Special BOS Meeting Monday June 7
The Modoc County Board of Supervisors will hold a special meeting Monday, June 7 to discuss the fiscal crisis it is facing as a result of misappropriating $20 million from the treasury.
The meeting, which is scheduled to start at 6 p.m. in the Sheriff’s Annex, is the result of pressure from the Monday Night Group which is opposed to the board’s intention to sell bonds and put the county in long-term debt in order to repay the treasury.
The county has been under mandate from the State Controller’s Office to replace the money “as soon as possible” for the last year. However, the state has not set a firm deadline for when the repayment must be made nor has it defined what it means by “as soon as possible.”
The Board of Supervisors has been privately aware of the misappropriation since April 2009, and went public with the urging of former CAO Mark Charlton about two months later.
In the ensuing 12 months the board forced Charlton out and hired its transportation director, Rick Rudometkin, to replace him -- without establishing Rudometkin's credentials for holding the position. It also contracted with Richard Arrow as an outside financial consultant, giving him the title of chief financial officer, and is considering contracting with a San Rafael firm to act as the financial underwriters for the sale of the bonds.
Most recently the board voted to create a new county fiscal officer position, which apparently will take effect when Arrow’s contract expires at the end of June.
The board has resisted serious consideration of any options suggested by the Monday Night Group to replace the $12.5 million balance to the treasury other than the sale of bonds to the institutional investors’ market. However, this effort hinges on the county’s obtaining an adequate credit rating currently being studied by Fitch Rating Services.
Friday, June 4, 2010
SCO Replies to Citizen’s Complaint
California State Controller John Chiang has re-affirmed that Modoc County’s accounting practices “jeopardized the county’s ability to safeguard its assets.”
In a May 14 letter responding to a complaint filed by Don Johnson of Alturas asking the state to find reasonable cause that either fraud or embezzlement may have occurred in the $20 million misappropriation of the treasury, Chiang also said his office found no evidence of embezzlement during its initial investigation.
“We identified internal control deficiencies and policy lapses that jeopardized the county’s ability to safeguard its assets, to ensure the accuracy and reliability of its financial records and promote compliance with laws and regulations,” Chiang stated.
“We questioned the soundness of the decisions reached by the county’s management,” he continued. “However we did not uncover any evidence suggesting one or more individuals at the county committed fraud or embezzled public funds disbursed from the state treasury.”
Chiang advised Johnson to contact the Modoc County District Attorney’s Office or the grand jury if he had more specific information to support his suspicions. Johnson did not reveal what his next move might be.
In a May 14 letter responding to a complaint filed by Don Johnson of Alturas asking the state to find reasonable cause that either fraud or embezzlement may have occurred in the $20 million misappropriation of the treasury, Chiang also said his office found no evidence of embezzlement during its initial investigation.
“We identified internal control deficiencies and policy lapses that jeopardized the county’s ability to safeguard its assets, to ensure the accuracy and reliability of its financial records and promote compliance with laws and regulations,” Chiang stated.
“We questioned the soundness of the decisions reached by the county’s management,” he continued. “However we did not uncover any evidence suggesting one or more individuals at the county committed fraud or embezzled public funds disbursed from the state treasury.”
Chiang advised Johnson to contact the Modoc County District Attorney’s Office or the grand jury if he had more specific information to support his suspicions. Johnson did not reveal what his next move might be.
Wednesday, June 2, 2010
Monday Night Group Seeks To Stop BOS
The Monday Night Group is sending out a call to action in its efforts to dissuade the Modoc County Board of Supervisors from signing an agreement to seek $15 million in bond revenue sales in order to repay the treasury the money the board misappropriated.
“We need to get as many people who are opposed to the bond sale as possible at the next meeting of the board,” said Don Demsher, a Monday Night Group member who hopes to see a massive turnout of citizens.
At the moment it is not clear when the next meeting of the Board of Supervisors will be, according to Stephanie Northrup, board clerk.
“They are gathering cash flow information for the next three months, to get a better idea of where we stand financially,” Northrup explained, adding that the board could set a future meeting date this coming week.
The next scheduled meeting of the board is June 22, but it can call either a special or emergency meeting before that date.
The ad hoc citizens committee, frequently a thorn in the political side of the supervisors, is becoming increasingly critical of the board’s determination to replace the funds it misappropriated by indebting the county for 15 years with a loan that could carry hidden costs.
While there was a discussion by the board on May 25 that it should meet on a weekly basis through June in order to reach an agreement with bond underwriters, that intention has failed to materialize.
The move by the Monday Night Group closely follows a scathing incrimination of the board at its June 1 meeting by Alan Hopkins, who is a member of the ad hoc committee but was not speaking on its behalf.
“I am expressing displeasure bordering on outrage,” Hopkins told the supervisors, pointing out that the board had failed to place on its agenda any discussion or action related to the county‘s immediate fiscal crisis.
“There are people missing,” he said noting that neither CAO Rick Rudometkin or Supervisor Shorty Crabtree were present. Rudometkin was reportedly on an extended Memorial Day Weekend out of town, and Crabtree was attending a Naval reunion in Washington, D.C.
“You should declare a fiscal emergency and stop spending right now,” Hopkins demanded of the impassive board. “You’re spending money this year that’s budgeted for next year. You are not taking this seriously.”
Demsher said there are numerous dangers associated with a proposed agreement to authorize an outside financial underwriter to represent the county in the sale of bonds.
“It appears to all of us, based on the past conduct of the Board of Supervisors, that it is not capable of implementing the requirements of the covenants associated with the agreement,” Demsher said. “They can’t do it.”
John Dederick, another prominent member of the Monday Night Group, added, “The bond issue will not make the county whole. They need to plan for the future. It’s a tremendous conflict of interest. They are acting in their own interest. Can we prove that? Probably not.”
-- Ray A. March
The Monday Night Group is sending out a call to action in its efforts to dissuade the Modoc County Board of Supervisors from signing an agreement to seek $15 million in bond revenue sales in order to repay the treasury the money the board misappropriated.
“We need to get as many people who are opposed to the bond sale as possible at the next meeting of the board,” said Don Demsher, a Monday Night Group member who hopes to see a massive turnout of citizens.
At the moment it is not clear when the next meeting of the Board of Supervisors will be, according to Stephanie Northrup, board clerk.
“They are gathering cash flow information for the next three months, to get a better idea of where we stand financially,” Northrup explained, adding that the board could set a future meeting date this coming week.
The next scheduled meeting of the board is June 22, but it can call either a special or emergency meeting before that date.
The ad hoc citizens committee, frequently a thorn in the political side of the supervisors, is becoming increasingly critical of the board’s determination to replace the funds it misappropriated by indebting the county for 15 years with a loan that could carry hidden costs.
While there was a discussion by the board on May 25 that it should meet on a weekly basis through June in order to reach an agreement with bond underwriters, that intention has failed to materialize.
The move by the Monday Night Group closely follows a scathing incrimination of the board at its June 1 meeting by Alan Hopkins, who is a member of the ad hoc committee but was not speaking on its behalf.
“I am expressing displeasure bordering on outrage,” Hopkins told the supervisors, pointing out that the board had failed to place on its agenda any discussion or action related to the county‘s immediate fiscal crisis.
“There are people missing,” he said noting that neither CAO Rick Rudometkin or Supervisor Shorty Crabtree were present. Rudometkin was reportedly on an extended Memorial Day Weekend out of town, and Crabtree was attending a Naval reunion in Washington, D.C.
“You should declare a fiscal emergency and stop spending right now,” Hopkins demanded of the impassive board. “You’re spending money this year that’s budgeted for next year. You are not taking this seriously.”
Demsher said there are numerous dangers associated with a proposed agreement to authorize an outside financial underwriter to represent the county in the sale of bonds.
“It appears to all of us, based on the past conduct of the Board of Supervisors, that it is not capable of implementing the requirements of the covenants associated with the agreement,” Demsher said. “They can’t do it.”
John Dederick, another prominent member of the Monday Night Group, added, “The bond issue will not make the county whole. They need to plan for the future. It’s a tremendous conflict of interest. They are acting in their own interest. Can we prove that? Probably not.”
-- Ray A. March
Tuesday, June 1, 2010
Cantrall Speaks Out
Implicates Maxwell, Stevens and Knoch
Supervisor Patricia Cantrall yesterday (June 1) called for a clearing of the books involving an estimated 90 accounts left unanswered with the retirement of Judith Stevens who was county auditor during the time an estimated $20 million was misappropriated from the treasury.
In effect, Cantrall became the first supervisor to directly raise the question of who was responsible for the county’s current financial crisis. Her comments came during a routine report from Asst. CAO Darcy Locken, who was answering questions from the sparse audience about the board’s intent to seek a long-term loan through bond revenue sales to replace the misappropriated money.
“Stevens asked to stay on after her retirement to finalize those accounts, and I want to know if they have been finalized,” Cantrall announced at the regular meeting of the Modoc County Board of Supervisors.
Later in an interview with the Modoc Independent News, Cantrall was far more blunt in her assessment of the misappropriation.
“Maybe I will end up in a state pen or a federal pen,” she said. “I am responsible whether I knew it (of the illegal use of the treasury) or not. There are others getting away without being accountable,” she added and named former CAO Mike Maxwell, former auditor Judith Stevens and current Treasurer Cheryl Knoch.
Maxwell retired Dec. 29, 2008 and Stevens followed Jan. 16, 2009, according to court house records. Neither Maxwell or Stevens have spoken publicly about their alleged involvement in the misappropriation. However, Knoch, who is unopposed in seeking re-election as treasurer, alluded to her fear of going to jail over the matter during a workshop meeting conducted by the Monday Night Group.
“I’m hearing from different sources that some of us are getting recalled,” Cantrall continued. “I can’t blame the public. It doesn’t matter if I didn’t know, I should have known.”
When it was suggested that the Board of Supervisors was taking a lot of criticism for the misappropriation, she made no excuses.
“We’re not lawyers, we‘re not accountants. I can’t say it any better. I didn’t know and the buck stops here. And I truly mean that. I am responsible. When there is no statue of limitations I can be brought into court for misappropriation 20 years from now. It means this will go on forever. Forever, anybody can come back and get us.”
Asked if she thought Chair Dan Macsay, who has been less than candid with the Modoc Independent News about the misappropriation, shared her view, she replied, “I’m sure he realizes what the law is.”
Cantrall said she did not think the estimated 90 accounts contributed in any major way to the treasury’s downfall, but she is looking for answers.
“I want to know if those accounts have been cleared up,” she explained. “The money sits in different pots. It should go back in the general fund if they have been cleared. It would be a small percentage from the treasury. I want to know if the auditors have cleared this up,” she said in reference to the two outside audits of the county‘s books that were ordered by the State Controller‘s Office.
“I have not seen which accounts they are or how much,” she said. “I asked what the grand total was and I did not get an answer. It’s in the board’s minutes.”
-- Ray A. March
Implicates Maxwell, Stevens and Knoch
Supervisor Patricia Cantrall yesterday (June 1) called for a clearing of the books involving an estimated 90 accounts left unanswered with the retirement of Judith Stevens who was county auditor during the time an estimated $20 million was misappropriated from the treasury.
In effect, Cantrall became the first supervisor to directly raise the question of who was responsible for the county’s current financial crisis. Her comments came during a routine report from Asst. CAO Darcy Locken, who was answering questions from the sparse audience about the board’s intent to seek a long-term loan through bond revenue sales to replace the misappropriated money.
“Stevens asked to stay on after her retirement to finalize those accounts, and I want to know if they have been finalized,” Cantrall announced at the regular meeting of the Modoc County Board of Supervisors.
Later in an interview with the Modoc Independent News, Cantrall was far more blunt in her assessment of the misappropriation.
“Maybe I will end up in a state pen or a federal pen,” she said. “I am responsible whether I knew it (of the illegal use of the treasury) or not. There are others getting away without being accountable,” she added and named former CAO Mike Maxwell, former auditor Judith Stevens and current Treasurer Cheryl Knoch.
Maxwell retired Dec. 29, 2008 and Stevens followed Jan. 16, 2009, according to court house records. Neither Maxwell or Stevens have spoken publicly about their alleged involvement in the misappropriation. However, Knoch, who is unopposed in seeking re-election as treasurer, alluded to her fear of going to jail over the matter during a workshop meeting conducted by the Monday Night Group.
“I’m hearing from different sources that some of us are getting recalled,” Cantrall continued. “I can’t blame the public. It doesn’t matter if I didn’t know, I should have known.”
When it was suggested that the Board of Supervisors was taking a lot of criticism for the misappropriation, she made no excuses.
“We’re not lawyers, we‘re not accountants. I can’t say it any better. I didn’t know and the buck stops here. And I truly mean that. I am responsible. When there is no statue of limitations I can be brought into court for misappropriation 20 years from now. It means this will go on forever. Forever, anybody can come back and get us.”
Asked if she thought Chair Dan Macsay, who has been less than candid with the Modoc Independent News about the misappropriation, shared her view, she replied, “I’m sure he realizes what the law is.”
Cantrall said she did not think the estimated 90 accounts contributed in any major way to the treasury’s downfall, but she is looking for answers.
“I want to know if those accounts have been cleared up,” she explained. “The money sits in different pots. It should go back in the general fund if they have been cleared. It would be a small percentage from the treasury. I want to know if the auditors have cleared this up,” she said in reference to the two outside audits of the county‘s books that were ordered by the State Controller‘s Office.
“I have not seen which accounts they are or how much,” she said. “I asked what the grand total was and I did not get an answer. It’s in the board’s minutes.”
-- Ray A. March
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