrected attendance reports with the signature of
the supervisor she had worked for at the time—that is, the
manager. The staff member did not realize that the manager
no longer worked for the CCC when he signed supervisor 1’s
revised attendance reports. As a result, once the staff member
received the revised attendance reports with the manager’s
signature, she approved supervisor 1’s overtime requests,
even though they lacked the appropriate authorization.
According to supervisor 2, had she and her staff known that
the manager who signed the corrected attendance reports
no longer worked for the CCC, they would have requested a
second signature from the current or acting manager, who, in
turn, would have requested documentation for the overtime
in question.
18 California State Auditor Investigative Report I2002-2 California State Auditor Investigative Report I2002-2 19
California Conservation Corps
The Supervisor Provided Erroneous or Incomplete
Information for Her Claims
The documents the supervisor provided to support her claims
contained erroneous or incomplete information. For instance,
on her revised June 1999 attendance report, supervisor 1
indicated that she worked six hours of overtime on June 6, but
elsewhere on the same attendance report she indicated that
the overtime occurred on June 16.4 Neither date corresponds
with her overtime request (a separate document), which shows
the overtime occurring on June 19. Similarly, on her revised
October 1999 attendance report and overtime request, she
claimed to have worked eight hours of overtime on October 10,
but the same attendance report indicated that she had worked
the overtime on October 8, and she even noted the wrong year
in her explanation.
In addition, we found several instances in which supervisor 1
claimed overtime that she was not entitled to receive.
Specifically, four revised attendance reports show the
supervisor claimed to have worked 22 hours of overtime
related to travel time she incurred when attending various
overnight training sessions. However, as is consistent with
the federal law, CCC policy stipulates that employees who
travel overnight are not compensated for travel outside of
normal work hours unless they are engaged in work while
traveling. When we spoke with her about these training
trips, supervisor 1 told us she did not conduct any work
while traveling. In addition, she told us she thought she was
entitled to be compensated for business travel time outside
her normal work hours. Based on her current rate of pay, the
value of the unallowable overtime is approximately $930.
Supervisor 1 told us she calculated her overtime by comparing
her original attendance reports to her travel expense claims, the
attendance reports of other CCC employees, or, in some cases,
Only 13.5 of the 187 notes in her day planner. When we asked the supervisor to
hours of overtime the provide written support for the overtime she had claimed, she
supervisor received credit was able to do so for only about half of the 14 claims and later
for were allowable and became unwilling to discuss the issue further. As we mentioned
sufficiently supported previously, supervisor 1 refused to sign under penalty of perjury
with documentation. a written statement of our understanding of the discussions we
had with her. Based on what she did provide, we found that
4 Supervisor 2 wrote conflicting dates on the calendar and narrative sections of her
attendance report.
18 California State Auditor Investigative Report I2002-2 California State Auditor Investigative Report I2002-2 19
California Conservation Corps
only 13.5 of the 187 hours of overtime she received credit for in
the form of compensatory time off were allowable and included
documentation that sufficiently supported her overtime claims.
AGENCY RESPONSE
The CCC reported that its action against the manager led to
his retirement and effectively corrected the instances involving
his mistreatment and intimidation of employees. In order
to improve its violence in the workplace prevention efforts,
CCC will revise its violence in the workplace protection
plan; provide additional violence prevention training to
all employees; and conduct supervisory training on issues
concerning employee complaints, appropriate use of counseling
and corrective measures, and progressive discipline processes.
The CCC also reported it will attempt to recoup any funds
due the State concerning the personal computer repairs the
manager improperly charged to the State and will assess its
internal controls and make the appropriate revisions. The
CCC is investigating the matter involving the supervisor,
supervisor 1 in this report, who received credit for overtime we
identified as questionable or in some cases, unallowable. The
CCC said it would require the supervisor to provide supporting
documentation, identify any overtime that is not sufficiently
documented or allowed, and recoup any funds due the State.
The CCC also will assess its internal controls related to the
authorization of overtime claims. n
20 California State Auditor Investigative Report I2002-2 California State Auditor Investigative Report I2002-2 21
CHAPTER 2
California Department of Forestry
and Fire Protection: Economically
Wasteful Decisions
ALLEGATION I2000-709
Officials at the California Department of Forestry and Fire
Protection (CDF) made economically wasteful decisions
when they allowed an executive to obtain a pilot’s
license at CDF’s expense and to fly CDF aircraft.
RESULTS AND METHOD OF INVESTIGATION
We investigated and substantiated the allegation. The executive
received at least 38 hours of ground and flight instruction plus
14 training hours in CDF aircraft. Including the $1,500 cost of
instruction and the estimated $7,651 cost of aircraft usage, the
executive’s training cost CDF $9,151. In addition, the executive
used various CDF aircraft for administrative and other travel
totaling more than 343 flight hours. Based on the billing
rate CDF charges other entities for the use of its aircraft, the
estimated cost of these nontraining flight hours is $78,116.
To investigate the allegation, we obtained the flight logs related
to the CDF aircraft and invoices paid by CDF for the executive’s
flight training. We also reviewed the executive’s travel expense
claims and information pertaining to CDF’s acquisition of a new
aircraft. In addition, we interviewed CDF employees, including
the executive.
BACKGROUND
The CDF’s mission is to protect the people of California from
fires, respond to emergencies, and protect and enhance forest,
range, and watershed values, thus providing social, economic,
and environmental benefits to citizens. CDF’s firefighters, fire
engines, and aircraft respond to an average of 6,400 wildland
fires each year. Within CDF is the Aviation Management Unit
(AMU). The AMU maintains and operates the aircraft used in
CDF’s firefighting efforts. Many of these aircraft, including
aircraft used for administrative, non-fire-related purposes, are
20 California State Auditor Investigative Report I2002-2 California State Auditor Investigative Report I2002-2 21
California Department of Forestry and Fire Protection
located in Sacramento, the executive’s headquarters. Before his
retirement in December 2001, the executive had indirect over-
sight of the AMU.
CDF MADE CERTAIN ECONOMICALLY WASTEFUL
DECISIONS
CDF paid for the executive’s commercial pilot’s license training
and allowed him to use CDF aircraft for his lessons and other
training flights. The total estimated cost for this training,
including ground and flight instruction and additional flight
Shortly before the
training hours in CDF aircraft, is $9,151. In addition, shortly
executive retired, CDF
before the executive retired, CDF sent the executive to receive
paid $11,100 to train
training to fly a new plane it had acquired; the cost of that
him to fly a newly
training was $11,100. The executive used CDF aircraft to fly
purchased aircraft.
throughout the State to attend meetings and perform other
administrative work; we believe many of these trips may not
have been cost-efficient or necessary and, therefore, not in the
State’s best interest.
State law declares that waste and inefficiency in state
government undermine the confidence of Californians in
government and reduces the state government’s ability to
address vital public needs adequately.5 In addition, state law
declares that all levels of management of state agencies must
be involved in assessing and strengthening the systems of
internal accounting and administrative control to minimize
fraud, errors, abuse, and waste of government funds.
CDF Paid for the Executive’s Flight Instruction and Supplied
Aircraft for the Lessons
According to the executive, in the late 1990s he had started
working to obtain his commercial pilot’s license, using his
own time and money. The executive said his flight instructor
mentioned that CDF had paid him to train another pilot
who was a retired CDF employee. When the executive asked
representatives from the AMU why CDF had paid to train the
retired employee, who apparently was working for CDF as a
retired annuitant, he said they told him they were short of pilots
to fly CDF’s administrative aircraft, and they then suggested that
CDF also could pay for the executive to complete his training.
5 For a more detailed description of the laws, regulations, and policies discussed in this
chapter, see Appendix B.
22 California State Auditor Investigative Report I2002-2 California State Auditor Investigative Report I2002-2 23
California Department of Forestry and Fire Protection
Between April 1999 and April 2000, the executive received at
least 38 hours of ground and flight instruction that were paid
for by CDF. Of these 38 hours, 22 related to flight instruction
and 16 were for ground instruction. The total instruction cost
was $1,500. In addition, there were other costs to CDF because
it allowed the executive to use CDF aircraft for his training.
CDF’s current reimbursement rate for the use of one of its air-
craft is $190 or $250 per flight hour, depending on the type of
aircraft, and not including pilot time.6 Based on the applicable
rate, the estimated value of the executive’s use of CDF aircraft
for training purposes was approximately $4,439, bringing
the total estimated value of the executive’s ground and flight
instruction training to $5,939.
From April 1999 through May 2001, the executive used CDF
aircraft for an additional 14 hours of training that were
essentially additional practice time for the executive. Again,
using CDF’s reimbursement rates and applying them to the
noninstruction flight training hours flown by the executive, the
value of his 14 hours of practice time is approximately $3,212.
In June 2001, CDF entered into a $5 million agreement to
acquire a new plane that could be used to carry infrared
equipment to detect fires through heavy smoke and pinpoint
the exact location and size of the fires. CDF wanted to have
three flight crews of two pilots each that were trained to fly
the new plane. Training for two pilots was included in the
acquisition price, but the cost to train additional pilots was
$11,100 each. The executive was one of the five pilots so far to
receive the training, held in Kansas, and he did so in July 2001.
The executive and another of the five pilots have since retired. 7
The executive retired from the State effective December 1, 2001,
Had the executive
but he told us he had been thinking about retiring for about
informed CDF that his
a year and a half. Given that fact, we question the executive’s
retirement was imminent,
decision to accept this very expensive training, which he com-
CDF could have
pleted less than five months before his retirement. CDF is now
considered other options.
left with only three employees trained to fly the new plane,
6 According to a CDF official, the rates prior to June 2000 were approximately $135 or
$215 per flight hour.
7 We did not interview the other pilot who retired. CDF told us that the other pilot now
works for a CDF contractor and is still available to fly for CDF. He retired from CDF in
early 2002.
22 California State Auditor Investigative Report I2002-2 California State Auditor Investigative Report I2002-2 23
California Department of Forestry and Fire Protection
although the executive told us that the AMU had asked him if
he would be willing to come back as needed to fly the plane, and
that he had said yes. Nevertheless, if the executive had informed
CDF that his retirement was imminent, CDF could have consid-
ered other options.
THE EXECUTIVE MADE NUMEROUS FLIGHTS IN CDF
AIRCRAFT
In addition to the training flights discussed previously, between
May 1999 and September 2001 the executive used CDF air-
craft for flights on at least 111 other days, for a total of more
than 343 hours of flight time at a cost of $78,116. In addition
to the sections discussed previously addressing waste in state
government, according to state regulations, reimbursement for
travel expenses will be made only for the method of transporta-
tion that is in the State’s best interest, considering both direct
expense as well as the officer’s or employee’s time. Although in
this case the executive was not reimbursed for the cost of the
aircraft usage—CDF pays those costs directly—we believe the
guiding principle of using the method of transportation that is
in the State’s best interest is relevant and applicable.
When we spoke with the executive, he told us he did not
believe he had done anything wrong. He said he believed that
his usage of CDF aircraft had always been in the State’s best
interest because it was more time-efficient. He also pointed out
that some places he needed to travel to are somewhat remote
and are not served by any commercial flights, and that driving
instead of flying would have wasted time. Although some of the
executive’s trips may well have been time- and cost-effective, we
believe many were not.
Table 2 summarizes the different types of flights flown by the
executive, including training flights, noted on the CDF flight logs.
Some Uses of CDF Aircraft Were Questionable
On several occasions, the executive used CDF aircraft to pick
up and drop off passengers—a sort of shuttle service for CDF
employees and others. The executive also used CDF aircraft to
fly to locations where driving or taking a commercial flight may
have been the mode of transportation that was most cost effec-
tive and therefore in the State’s best interest.
24 California State Auditor Investigative Report I2002-2 California State Auditor Investigative Report I2002-2 25
California Department of Forestry and Fire Protection
TABLE 2
Types of Flights Flown by the Executive
Mission Type* Hours
Administrative:
CDF resource management flights, department support flights that are
not fire-related, Resources Agency support flights.
315.8
Training:
Pilot initial check, pilot recurrency training. 36.0
Fire:
Wildfires, fire support missions such as engine access survey,
communications during fire emergencies. 16.5
Non-fire:
Other emergency flights such as support of floods, earthquake, etc. 7.0
Unknown 4.5
Total 379.8
*The mission type definitions are not documented; we obtained these definitions from an
executive in the Aviation Management Unit.
We found three instances in which the executive used CDF
aircraft to fly to the Lake Tahoe area, approximately a 2-hour
drive from Sacramento. Specifically, the executive told us that
The executive flew on May 21, 1999, he was a guest speaker at a conference in that
to Lake Tahoe, area and that he and another CDF employee used the aircraft
approximately a 2-hour “due to time constraints on other meetings.” On April 17, 2001,
drive from Sacramento, the executive flew to the area twice. According to the executive,
twice in one day to he flew two other CDF administrators to the area to speak at a
transport administrators meeting. The administrators were transported by department
to meetings. vehicle to the meeting site, but one of them needed to be back
in Sacramento before the other administrator’s speech, so the
executive made two trips back and forth. Using the CDF’s cost
reimbursement rates, the cost of the 3.2 total hours of flight
time is $800. Further, we believe that transporting administra-
tors to meetings is an inefficient use of an executive’s time.
State policy outlines criteria for selecting a mode of
transportation and says to select the least costly method of
transportation, considering direct expense and employee
time away from the office. The policy also discusses the use
of agency-owned or agency-leased aircraft and says, “Do
not use aircraft for executive travel if the destination is
within two hours’ driving time or a regular commercial
airline serves the location.” Commercial transportation
is to be used whenever its total cost is less than that of
24 California State Auditor Investigative Report I2002-2 California State Auditor Investigative Report I2002-2 25
California Department of Forestry and Fire Protection
agency-provided aircraft, and it requires that individuals
consider and document various criteria when deciding the
least costly method of travel, including the cost of personnel
hours lost in travel, total commercial travel costs, added per
diem costs, accessibility and/or urgency of the situation,
and commercial airline service and schedules. We found
no evidence that the executive nor anyone else at CDF
performed these analyses when deciding to use CDF aircraft
for his travel.
In another example of a flight that appears to be more for
convenience than business necessity, we also asked the
executive about a December 1999 flight from Monterey. He
said that he had been stuck in Monterey and that someone
from the AMU had flown to Monterey to pick him up.
He then flew the plane back to Sacramento. He told us he
needed to return to Sacramento early for a meeting. The
executive provided no further information about how he got
to Monterey in the first place or whether he had considered
other modes of transportation, such as a commercial flight or
rental car.
In addition, we noted at least six instances in which the executive
deviated, sometimes significantly, from a direct flight
plan in order to pick up and drop off passengers. For example,
in three instances the executive flew from Sacramento to
Santa Rosa to pick up a passenger, flew to Southern California, and
then dropped off the passenger in Santa Rosa before returning to
We found no evidence Sacramento. One of the trips was to attend the dedication of a
in the documents we new fire station, and another was to attend a CDF employee’s
reviewed that any of retirement function; the purpose of the third trip was not noted.
the CDF employees In another instance, the executive stopped in Fresno to pick
considered using up another CDF employee before proceeding to Monterey to
alternative modes of tour the ranger unit. He returned the employee to Fresno before
transportation or had he flew back to Sacramento. Further, the executive flew a state
determined whether there official to Redding but stopped in Santa Rosa before and after
was a business need for going to Redding to pick up other CDF employees. In the sixth
making certain trips. instance, the executive flew from Sacramento to Arcata to pick
up a CDF employee and flew to Porterville; they then both returned
to Sacramento. The map in Figure 1 indicates the location of the
towns and cities mentioned in the six instances above and provides
a sense of how far the executive deviated from an otherwise
direct flight in order to transport other CDF employees. We
found no evidence or other indications that any of the individu-
als had considered using alternate modes of transportation or
had determined whether there was a business need for making
these trips.
26 California State Auditor Investigative Report I2002-2 California State Auditor Investigative Report I2002-2 27
California Department of Forestry and Fire Protection
FIGURE 1
Map of Selected Administrative Flight Destinations
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26 California State Auditor Investigative Report I2002-2 California State Auditor Investigative Report I2002-2 27
California Department of Forestry and Fire Protection
We also asked the executive about a trip in which he flew
from his headquarters in Sacramento to the Santa Rosa area
to pick up a passenger before proceeding to Redding. The
executive told us the passenger’s time is very valuable and
that the time it would take for him to drive from Santa Rosa
to Redding and back is excessive. He explained that CDF is an
emergency department, and oftentimes they do not have the
flexibility to waste their time on the highway. We agree that
there are emergency, and even nonemergency, situations in
which the use of aircraft is in the State’s best interest; however,
without appropriate documentation of the circumstances
surrounding the decision to use this more costly mode of
transportation, CDF leaves itself open to criticism that the use of
the aircraft is not in the State’s best interest.
THE EXECUTIVE RENTED PRIVATE AIRCRAFT FOR
NONEMERGENCY FLIGHTS
In addition to using CDF aircraft for numerous administrative
flights, the executive rented aircraft from a private company at
least five times between April 1999 and February 2001, costing
the CDF approximately $1,535. According to CDF policy,
emergency hiring of aircraft is authorized, as necessary, to meet
Contrary to CDF policy emergency fire situations. The policy goes on to say that this
for emergency hiring of privilege must be administered judiciously to avoid unnecessary
aircraft, it appears that expenditure of public funds.
on at least four occasions
it rented aircraft for Contrary to this policy, it appears that at least four of these
administrative purposes, five trips were for administrative purposes, not emergency
not for emergency fire fire situations. We were unable to determine the purpose or
situations. destination of the fifth trip. As we mentioned previously,
according to state policy, agencies should not use aircraft for
executive travel if the destination is within 2 hours’ driving
time or a regular commercial airline serves the location.
One of these four trips was to Yreka, a relatively remote area
several hours’ drive from Sacramento. However, the other
three were to Truckee, San Jose, and Monterey. Each of these
locations is within approximately 2 to 3.5 hours’ driving time
of Sacramento, where the executive worked. Although driving
time from Sacramento to San Jose and Monterey exceeds the
2-hour guideline, as we mentioned previously, both direct and
indirect expenses should be considered and documented when
determining the method of transportation that is in the State’s
best interest.
28 California State Auditor Investigative Report I2002-2 California State Auditor Investigative Report I2002-2 29
California Department of Forestry and Fire Protection
The executive told us that using the aircraft is the most time-
efficient method of travel. However, we question the time- and
cost-efficiency in these situations. In addition to the flight time
required and the cost of using the aircraft, other factors should
be weighed in determining the time- and cost-efficiency. These
factors include the cost of the executive’s travel time, and
possibly the travel time of other passengers, to and from the
airport at both the departure and arrival points, and the need
to have ground transportation once the executive reached his
destination. Because the executive did not document the factors
he considered to determine whether using the CDF aircraft
was in the State’s best interest, we were unable to evaluate his
decisions fully.
Finally, according to state regulations, where it is authorized
and necessary to hire special conveyances, a full explanation,
stating the facts constituting the necessity, shall accompany the
expense claim. We found no such explanations accompanying
the expense claims we reviewed.
THE EXECUTIVE KEPT INCOMPLETE AND
INACCURATE RECORDS
The information presented in the preceding sections is based
on the CDF flight logs, but the executive also maintained
his own logbook. We should point out that the executive
admitted to us that, “In regards to the dates, I sometimes
would not make entries in my logbook the same day as the
flight. Also, sometimes it gets so busy, I’m not accurate on
the dates in my logbook or the department’s flight log.” The
executive’s records—that is, aircraft flight logs, his logbook,
Because the executive did and his travel expense claims—indicated conflicting flight
not keep complete and dates at least five times.
accurate information
about his flights, it is We asked the executive about several trips for which the infor-
difficult to determine mation in the CDF flight logs was unclear or incomplete. On at
whether much of his least two occasions, the executive said he did not have a corre-
use of the aircraft was sponding entry or trip in his logbook.
appropriate.
Although the executive asserted that he transported only
authorized personnel on his flights, we discovered at least
21 instances in which the executive failed to note the fact
that there were passengers on board and/or to give the
identity of the passengers; as a result, we could not verify
the accuracy of his assertion. These numerous examples of
28 California State Auditor Investigative Report I2002-2 California State Auditor Investigative Report I2002-2 29
California Department of Forestry and Fire Protection
inaccurate and incomplete information make it more difficult
to determine whether much of the executive’s use of the
aircraft was appropriate.
AGENCY RESPONSE
CDF said it would take steps to improve its procedures
for determining and documenting the relative merits of
using aircraft or automobiles, ensure that an explanation
is provided when aircraft rental is necessary, and provide
training to CDF executives and the CDF AMU on the need
for and the use of procedures to document transportation
decisions. However, CDF does not believe that the examples
we have outlined regarding the executive’s use of CDF aircraft
are examples of wasteful decisions and stressed that it sees air
travel as a way to increase efficiency and increase the work
accomplished by its executives. Further, it believes that air
transportation enables executives to do more public outreach
and have more face-to-face meetings, both of which are
important to assuring the full readiness of field locations to
fulfill their statewide fire protection and public safety and
valuable to the CDF’s mission. n
30 California State Auditor Investigative Report I2002-2 California State Auditor Investigative Report I2002-2 31
CHAPTER 3
Veterans Home of California,
Yountville: Improper Billings to
Medicare
ALLEGATION I2000-876
The information system used by the hospital at the
Veterans Home of California, Yountville (home), for
processing charges for services provided to the home’s
residents contains charges attributed to one doctor for services
that the doctor could not have provided.
RESULTS AND METHOD OF INVESTIGATION
We investigated and substantiated the allegation. The
information system the home uses to bill insurers showed
that the doctor saw patients 2,614 times from July 1, 1999,
through July 17, 2001, but we concluded that the doctor did
not see a patient in question for 1,792 of those visits. As of
January 22, 2002, the home had billed Medicare $131,000 for
1,488 of these 2,614 patient visits. However, $55,000 was for
887 visits that we concluded the doctor did not make. We did
not determine whether the home has billed other insurers for
any such visits or if it will do so in the future.
To investigate the allegation, we reviewed policies and
procedures related to the information system the home uses
to bill insurers. In addition, we reviewed the home’s record of
claims submitted to Medicare for reimbursement of charges
related to the doctor’s patient visits from July 1, 1999,
through July 17, 2001. To assess the accuracy of these claims
and of the home’s system for billing insurers, we compared
the records of services provided by the doctor contained
in the information system the home uses to bill insurers
to the doctor’s clinic schedules from July 1, 1999, through
July 17, 2001.8 To determine which source of information
was more accurate, we also reviewed the medical records for
8 The home was unable to provide clinic schedules for the doctor for 21 days during
the period.
30 California State Auditor Investigative Report I2002-2 California State Auditor Investigative Report I2002-2 31
Veterans Home of California, Yountville
three of the doctor’s patients. We did not review the home’s
records of services provided by other doctors or the home’s
billings for those services.
In addition, we interviewed the former scheduling supervisor for
the home’s ambulatory care clinic, the former chief of patient
scheduling, the current chief of medical records, the current
chief medical officer, and the doctor. We relied on information
provided by these people for our understanding of how the
scheduling section processes some records and for explanations
of how the information system could contain records of more
patient visits than were recorded on the doctor’s clinic schedule.
We gave each of them a written summary of our understanding
of their statements and asked them to make any changes or to
rewrite the statements if necessary. To ensure their accuracy,
we also asked them to sign the summaries under penalty of
perjury. However, the former ambulatory care clinic scheduling
supervisor, the former chief of patient scheduling, and the
doctor refused to sign our summaries of their statements.
Although we report our understanding of what they told us, we
have less confidence in our understanding of their accounts due
to their unwillingness to confirm the summaries and to certify
them under penalty of perjury.
We also discussed the information system with members
of our staff who recently completed an audit of the
same information system and reported that it has many
weaknesses.9 However, that audit did not address the issue of
excess charges in the system.
BACKGROUND
The California Department of Veterans Affairs (DVA) runs a
veterans’ home in Yountville. Among other services, the home
provides medical services to its residents, including an ambula-
tory care clinic (clinic). According to the home’s medical staff,
every patient treated by a doctor in the clinic should be reflected
on the doctor’s daily clinic schedule. The clinic schedule is
printed daily, but patients may be added manually if they sched-
ule appointments after the schedule is printed or if they arrive at
the clinic without an appointment.
9 We issued report number 2001-113, titled Department of Veterans Affairs: Weak
Management and Poor Internal Controls Have Prevented the Department From Establishing
an Effective Cash Collection System, in December 2001.
32 California State Auditor Investigative Report I2002-2 California State Auditor Investigative Report I2002-2 33
Veterans Home of California, Yountville
Furthermore, there should be a charge slip for every patient
treated by a doctor. The charge slips identify the patient,
the doctor, the clinic, and the services the doctor provided.
After a series of reviews to ensure that each charge slip’s
information is accurate, they are forwarded to the data entry
personnel where the information is entered into the system
used to obtain reimbursement from Medicare, the California
Medical Assistance Program (Medi-Cal), and other insurance
providers for some of the costs of treating these patients.
THE HOME PROCESSED CHARGES FOR SERVICES
THE DOCTOR COULD NOT HAVE PROVIDED
The home began using data in its medical information system
to bill Medicare, Medi-Cal, and other insurers for patient
services beginning on July 1, 1999. Our review of records
in the home’s medical information system showed that the
doctor saw patients in the clinic on 2,614 occasions from
July 1, 1999, through July 17, 2001. During the same period,
her clinic schedules reveal that she treated patients only
748 times. There were 74 visits in the system on 20 days for
which the home was unable to provide a clinic schedule for
The home billed insurers the doctor. Because we cannot be certain that she did not see
for the physician’s services patients on those days, we do not consider these 74 visits to
for 400 cases on days she be in error. Nevertheless, of the 2,614 patient visits listed in
did not work. the system, the doctor appears not to have seen the patient
in 1,792 (69 percent) instances. Some of these excess visits
in the system were for patients who were not on the doctor’s
clinic schedule for that day. In 400 other cases, the doctor
was not working on the day in question, including weekends,
holidays, and days that she was on vacation or sick leave.
Furthermore, 148 incorrectly recorded visits were on 50 days
on which the doctor worked from home. As further evidence
of the information system’s lack of credibility, it indicated
that the doctor saw patients on every day of 35 consecutive
days spanning August and September 1999, 34 consecutive
days spanning June and July 2000, and 26 consecutive days
spanning May and June 2001. In fact, the billing system
indicated that the doctor saw patients on all but three of the
70 days from July 15 through September 22, 1999.
Because there was such a large discrepancy between the two
sources of information, we wanted further confidence in the
information presented on the clinic schedules. We took a close
look at the recorded visits for three specific patients. Specifically,
32 California State Auditor Investigative Report I2002-2 California State Auditor Investigative Report I2002-2 33
Veterans Home of California, Yountville
we compared patient visit information from the doctor’s
clinic schedules and the billing system to these patients’
medical records to see whether the doctor had treated them
on these dates. During a period of 64 days for one of the
patients, 163 days for another, and 182 days for the third, we
found that the information system showed the doctor saw
these three patients a total of 216 times. The clinic schedules
for the same periods showed that the doctor treated the three
patients only 9 times. The patients’ medical records showed that
the doctor treated them only 12 times. Although the medical
records showed slightly more visits than did the clinic schedules,
it is clear that the clinic schedules were more reliable than the
system used to bill insurers. The billing system showed that the
doctor treated the patients 204 more times than she did.
Although none of them could say with certainty how these
excess visits had ended up in the billing system, medical and
administrative staff provided some possible explanations,
including the following:
• Some visits attributed to the doctor could be for services that
nurses provided to unscheduled patients. Staff explained that
the information system would not accept the nurses’ names
for these costs, and so, based on their erroneous understand-
ing of a consultant’s advice, scheduling staff used doctors’
names. One staff member explained further that the home
would not have sought reimbursement for these costs but
recorded them only so the system could track them.
• Charge slips may have been created showing the patients’
usual attending physician, but the patients actually were seen
by the medical officer of the day. If the scheduling section
staff failed to change the name to the name of the medical
officer of the day, the billing system would reflect incorrectly
the name of the usual attending physician.
• The excess recorded visits might include errors in the informa-
tion system, or staff may have entered everything under the
doctor’s name for the sake of convenience.
• Incorrect dates may have been entered on charge slips.
Although staff told us that the home would not have sought
reimbursement for charges in those cases in which it used
doctors’ names to record charges in the system when nurses
actually provided the services, we are not confident that the
system can isolate these types of charges. In fact, we saw
34 California State Auditor Investigative Report I2002-2 California State Auditor Investigative Report I2002-2 35
Veterans Home of California, Yountville
nothing that indicated it could do so. For example, the home
billed Medicare $131,000 for 1,488 patient visits presumably
made by the doctor from July 1, 1999, through July 17, 2001.
However, when we compared the claimed visits to the doctor’s
Of the $131,000 the clinic schedules, we found that she did not see patients on
home billed Medicare 887 (60 percent) of the 1,488 occasions. Thus, of those visits that
between July 1999 and actually were billed to Medicare, it appears that the home billed
July 2001, $55,000 was $55,000 (42 percent) of the $131,000 incorrectly. Our recent
billed incorrectly. audit reviewed the home’s information system to determine
the validity of data in various management reports. Although
that review focused on the management of cash flow and
did not consider the issue of excess charges, it found that the
department lacks adequate knowledge of the data in its system
and is, therefore, unaware of the number or amounts of charges
it has billed.
State law requires each state agency to establish and maintain
an adequate system of internal accounting and administrative
controls to provide public accountability and to minimize fraud,
errors, abuse, and waste of government funds.10 In addition, it
states that the controls should be evaluated on an ongoing basis
and identified weaknesses promptly corrected.
We found no evidence that employees of the home knowingly
and intentionally entered incorrect data in the system to
fraudulently obtain reimbursements from Medicare or other
insurers. In fact, the services it lists may have been provided by
other doctors or by nurses. However, the home does not have
accurate records to support the claims it makes to Medicare or
other insurers.
AGENCY RESPONSE
The DVA reports that it is actively working to upgrade its
billing system and is working with its billing agent to resolve
any charges billed and reimbursed incorrectly. Further, the
DVA states that it will ensure it obtains the signature of the
attending physician/technician to maintain proper practices
and Medicare compliance. n
10 For a description of the state law pertaining to internal controls, see Appendix B.
34 California State Auditor Investigative Report I2002-2 California State Auditor Investigative Report I2002-2 35
Blank page inserted for reproduction purposes only.
36 California State Auditor Investigative Report I2002-2 California State Auditor Investigative Report I2002-2 37
CHAPTER 4
Governor’s Office of Emergency
Services: Excessive Wages, Overtime,
and Travel Costs
ALLEGATION I2000-607
We and the California Highway Patrol (CHP) previously
investigated and substantiated allegations involving
employees of the fire and rescue branch of the
Governor’s Office of Emergency Services (OES). In April 2000
we reported, among other things, that poor supervision and
inadequate administrative controls had enabled employees to
commit various improprieties, including claiming excessive
overtime and travel costs.11 Subsequently, we received
information that one employee continued to claim excessive
amounts of overtime.
RESULTS AND METHOD OF INVESTIGATION
We investigated and substantiated this and other improprieties.
During fiscal year 1999–2000, employee A received $100,207 in
wages, of which $35,743, or approximately 36 percent, was for
overtime, and in fiscal year 2000–01 he received $107,137 in
wages, of which $40,523, or approximately 38 percent, was for
overtime pay. Employee A incurred this overtime, in part,
because OES permitted him to continue to claim his commute
time even after it became aware of this issue in 1998.12 Although
we did not calculate the total commute hours or travel costs
for which employee A was compensated, they were significant,
considering that he lived at least two hours from his assigned
work area and that he had been claiming his commute since he
began his employment in May 1996. The current manager of the
fire and rescue branch estimated that as much as 25 percent of
employee A’s overtime was due to his commute.
11 When we notified the director of OES that we would be investigating the allegations,
he informed us the CHP had begun a similar investigation at OES’s request. To avoid
duplicating investigative efforts, we met and coordinated with the CHP. We reported
these improprieties in investigative report I2000-1.
12 The CHP first reported this issue to OES in November 1998.
36 California State Auditor Investigative Report I2002-2 California State Auditor Investigative Report I2002-2 37
Governor’s Office of Emergency Services
In addition, we obtained evidence that, rather than ensuring
that employee A ceased to claim his commute, OES may
never have intended to stop such claims. Not only did OES
enter into a questionable agreement with employee A’s
bargaining unit—an agreement that the current manager of
the fire and rescue branch believes permitted the employee
to continue to claim his commute—but it also did not
provide the Department of Personnel Administration (DPA)
an opportunity to review and approve the agreement as
required. When we asked the appropriate DPA official to
review the agreement, he questioned its appropriateness
and said he considered it invalid. OES eventually resolved
this issue by reassigning employee A to a work area in
which he lives, but it did not do so until February 2002.
Furthermore, OES failed to adequately monitor and control
overtime and related costs because it did not always ensure
that employee A and other employees of the fire and rescue
branch obtained prior authorization before incurring
nonemergency overtime.
To investigate the allegations, we interviewed OES employees,
a former employee, and a representative of the DPA. We also
reviewed employee travel expense claims, attendance reports,
telephone records, mileage logs, and other related documents
and reports. In addition, we reviewed pertinent laws and depart-
mental policies.
BACKGROUND
As a result of our prior investigation, OES reported that it had
terminated one employee, received voluntary demotions from
two, and received resignations from three others. OES also
reported that it told an employee, employee A in this report,
that he no longer could claim his commute and that it had
developed and implemented an administrative control system
for overtime and travel costs.
DESPITE PRIOR KNOWLEDGE, OES CONTINUED TO PAY
EMPLOYEE A FOR HIS COMMUTE
State policy prohibits state agencies from paying employees
for time spent commuting from their home to the work area.13
Even though OES became aware that this was occurring as
13 For a more complete description of the laws, regulations, and policies discussed in this
chapter, see Appendix B.
38 California State Auditor Investigative Report I2002-2 California State Auditor Investigative Report I2002-2 39
Governor’s Office of Emergency Services
early as November 1998, it continued to allow employee A to
claim his commute time, which contributed, in part, to the
extraordinary amount of overtime he subsequently received.
As shown in Figure 2, for the fiscal year 1999-2000, employee A
received approximately $100,207 in wages, of which $35,743,
or 36 percent, was overtime pay. For the next fiscal year 2000–01,
he was paid approximately $107,137, of which $40,523, or
38 percent, was overtime.
FIGURE 2
Employee A Base and Overtime Pay
Fiscal Years 1999–2000 and 2000–01
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Although much of employee A’s overtime related to emergency
events, nearly half was associated with nonemergency activities
such as meetings or training classes. For example, of 815 hours
of overtime employee A claimed in fiscal year 1999–2000,
370 hours, or approximately 45 percent, was for nonemergency
events. In fiscal year 2000–01, he claimed 862 hours of
overtime, of which 390 hours, or about 45 percent, pertained to
nonemergency activities.
Moreover, although we did not specifically identify and
extract all the commute hours for which employee A was
compensated, his commute time had a significant impact
38 California State Auditor Investigative Report I2002-2 California State Auditor Investigative Report I2002-2 39
�����������
Governor’s Office of Emergency Services
on the regular pay, overtime, and travel costs he received,
considering that he lived at least 2 hours from his assigned
work area. For example, of the 68 hours of nonemergency
overtime employee A claimed in March 2001, more than
22 hours, or approximately 33 percent, related to his
commute between his home and his assigned work area.
In July 1999, of the 73 hours of nonemergency overtime
employee A claimed, more than 18 hours, or 25 percent,
was attributable to his commute.14 When we spoke with the
current manager of the fire and rescue branch, he estimated
that as much as 25 percent of employee A’s overtime was due
to his commute.
Employee A May Not Have Been Told to Stop Claiming His
Commute Time
Employee A and his managers have provided conflicting
information regarding whether he was told to stop claiming
his commute time. In July 1999, as our prior investigation
It appears OES never drew to a close, we spoke with the former manager of the fire
intended to stop the and rescue branch about the matter.15 He told us that it was
employee from claiming his understanding that employee A had been told that he no
his commute time unless longer could claim his commute time and that he had stopped
it could assign him to a doing so. During our current investigation, employee A told us
work area closer to his that it had always been his understanding that his home was
home. his designated headquarters and, as a result, he claimed the
time it took him to drive from his home to locations within his
assigned work area. He added that to compensate for this, he
sometimes did not claim all the time he spent conducting state
business, such as when he worked late or responded to e-mail
messages or pages on his days off. It is unclear to us why, if
employee A believed this arrangement was appropriate, he felt
he needed to compensate in some way for charging commute
time as work hours. Regardless, we found no written evidence
that OES instructed the employee that he no longer could claim
his commute.
Employee A not only continued to claim his commute time,
but it appears that OES never intended to prevent him from
claiming this time unless it could reassign him to a work area
closer to his home. In a letter dated April 7, 1999, the former
manager thanked the chief of a fire district located within
14 In addition to claiming overtime to commute to and from his assigned work area,
employee A’s commute also led to inflated travel expenses and regular work hours.
15 This manager retired from OES effective March 30, 2001.
40 California State Auditor Investigative Report I2002-2 California State Auditor Investigative Report I2002-2 41
Governor’s Office of Emergency Services
employee A’s work area for offering OES the ability to locate
one of its employees, employee A, at the fire district’s
headquarters. However, the former manager added, “We have
reevaluated our situation and do not currently plan to relocate
[employee A’s] office from his current home office at this time.”
OES allowed the abuse to continue by declining the offer to
move the employee’s office from his home to a more central
location within his assigned work area.
OES Entered Into a Questionable Agreement With
Employee A’s Bargaining Unit
On April 7, 1999, the same day OES formally rejected the chance
to relocate employee A’s office to a location within his assigned
work area, OES entered into a questionable agreement with
employee A’s bargaining unit. The current manager of the fire
and rescue branch believed this agreement entitled employee A
to continue claiming his commute time.
The current manager told us the issue surrounding
employee A’s commute first came up after OES developed a
policy in October 1998 concerning headquarters designations
for employees. The policy allows staff who have regional
In 1998 OES adopted a responsibilities in areas in which no state-owned or state-
policy allowing staff with leased facilities are reasonably available to have their
responsibilities in areas residence designated as their headquarters. However, the
with no state-owned policy further states that when an employee’s residence is
or state-leased facilities designated as his or her headquarters, it must be located
to have their residence within the assigned work area. The policy also specified that
designated as their commute time between an employee’s home and his or her
headquarters. designated headquarters or work area is not considered work
time for regular pay, overtime, or travel costs, except as may
be specified in DPA or collective bargaining agreements.
After OES developed this policy, DPA, on February 8, 1999,
delegated to OES limited authority to meet and confer
with the employee’s bargaining unit to discuss its impact.
On April 7, 1999, after meeting to discuss these issues with
employee A’s bargaining unit representative, OES entered
into an agreement that effectively exempted employee A
from complying with the policy. The agreement states that
the bargaining unit concurred with the adoption of OES’s
headquarters designation policy, except to the extent that it
may adversely impact incumbent employees who currently
live outside their assigned work area.
40 California State Auditor Investigative Report I2002-2 California State Auditor Investigative Report I2002-2 41
Governor’s Office of Emergency Services
The manager of the fire and rescue branch said he believed
that the exemption provided under this agreement allowed
employee A to continue to use his home as his headquarters and
that it effectively permitted him to consider any travel time he
incurred while traveling from his home to his assigned work area
as time worked. However, another OES manager who took part
in discussions with the bargaining unit said the agreement was
never intended to allow employee A to continue to claim his
commute time. In fact, he said it was his understanding that the
fire and rescue branch would take the necessary steps to ensure
that employee A did not continue to claim commute time to
and from his home and his assigned work area. Clearly, the fire
and rescue branch did not share the same understanding, as
employee A continued to be paid for his commute.
The DPA official who delegated to OES the limited authority to
meet and confer with the employee’s bargaining unit questioned
the agreement’s validity. Specifically, the DPA official told us
his records indicated that OES did not submit to DPA copies of
any agreement OES may have entered into with the bargaining
According to a DPA unit concerning headquarters designation, as required. He
official, it makes no pointed out that the document he signed granting OES the
sense to designate an authority to meet and confer with the employee’s bargaining
employee’s home as unit stated explicitly that any agreement reached between OES
headquarters in instances and the bargaining unit would be effective only upon approval
such as this, where the and signature of the appropriate DPA official—in other words,
employee’s residence is a himself. Consequently, the DPA official said, the agreement
two-hour commute from reached by OES was invalid and could not be executed.
his assigned work area. According to the DPA official, had OES afforded him the
opportunity to review the agreement, he would have questioned
who it affected and why OES sought specific exemptions. He
added that it made no sense to designate an employee’s home
as headquarters in instances such as this, where an employee’s
residence is a two-hour commute from his assigned work area.
He said it would be reasonable and prudent for the appropriate
state agency to designate a headquarters location somewhere
within the employee’s assigned work area.
THE FIRE AND RESCUE BRANCH STILL DOES
NOT ADHERE TO ADMINISTRATIVE CONTROLS
CONCERNING OVERTIME
Because the fire and rescue branch failed to follow its own
administrative controls concerning overtime, employees have
continued to incur nonemergency overtime that lacked advance
42 California State Auditor Investigative Report I2002-2 California State Auditor Investigative Report I2002-2 43
Governor’s Office of Emergency Services
authorization. State law requires each state agency to establish
and maintain a system or systems of internal accounting and
administrative controls. Internal controls are necessary to
provide public accountability and are designed to minimize
fraud, abuse, and waste of government funds. California
regulations state that, in order to be compensable by cash or
compensating time off, overtime must be authorized in advance,
except in an emergency, by the appointing authority or its
designated representative.
In an attempt to address the past failure of the fire and rescue
branch to control excessive nonemergency overtime and
related expenses, OES reported to us on February 10, 1999, that
it had implemented an administrative system that required
employees in the fire and rescue branch to submit in a timely
manner various documents that included but were not
limited to a monthly calendar of planned activities, overtime
authorization and claim forms, authorization for on-call
hours, and absence and time reports. OES reported that
supervisors would compare each document with previously
approved authorizations and individual planning documents
to ensure agreement and to continuously monitor overtime
use and travel expenses. However, one supervisor responsible
for performing these control functions admitted that some
employees under his supervision had not submitted the
appropriate documents by the third working day of each
month, as required. As a result, the supervisor said that there
might have been instances when he was not able to review and
approve planned overtime and travel incurred by employees
under his supervision.
Although we did not perform an extensive review of the records
of each employee in the fire and rescue branch, we did note
several instances in which employees did not receive advance
approval of nonemergency overtime. For instance, during
Of the 84.5 hours of July 1999, employee A claimed 84.5 hours of overtime, 73 of
overtime employee A which related to nonemergency events. However, none of the
claimed in July 1999, documents we obtained from the fire and rescue branch show
73 hours were related to that employee A received prior approval for the nonemergency
nonemergency events; overtime he claimed. In June 2000, of 99.5 hours of overtime
however, the employee claimed by employee A, 60.5 hours were nonemergency
had not obtained overtime. Again, the documents we obtained did not show
prior approval to work that employee A obtained prior authorization to work the
overtime. overtime. In June 2001, another employee, employee B,
claimed 43.75 hours of overtime, all for nonemergency
events. Yet none of the documents we reviewed indicated
42 California State Auditor Investigative Report I2002-2 California State Auditor Investigative Report I2002-2 43
Governor’s Office of Emergency Services
that he had received prior approval for the overtime.
Given that employee A and the rest of the fire and rescue
branch historically have incurred significant amounts of
nonemergency overtime, we believe it would be prudent for OES
to follow its own administrative procedures designed to monitor
and control overtime and travel costs.16
AGENCY RESPONSE
OES reported that the unresolved supervisory and administrative
issues associated with the fire and rescue branch were a result
of miscommunications during changes to fire and rescue
branch management or inadequate training, but that these
issues have now been addressed. OES suggests that the issue
of the questionable agreement with employee A’s bargaining
unit is “moot” because employee A has been reassigned to a
work area where he lives and the circumstances of all other OES
employees potentially covered by the agreement have changed
so the agreement is applicable to no one. OES also reported that
it has established administrative controls concerning overtime
authorization and that it has counseled all fire and rescue
branch employees that nonemergency overtime will not be
incurred without prior authorization. n
16 We previously reported that only 41 percent of overtime claimed by employees at the
fire and rescue branch from November 1996 through June 1997 related directly to
emergency conditions.
44 California State Auditor Investigative Report I2002-2 California State Auditor Investigative Report I2002-2 45
CHAPTER 5
California State University, Northridge:
Unauthorized Bank Account
ALLEGATION I2001-709
The director of a research center (center) at California State
University, Northridge (CSUN) opened an unauthorized
bank account in connection with his administration of
the center.
RESULTS AND METHOD OF INVESTIGATION
CSUN investigated and substantiated the allegation and other
improper activities and reported its findings to us. To investigate
the allegation, CSUN reviewed records pertaining to the center,
including bank records, and conducted interviews. CSUN found
that not only did the director open an unauthorized bank
account, but he also commingled personal and university funds
and paid personal expenses from the account. In addition, he
deposited checks into the account that were made payable to
other organizations. Further, checks from the account totaling
$9,520 were written directly to the director or to cash, or were
used to pay for the director’s personal expenses. CSUN has
closed the center.
BACKGROUND
The center, under the auspices of CSUN, was established to
focus research on particular issues, including the hosting of
symposia and conferences, and to serve as a clearinghouse
for the collection and dissemination of national and global
information. All lectures, programs, and activities were to be
open to the entire university and the general public.
44 California State Auditor Investigative Report I2002-2 California State Auditor Investigative Report I2002-2 45
California State University, Northridge
THE DIRECTOR IMPROPERLY OPENED AN
UNAUTHORIZED BANK ACCOUNT FOR THE CENTER
In early 1998, the director opened a checking account in the
center’s name. However, because the center was a CSUN entity,
CSUN concluded that he did not have legal authority to open
such an account. Specifically, CSUN policies require that one
of the three CSUN financial service agencies (the University
Accounting Office, the University Corporation, or the CSUN
Foundation) be consulted to certify that (1) the purposes of
the center do not violate the agency’s regulations and (2) the
procedures for handling and being accountable for funds
conform to the agency’s regulations.
THE DIRECTOR COMMINGLED PERSONAL FUNDS AND
CENTER FUNDS
The director deposited $15,924 into the center account. Of
the checks then written against the center’s account, $9,520
was paid to the director himself, to cash, or for the director’s
personal expenses. State law requires each state agency to
establish and maintain an adequate system of internal
controls.17 Internal controls are designed to prevent errors,
irregularities, and illegal acts. Because cash and checks
Although the director are highly liquid assets, they can be converted easily for
deposited some personal improper uses, such as theft or misappropriation.
income into the account,
checks paid to the director The director stated that he established the account in order
or made out to cash to keep a record of personal income spent for the center’s
exceeded the director’s operation. The director did deposit approximately $2,840 of
deposits by $3,437. his personal funds into the center account and an additional
$3,243 that represented revenues from the sale of course
materials to his students. However, the checks paid to the
director, used to pay his personal expenses, or made out to
cash exceeded the director’s personal deposits to the account
by $3,437. Further, some of the checks payable to the director
had the word “loan” written in the note section. There was no
documentation showing that any of the “loans” were paid back
to the account.
Other sources of deposited funds were $2,610 in cash, $2,050
from another association, and $2,489 from other outside
entities. Included in the deposits were 17 checks totaling
17 For a more complete description of the laws discussed in this chapter, see Appendix B.
46 California State Auditor Investigative Report I2002-2 California State Auditor Investigative Report I2002-2 47
California State University, Northridge
$2,550 that were payable not to the center but to other
entities. Of these 17 checks, 16 (totaling $2,050) related to
one association of which the director formerly served as
president. CSUN concluded that, without a corresponding
payment to the association, the situation had the appearance of
embezzlement of the association’s funds.
THE DIRECTOR FAILED TO PROVIDE A COMPLETE
ACCOUNTING FOR CENTER FUNDS
Despite repeated requests from the dean and the CSUN internal
auditor, the director never provided a complete accounting
of center funds, including documentation of all revenues and
expenditures. The director argued that this was his personal
account and refused to provide access to any account of which
he was the sole proprietor. CSUN disagreed that the account
was personal or private because “the account, its purpose and
its operation are clearly related to the function of university
operations and to the holdings and operation of the [center].”
CSUN defines state money as follows: “If the entity or persons
responsible for developing and/or overseeing a program (the
owner of the program) is an official campus organization or
campus employee, the revenue generated by the program is
campus money.” According to a document prepared by the
dean, he concluded that, “By this definition and by university
and state policies, it is clear that monies and records related
to the above account, although improperly opened by [the
director] and operated for 19 months without authorization,
Because of the director’s reflect financial activities of a university center and are to be
refusal to provide requested deemed state monies.”
information, CSUN had
no assurance that the As we mentioned, state law requires each state agency to
center’s funds were being establish and maintain an adequate system of internal controls.
administered properly. Because of the director’s refusal to provide the requested
information, CSUN had no assurance that the center’s funds
were being administered properly and prudently to prevent
errors, irregularities, or illegal acts.
AGENCY RESPONSE
CSUN closed the center. In addition, CSUN revised its policies
to state that outside bank accounts are not permitted under
any circumstances and distributed new guidelines to all center
directors regarding an acceptable design for the financial
46 California State Auditor Investigative Report I2002-2 California State Auditor Investigative Report I2002-2 47
summary of the annual report. Finally, CSUN provided the
director with a notice of dismissal dated May 17, 2002. The
director has filed an appeal with the State Personnel Board. n
48 California State Auditor Investigative Report I2002-2 California State Auditor Investigative Report I2002-2 49
CHAPTER 6
Department of General Services,
Office of State Publishing: Misuse
of State Equipment and Inadequate
Documentation of Overtime
ALLEGATIONS I2000-643, I2000-750, AND I2001-656
Employees in the Office of State Publishing (OSP), part of
the Department of General Services (DGS), misused state
equipment and abused overtime.
RESULTS AND METHOD OF INVESTIGATION
We asked the DGS to investigate the allegations on our
behalf. It substantiated some aspects of the allegations
but was not able to evaluate others properly due to a lack
of timely and/or specific information and inadequate
documentation. To investigate the allegations, DGS auditors
reviewed adverse action files related to an employee’s use of
state computer equipment for improper purposes. In addition,
the auditors discussed the allegations with OSP’s senior
management; conducted interviews with management
personnel and some individuals mentioned in the
allegations; and reviewed leave balances, overtime hours,
policies, and practices.
EMPLOYEES MISUSED STATE EQUIPMENT
We received allegations that two OSP employees routinely
and blatantly used state equipment for personal projects. In
addition, one employee allegedly used a state computer to access
obscene or pornographic Web sites. State law prohibits state
employees from using state resources such as state equipment
for personal enjoyment, private gain, or personal advantage, or
for an endeavor not related to state business.18
18 For a more complete description of the laws discussed in this chapter, see Appendix B.
48 California State Auditor Investigative Report I2002-2 California State Auditor Investigative Report I2002-2 49
Department of General Services, Office of State Printing
Although the DGS auditor determined that OSP employees have
used state equipment for personal projects, they could not inde-
pendently verify the degree of the usage. One manager told the
auditors that his policy calls for state equipment to be used for
state business only. However, he said he was aware that all his
employees have on occasion used the equipment for personal
purposes. Based on his observations, he said the use was mini-
mal and not abusive.
The DGS had investigated and resolved another allegation
before receipt of our letter. Specifically, an OSP employee
used state computer equipment for improper purposes,
including accessing sexually suggestive Web sites. The DGS took
adverse action against the employee, including reducing his pay
by 10 percent for six months.
OSP’S SYSTEM OF RECORD KEEPING MAKES
CONFIRMING ABUSE OF OVERTIME DIFFICULT
Although the DGS reported that it was unable to investigate
fully and therefore possibly substantiate allegations that employ-
ees abused overtime and failed to charge leave balances, we
nevertheless have concerns about these issues. State law requires
each state agency to establish and maintain a system or systems
of internal accounting and administrative controls. Internal
controls are necessary to provide public accountability and are
designed to minimize fraud, errors, abuse, and waste of govern-
ment funds. The elements of a satisfactory system of internal
accounting and administrative control include a system of
authorization and record-keeping procedures adequate to pro-
vide effective accounting control over assets, liabilities, revenues,
and expenditures.
According to the DGS, the accuracy of claimed overtime
Two managers admitted and leave at the OSP depends primarily on the honesty of
that abuse of overtime employees in recording their time and the diligence of
or leave time could supervisors in verifying the accuracy of that time. The DGS
occur because on-site stated that it did not have enough credible, specific, and timely
supervision may not be information to investigate the allegations fully. However, the
available and practical on DGS did review overtime practices and discuss the allegations
all three daily work shifts. of abuse with the two managers in charge of the relevant areas
at OSP. The managers indicated that they were not aware of
any specific instances of abuse of overtime or leave time but
recognized that overtime abuse could occur and not be detected
50 California State Auditor Investigative Report I2002-2 California State Auditor Investigative Report I2002-2 51
Department of General Services, Office of State Printing
readily because of the often unplanned nature of the work
performed and the existence of three shifts for which on-site
supervision may not be available and practical.
Other than the final time sheet submitted by each employee,
no formal records are maintained regarding overtime worked.
Further, the time sheets contain information regarding the days
on which overtime was worked and the hours claimed, but they
do not provide details on the actual jobs performed. At least
one manager indicated that he informally tracks the overtime
and leave taken by his employees through the use of calendars
and logs. However, these records are not maintained for audit
or external review purposes. The DGS concluded that the cur-
rent system of informal record keeping does not allow an inde-
pendent party to evaluate fully whether the overtime is being
controlled effectively.
As we mentioned, the DGS was unable to substantiate the
allegation, but it did acknowledge a potential for abuse. One
One employee increased employee, whose base pay during calendar year 2000 was
his salary $24,000 approximately $49,000, received about $24,000 (49 percent
(49 percent of his annual of his annual salary) in overtime pay that year, bringing his
salary) by working total pay for the year to $73,000. The DGS did find that the
overtime. employee’s overtime hours were significantly higher than those
of his coworkers, but the employee’s manager did not find the
amount to be excessive, as the employee never turns down
overtime when he is scheduled to work it and readily volunteers
to work other people’s scheduled overtime. Nevertheless, due
to inadequate record keeping and a possible lack of on-site
supervision, the DGS has less assurance that all the overtime
was necessary and actually was worked.
AGENCY RESPONSE
As we mentioned, the DGS took adverse action against the
employee who misused state computers to access sexually sug-
gestive Web sites. Also, OSP management agreed to take action
to ensure that state equipment no longer is used for personal
projects. To prevent even the perception of misuse, this policy
will not allow any personal use, including that of an incidental
and minimal nature. Management also agreed to implement a
new formal overtime system. This system will include provisions
for the prior approval of overtime requests or assignments, the
identification of the job to be performed, and the reason over-
time is needed to complete the job. n
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52 California State Auditor Investigative Report I2002-2 California State Auditor Investigative Report I2002-2 53
CHAPTER 7
Update on Previously Reported Issues
CHAPTER SUMMARY
The California Whistleblower Protection Act, formerly
known as the Reporting of Improper Governmental
Activities Act, requires an employing agency or
appropriate appointing authority to report to the Bureau of
State Audits (bureau) any corrective action, including
disciplinary action it takes in response to an investigative report
not later than 30 days after the report is issued. If it has not
completed its corrective action within 30 days, the agency or
authority must report to the bureau monthly until it completes
that action. This chapter summarizes corrective actions taken on
one case since we last reported it.
DEPARTMENT OF TRANSPORTATION
CASE I980141
On April 3, 2001, we reported that a Department of Transpor-
tation (Caltrans) employee had a conflict of interest and had
engaged in incompatible activities. Specifically, the employee
participated in making departmental decisions that benefited a
company owned by his wife. In addition, he misused his state
position to influence Caltrans’ contractors and private busi-
nesses to do business with his wife’s company. The employee also
used state resources to solicit work for his private consulting busi-
ness. The employee discredited Caltrans and the State because of his
conflicts of interest and his attempts to influence private businesses.
Caltrans initially told us it had suspended the employee for
45 days without pay, but we discovered that this information
was incorrect. After being served with notice of a 60-day
suspension without pay, the employee appealed to the State
Personnel Board (personnel board), and a formal agreement
between the parties, approved by the personnel board on
February 15, 2001, stipulated a 30-day suspension without pay.
Although Caltrans says the employee did not report to work for
30 working days per the agreement, the employee continued to
receive his full salary and failed to notify Caltrans of this fact.
52 California State Auditor Investigative Report I2002-2 California State Auditor Investigative Report I2002-2 53
After we brought this matter to its attention in October 2001,
A suspended employee Caltrans notified the employee that he would have to repay
inappropriately received approximately $7,300. It gave him a number of repayment
his full salary during his options. Because Caltrans had made the error, it did not take
suspension but ultimately any further action against the employee for failing to disclose
repaid Caltrans for the that he had continued to receive his full salary and benefits
error after we brought it during his suspension. It is unclear whether Caltrans would
to Caltrans’ attention. have discovered the error or whether the employee would have
brought it to Caltrans’ attention. Nevertheless, Caltrans’ error
essentially led to the employee receiving an interest-free loan. In
April 2002, Caltrans provided us with a copy of a check signed
by the employee’s wife and dated March 22, 2002, to repay the
full amount.
UPDATED INFORMATION
In late 2000, the employee’s supervisor warned the employee
not to engage in any activity related to erosion control (the
industry in which his wife’s company operates) during work
hours or in his capacity as a Caltrans employee. In direct
violation of this warning, the employee attended a Caltrans-
sponsored meeting for the erosion control industry in
June 2001. In addition, only six days after the personnel board
approved the stipulated agreement from the employee’s previous
disciplinary action, on February 21, 2001, the employee posted
an inquiry on the Caltrans intranet related to erosion control.
To discipline the employee, Caltrans attempted to reduce the
employee’s pay by approximately 17 percent for 12 months. The
employee appealed this decision to the personnel board, which
modified the disciplinary action to a 5 percent salary reduction
for 6 months.
54 California State Auditor Investigative Report I2002-2 California State Auditor Investigative Report I2002-2 55
We conducted this review under the authority vested in the California State Auditor
by Section 8547 et seq. of the California Government Code and in compliance with
applicable investigative and auditing standards. We limited our review to those areas
specified in the results and method of investigation sections of this report.
Respectfully submitted,
ELAINE M. HOWLE
State Auditor
Date: November 13, 2002
Investigative Staff: Ken L. Willis, Manager, CPA
William Anderson, CFE
Scott Denny, CPA, CFE
Cynthia A. Sanford, CPA
Mike Urso
Audit Staff: Dawn Tomita
Theresa M. Carey, CPA
54 California State Auditor Investigative Report I2002-2 California State Auditor Investigative Report I2002-2 55
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56 California State Auditor Investigative Report I2002-2 California State Auditor Investigative Report I2002-2 57
APPENDIX A
Activity Report
The Bureau of State Audits (bureau), headed by the state
auditor, has identified improper governmental activities
totaling $11.2 million since July 1993, when it reactivated
the Whistleblower Hotline (hotline), formerly administered
by the Office of the Auditor General. These improper activities
include theft of state property, false claims, conflicts of
interest, and personal use of state resources. The state auditor’s
investigations also have substantiated improper activities that
cannot be quantified in dollars but have had a negative social
impact. Examples include violations of fiduciary trust, failure to
perform mandated duties, and abuse of authority.
Although the bureau investigates improper governmental
activities, it does not have enforcement powers. When it
substantiates allegations, the bureau reports the details to
the head of the state entity or to the appointing authority
responsible for taking corrective action. The California
Whistleblower Protection Act (act) also empowers the state
auditor to report these activities to other authorities, such as law
enforcement agencies or other entities with jurisdiction over the
activities, when the state auditor deems it appropriate.
Corrective actions taken on cases contained in this report are
described in the individual chapters. Table A.1 on the following
page summarizes all the corrective actions taken by agencies
since the bureau reactivated the hotline. In addition, dozens
of agencies have modified or reiterated their policies and
procedures to prevent future improper activities.
56 California State Auditor Investigative Report I2002-2 California State Auditor Investigative Report I2002-2 57
TABLE A.1
Corrective Actions Taken
July 1993 Through July 2002
Type of Corrective Action Instances
Referrals for criminal prosecution 73
Convictions 7
Job terminations 46
Demotions 8
Pay reductions 10
Suspensions without pay 12
Reprimands 135
New Cases Opened
March 2002 Through July 2002
From March 1, 2002, through July 31, 2002, we opened
270 new cases.
We receive allegations of improper governmental activities in
several ways. Callers to the hotline at (800) 952-5665 reported
139 (52 percent) of our new cases.19 We also opened 128 new
cases based on complaints received in the mail and 3 based on
complaints from individuals who visited our office. Figure A.1
shows the sources of all cases opened from March 2002 through
July 2002.
FIGURE A.1
Sources of 270 New Cases Opened
��������
��
����
��� �������
���
19 In total, we received 2,115 calls on the hotline from March 2002 through July 2002.
However, 1,357 (64 percent) of the calls were about issues outside our jurisdiction. In
these cases, we attempted to refer the caller to the appropriate entity. An additional
637 (29 percent) were related to previously established case files.
58 California State Auditor Investigative Report I2002-2 California State Auditor Investigative Report I2002-2 59
Work on Investigative Cases
March 2002 Through July 2002
In addition to the 270 new cases we opened during this
five-month period, 93 previous cases were awaiting review or
assignment as of February 28, 2002, and 34 were still under
investigation, either by this office or by other state agencies, or
were awaiting completion of corrective action. Consequently,
397 cases required some review during this period.
After reviewing the information provided by complainants and
conducting preliminary reviews, we concluded that 162 cases did
not warrant complete investigation because of lack of evidence.
The act specifies that the state auditor can request the assistance
of any state entity or employee in conducting an investigation.
From March 1, 2002, through July 31, 2002, state agencies
investigated 17 cases on our behalf and substantiated allegations
on 2 (22 percent) of the 9 cases they completed during the
period. In addition, we independently investigated 12 cases
and substantiated allegations on all 4 of the cases we completed
during the period. As of July 31, 2002, 204 cases were awaiting
review or assignment. With the California State University,
Northridge, we jointly investigated and substantiated allegations
on one of the two joint investigations during the period.
Figure A.2 shows the disposition of the 397 cases worked on
from March 2002 through July 2002.
FIGURE A.2
Disposition of 397 Cases
March 2002 Through July 2002
��������������������
�������������� ��������������
��������������� ��������������
���������� ������
��� ���
58 California State Auditor Investigative Report I2002-2 California State Auditor Investigative Report I2002-2 59
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60 California State Auditor Investigative Report I2002-2 California State Auditor Investigative Report I2002-2 61
APPENDIX B
State Laws, Regulations, and Policies
This appendix provides more detailed descriptions of the
state laws, regulations, and policies that govern employee
conduct and prohibit the types of improper governmental
activities described in this report.
CAUSES FOR DISCIPLINING STATE EMPLOYEES
The California Government Code, Section 19572, enumerates
the various causes for disciplining state civil service employees.
These causes include incompetency, inefficiency, inexcusable
neglect of duty, insubordination, dishonesty, misuse of state
property, and other failure of good behavior, either during
or outside of duty hours, which is of such a nature that it
causes discredit to the appointing authority or the person’s
employment.
REGULATIONS COVERING TRAVEL EXPENSE
REIMBURSEMENTS AND PAYMENT OF COMMUTING
EXPENSES
Chapters 2 and 4 report improper payment of travel or
commuting expenses.
The California Code of Regulations, Title 2, Section 599.615.1,
states that each state agency shall determine the necessity
for travel and that such travel shall represent the State’s best
interest. Section 599.616.1(a) prohibits payment of per diem
expenses such as meals and lodging if the expense is incurred
within 50 miles of headquarters. Section 599.616.1(b) specifies
that a place of primary dwelling shall be designated for each
state officer and employee, and that the primary dwelling
shall be defined as the actual dwelling place of the employee
that bears the most logical relationship to the employee’s
headquarters and shall be determined without regard to any
other legal or mailing address. Section 599.626.1 stipulates that
reimbursement for travel expenses will be made only for the
method of transportation that is in the State’s best interest and,
regardless of the employee’s normal mode of transportation,
disallows expenses that arise from travel between home or
60 California State Auditor Investigative Report I2002-2 California State Auditor Investigative Report I2002-2 61
garage and headquarters. When a trip begins or ends at the
employee’s home, the distance traveled shall be computed
from the lesser of the employee’s home or headquarters.
Section 599.627.1 states that, in cases in which it is authorized
and necessary to hire special conveyances, a full explanation,
stating the facts constituting its necessity, shall accompany the
expense claim. Section 599.638.1(d) requires state officers and
employees to state the purpose of each trip and meal for which
reimbursement is claimed.
WORKPLACE VIOLENCE DEFINED
Chapter 1 reports violations of violence in the workplace
policies.
The Department of Health and Human Services’
Understanding and Responding to Violence in the Workplace
defines workplace violence as including abuse of authority,
intimidating or harassing behavior, and threats. The California
Conservation Corps’ Violence in the Workplace Protection
Plan defines workplace violence as an act or behavior that is
physically assaultive; is intensely focused on a grudge, grievance,
or romantic interest in another person; is communicated or
reasonably perceived as menacing or as being a threat to harm
or endanger the safety of another individual; involves destroying
property or throwing objects in a manner reasonably perceived
to be threatening; or is a communicated or reasonably perceived
threat to destroy property.
In addition, guidelines established by the California Department
of Industrial Relations’ Division of Occupational Safety and
Health concerning workplace security states that employees
with a history of assault or who have exhibited belligerent,
intimidating, or threatening behavior to others present a
potential risk of violence in the workplace. An employer’s
considerate and respectful management of his or her employees
represents an effective strategy for preventing workplace
violence by employees. In addition, the guidelines suggest
that employers establish a clear anti-violence management
policy; apply the policy consistently and fairly to all employees,
including supervisors and managers; and provide appropriate
supervisory and employee training in an effort to prevent
workplace violence.
62 California State Auditor Investigative Report I2002-2 California State Auditor Investigative Report I2002-2 63
PROHIBITIONS AGAINST USING STATE RESOURCES FOR
PERSONAL GAIN
Chapters 1 and 6 report personal use of state resources.
The California Government Code, Section 8314, prohibits
state officers and employees from using state resources such
as land, equipment, travel, or state-compensated time for
personal enjoyment, private gain, or personal advantage, or
for an outside endeavor not related to state business. If the
use of state resources is substantial enough to result in a gain
or advantage to an officer or employee for which a monetary
value may be estimated, or a loss to the State for which a
monetary value may be estimated, the officer or employee
may be liable for a civil penalty not to exceed $1,000 for
each day on which a violation occurs plus three times the
value of the unlawful use of state resources. In addition, the
California Conservation Corps’ Operations Manual prohibits
employees from using state purchasing procedures to obtain
services or property for personal use.
CRITERIA CONCERNING TRAVEL TIME
Chapter 1 discusses provisions governing employee
compensation while on travel status.
Both the federal Fair Labor Standards Act and the California
Conservation Corps’ travel policy stipulate that employees who
travel overnight are not compensated for travel outside of normal
work hours unless they are engaged in work while traveling.
CRITERIA GOVERNING STATE MANAGERS’
RESPONSIBILITIES
Chapters 2, 3, 4, 5, and 6 report weaknesses in management
controls.
The Financial Integrity and State Manager’s Accountability Act
of 1983 (act) contained in the California Government Code,
beginning with Section 13400, requires each state agency
to establish and maintain a system or systems of internal
accounting and administrative controls. Internal controls are
necessary to provide public accountability and are designed
to minimize fraud, abuse, and waste of government funds.
In addition, by maintaining these controls, agencies gain
reasonable assurance that those measures they have adopted
protect state assets, provide reliable accounting data, promote
operational efficiency, and encourage adherence to managerial
62 California State Auditor Investigative Report I2002-2 California State Auditor Investigative Report I2002-2 63
policies. The act also states that the elements of a satisfactory
system of internal accounting and administrative control shall
include a system of authorization and record-keeping procedures
adequate to provide effective accounting control over assets,
liabilities, revenues, and expenditures. Further, this act requires
that, when detected, weaknesses must be corrected promptly.
In addition, the California Government Code, Section 11813,
declares that waste and inefficiency in state government
undermine Californians’ confidence in government and
reduce the state government’s ability to address vital public
needs adequately.
CRITERIA GOVERNING USE OF STATE-OWNED OR
LEASED AIRCRAFT
Chapter 2 discusses executive use of state-owned or
leased aircraft.
The State Administrative Manual discusses the use of agency-
owned or leased aircraft. Section 742 prohibits the use of
such aircraft for executive travel if the destination is within
two hours’ driving time or a regular commercial airline
serves the location. Section 748 outlines transportation
selection criteria and says to select the least costly method
of transportation, considering direct expense and employee
time away from the office. Commercial transportation will
be used whenever its total cost is less than agency-provided
aircraft. Agency aircraft may be used when it proves to be
the least costly method, but individuals should consider and
document various criteria including the cost of personnel
hours lost in travel, total commercial travel costs, added per
diem costs, accessibility and/or urgency of the situation, and
commercial airline service and schedules.
In addition, Section 7761.10 of the California Department
of Forestry and Fire Protection’s Hired Equipment Policies,
Procedures, and Payment Rates states that emergency hiring
of aircraft is authorized, as necessary, to meet emergency
fire situations, but the policy also says this privilege must be
administered judiciously to avoid unnecessary expenditure of
public funds.
64 California State Auditor Investigative Report I2002-2 California State Auditor Investigative Report I2002-2 65
CRITERIA GOVERNING COMMUTES
Chapter 4 reports improper compensation for commutes.
The California Department of Personnel Administration’s (DPA)
Policy Guidelines Applicable to State of California Civil Service
Employees prohibits state agencies from paying employees
for ordinary home-to-work and work-to-home commuting.
In addition, the Governor’s Office of Emergency Services
developed a policy concerning headquarters designation
for employees. The policy allows for staff who have regional
responsibilities in areas where there are no state-owned or
leased facilities reasonably available to have their residence
designated as their headquarters. However, the policy further
states that an employee’s residence must be located within his
or her assigned work area to be designated as the employee’s
headquarters. The policy also specifies that commute time
between an employee’s home and the designated headquarters
or work area is not considered work time for regular pay,
overtime, or travel costs except as may be specified in DPA or
collective bargaining agreements.
REGULATIONS CONCERNING PAYMENT OF OVERTIME
Chapter 4 reports improper compensation for overtime.
The California Code of Regulations, Title 2, Section 599.702,
states that in order to be compensable by cash or compensating
time off, overtime must be authorized in advance, except in
an emergency, by the appointing authority or its designated
representative.
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APPENDIX C
Incidents Uncovered by Other Agencies
Section 20080 of the California State Administrative
Manual requires state government departments to notify
the Bureau of State Audits (bureau) and the Department
of Finance of actual or suspected acts of fraud, theft, or other
irregularities they have identified. What follows is a brief
summary of incidents involving state employees reported from
March through July 2002. Although many state agencies do
not yet report such irregularities as required, some vigorously
investigate such incidents and put considerable effort into
creating policies and procedures to prevent future occurrences.
It is important to note that the reported incidents have been
brought to conclusion; we will not publish any reports that
would interfere with or jeopardize any ongoing internal or
criminal investigation.
Seven state entities notified the bureau of 22 instances of
improper governmental activity that had been brought to
conclusion from March through July 2002. Those entities
were the Department of Transportation; the California State
University system; the Department of Motor Vehicles; the
Business, Transportation and Housing Agency; the Victim
Compensation and Government Claims Board; the Department
of Fish and Game; and the Franchise Tax Board. Incidents
resulting in monetary loss to the State totaled $412,738.
Financial losses to some of these entities have been mitigated by
restitution of $154,372.
DEPARTMENT OF TRANSPORATION
The Department of Transportation (Caltrans) reported three
investigations involving embezzlement, unauthorized purchases,
misuse of state property and conflicts of interest. One employee
stole $250,000 in an accounts payable scheme. By the time
the fraud was uncovered, most of the money had either
been spent or transferred to another country. The employee
was prosecuted and convicted. Caltrans fired the employee,
improved weaknesses in its internal controls, and requested that
the remaining funds ($76,000) be returned to the State. Another
employee made $2,137 in unauthorized purchases using a
state credit card. The employee resigned and Caltrans deferred
66 California State Auditor Investigative Report I2002-2 California State Auditor Investigative Report I2002-2 67
further investigative efforts to legal authorities for criminal
prosecution. A third investigation involved an employee who,
in his official state position, used state letterhead and equipment
to write a letter to a local entity expressing support for a certain
transportation project. Caltrans concluded the employee’s
actions were inconsistent with his duties as a state employee and
represented a conflict of interest and confirmed that the project’s
consultant had hired and paid the employee $12,748 for work
related to the project. Caltrans restricted the employee’s work
duties and communications with parties outside the department
in his official capacity.
CALIFORNIA STATE UNIVERSITY
Four California State University (university) campuses reported
improper governmental activities. One campus reported
that its investigation concerning fiscal irregularities led to a
grand jury indictment of an employee on forgery, fraud, and
embezzlement charges. The employee pled guilty and restitution
was set at $147,000. A second campus reported an employee
devised a purchasing scheme to obtain merchandise for herself
at the State’s expense. The employee purchased $28,000 worth
of merchandise for the university using her university credit
card, then used vendor merchandise credits to obtain $2,000
in additional merchandise for herself in lieu of taking a vendor
discount for the university. The campus retrieved some of the
stolen merchandise, canceled the employee’s university
credit card, and fired her. A third campus discovered an
employee used a university procurement card to purchase
personal items totaling $5,810. The campus fired the employee,
received $1,500 from the employee, authorized another $1,071
be taken from her final paycheck, and accepted a promissory
note for the remaining balance. A fourth campus reported that
a student employee falsified attendance reports by adding hours
that had not been worked, totaling $1,450 in unearned wages.
The campus discharged the student from employment and
received full restitution.
68 California State Auditor Investigative Report I2002-2 California State Auditor Investigative Report I2002-2 69
DEPARTMENT OF MOTOR VEHICLES
During the five-month period from March through July 2002,
the Department of Motor Vehicles (DMV) advised this office
of 11 investigations completed by its staff that substantiated
improper activities by DMV employees. Three of these
investigations involved the selling of fraudulent driver’s licenses
or other related documents to 11 people, of which 8 were
undocumented immigrants who paid $13,000 for the privilege
of driving. Many of these individuals did not take (or pass, if
taken) written, vision, or driving tests. The DMV also uncovered
these improprieties:
• Three employees misappropriated $296 by falsifying or alter-
ing the DMV database.
• One employee through misrepresentations obtained for
family members $124 in discounted bus passes subsidized by
the State.
• Two employees falsified records to show a friend had passed a
written exam.
BUSINESS, TRANSPORTATION AND HOUSING AGENCY
The Business, Transportation and Housing Agency (BTHA)
reported an employee billed personal air flights to his state credit
card and used his state cell phone and vehicle for personal use.
In total, the employee obtained $4,422 in personal benefits at
the State’s expense. The employee also used the prestige of the
State to obtain government discounts for his personal air flights.
BTHA recovered $4,422 from the employee and revoked his state
credit card.
68 California State Auditor Investigative Report I2002-2 California State Auditor Investigative Report I2002-2 69
VICTIM COMPENSATION AND GOVERNMENT
CLAIMS BOARD
The Victim Compensation and Government Claims Board
(board) informed us an employee used state equipment to
access pornographic Web sites. The board filed an adverse
action against the employee then withdrew it and accepted
a voluntary resignation with fault as part of a settlement
agreement with the employee.
DEPARTMENT OF FISH AND GAME
The Department of Fish and Game advised us of one investiga-
tion involving contract and leave accounting irregularities, and
personal use of a state vehicle. It completed its review and initi-
ated training and other corrective actions commensurate with
the nature of the irregularities.
FRANCHISE TAX BOARD
The Franchise Tax Board reported an employee inappropriately
accessed and obtained tax information. The employee volun-
tarily resigned.
70 California State Auditor Investigative Report I2002-2 California State Auditor Investigative Report I2002-2 71
INDEX
Allegation Page
State Entity Number Allegation Number
California State University, I2001-709 Unauthorized bank account 45
Northridge
Conservation Corps I990174 Abuse of power, personal use of state funds, 5
and questionable overtime
Emergency Services I2000-607 Excessive wages, overtime, and travel costs 37
Forestry and Fire Protection I2000-709 Economically wasteful decisions 21
General Services I2000-643 Misuse of state equipment and inadequate 49
documentation of overtime
I2000-750
I2001-656
Transportation I980141 Update on conflicts of interest and 53
incompatible activities
Veterans Home I2000-876 Improper billings to Medicare 31
70 California State Auditor Investigative Report I2002-2 California State Auditor Investigative Report I2002-2 71
cc: Members of the Legislature
Office of the Lieutenant Governor
Milton Marks Commission on California State
Government Organization and Economy
Department of Finance
Attorney General
State Controller
State Treasurer
Legislative Analyst
Senate Office of Research
California Research Bureau
Capitol Press
72 California State Auditor Investigative Report I2002-2