Charlton Discovers
Funds Are Missing
Part VII
It took newly hired CAO Mark Charlton only a few months on the job to discover that funds were being wrongly taken from the treasury. It took the Modoc County Board of Supervisors just a few more months to give Charlton his walking papers.
His tenure as Modoc County’s chief administrative officer was just a few days short of a year. It’s now been nearly two years since his disclosure of the misappropriation, and the county treasury has yet to be restored.
(For related articles see “Editorial: Following the Rudometkin-BOS Trail,” April 5, 2010; and “Modoc-gate: Charlton’s Fatal Briefing,” Nov. 18, 2009).
Before the Board of Supervisors pushed him out, Charlton, who holds master degrees in civil engineering, economics and theology and came from a career in upper management in the U.S. Army Corps of Engineers, went public with information that an estimated $20 million had been moved from the treasury in violation of various state laws.
Speculation on his role in revealing the county’s secret has been a favorite pastime of courthouse observers -- both detractors and advocates -- ever since the word “misappropriation” hit the streets.
Charlton suspected the treasury was being misused in about March or April 2009, and he was not the only one, there were others. Chester Robertson, Alturas public works director, and his mother-in-law Karen Stockton, director of public health, also had their suspicions, according to the insurance claim being filed against various county officials.
But it was Charlton, as the county’s top administrative official who took action. He reported the misappropriation of funds to the California State Controller’s Office (SCO), which notified the Attorney General’s Office (AG) and “some sort of a file or investigation began,” the claim, written by former DA Gary Woolverton asserts.
Charlton did not stop with notification to the state. He strongly suspected that school funds were being diverted and he informed Gary Jones, county superintendent of schools of his suspicions. Jones, in turn, notified the State Department of Education, Woolverton reveals in the claim.
Now, there were three state departments looking at Modoc County -- the SCO, AG and Education. Charlton and Jones worked out an immediate payback of an estimated $300,000 in school funds, and the AG ceased its investigation while the SCO, after making its own initial audit investigation, demanded all the missing funds be repaid “as soon as possible” and ordered a new outside audit be made of the county’s books.
“The SCO was notified or was part of the resolution” between Charlton and Jones, the claims states. “The SCO notified the AG’s office and there was a gentleman’s agreement that the file/investigation at the AG’s office would be closed.”
In the process, and the date is not clear, Charlton activated the possibility of an insurance claim when he verbally advised Trindel Insurance Fund of the suspected misappropriation. That notification set in motion the eventual action against various county officials, including Treasurer Cheryl Knoch, former auditor Judi Stevens and former CAO Mike Maxwell, among others.
“Mark Charlton’s position is fairly clear,” Woolverton states in the insurance claim. “Based on the fact that he had a copy of the complete treasurer’s monthly report suggests that at least the previous CAO and the treasurer had a copy of the treasurer’s monthly report.
“The treasurer’s report allowed the recipient to analyze the numbers in the treasury, which included the restricted funds and with study and analysis and determine that restricted funds were being diverted…A careful review of the monthly treasurer’s report quickly discloses the negative fund balances,” Woolverton states, and includes the monthly report as an exhibit in the claim.
“A review of the last line and then a review of the various accounts left little doubt that the problem discovered by Charlton was very real, present and on-going. This is the report which was (historically) going to a select number of department heads, but not to others,” Woolverton writes.
Before 2009 was to end, Charlton was pushed out and Rick Rudometkin, until then director of county public works, was appointed to fill his position. Rudometkin’s first job, under order of the Board of Supervisors, was to fire Charlton and his front office assistant Paula Jessup.
Darcy Locken was Charlton’s assistant CAO and survived the purge. In 2010 she defeated incumbent Auditor Alice Marrs in her bid for re-election.
Rudometkin resisted disclosing his personnel files until pressured with a possible lawsuit by the First Amendment Coalition. When the files were finally made public they contained nothing indicating he was qualified for the CAO position.
-- Ray A. March
Next: Cheryl Knoch, the County Treasurer's Role
Saturday, March 5, 2011
Friday, March 4, 2011
Civility Reminded
Editor’s Note: From time to time we remind our readers that when they are posting comments either in response to an article or in an exchange between themselves on this blog to please keep to the subject at hand, and refrain from comments that do not lend themselves to an advancement of the dialogue. This includes metaphors used in describing persons who are either private or public figures in our community. We reserve the right not to post any comments that in our opinion violate this policy.
Editor’s Note: From time to time we remind our readers that when they are posting comments either in response to an article or in an exchange between themselves on this blog to please keep to the subject at hand, and refrain from comments that do not lend themselves to an advancement of the dialogue. This includes metaphors used in describing persons who are either private or public figures in our community. We reserve the right not to post any comments that in our opinion violate this policy.
Governor Brown Declares State of Emergency In Modoc County
Editor's Note: Governor Jerry Brown yesterday issued an emergency proclamation for Modoc County following unseasonably warm weather that melted significant amounts of the snow pack in mid January, causing flooding and damaging roadways and infrastructure.
The full text of the emergency proclamation is below:
A PROCLAMATION OF A STATE OF EMERGENCY
WHEREAS from January 13, 2011, through January 15, 2011, unseasonably warm weather melted significant amounts of the snow pack causing flooding within Modoc County; and
WHEREAS the flooding caused conditions of extreme peril to the transportation infrastructure and the safety of the persons and properties within the county of Modoc; and
WHEREAS the flooding caused severe damage to, and closure of, roadways in the county of Modoc; and
WHEREAS the effects of the flooding continue to threaten the county of Modoc; and
WHEREAS on January 25, 2011 Modoc County adopted a resolution proclaiming existence of a local emergency; and
WHEREAS the circumstances of the flooding, by reason of their magnitude, are or are likely to be beyond the control of the services, personnel, equipment and facilities of any single county, city and county, or city and require the combined forces of a mutual aid region or regions to combat; and
WHEREAS under the provisions of section 8558(b) of the California Government Code, I find that conditions of extreme peril to the safety of persons and property exist due to the flooding in Modoc County.
NOW, THEREFORE, I, EDMUND G. BROWN, JR., Governor of the State of California, in accordance with the authority vested in me by the state Constitution and statutes, including the California Emergency Services Act, and in particular, section 8625 of the California Government Code, HEREBY PROCLAIM A STATE OF EMERGENCY to exist within Modoc County.
IT IS HEREBY ORDERED THAT:
1. The California Department of Transportation shall formally request immediate assistance through the Federal Highway Administration’s Emergency Relief Program, Title 23, United States Code section 125, in order to obtain federal assistance for highway repairs or reconstruction in the county of Modoc.
2. All agencies of the state government utilize and employ state personnel, equipment and facilities for the performance of any and all activities consistent with the direction of the California Emergency Management Agency (Cal EMA) and the State Emergency Plan, and that Cal EMA provide local government assistance under the authority of the California Disaster Assistance Act.
I FURTHER DIRECT that as soon as hereafter possible, this proclamation be filed in the Office of the Secretary of State and that widespread publicity and notice be given of this proclamation.
IN WITNESS WHEREOF I have hereunto set my hand and caused the Great Seal of the State of California to be affixed this 3rd day of March, 2011.
_____________________________
EDMUND G. BROWN, JR.
Governor of California
ATTEST:
_____________________________
DEBRA BOWEN
Thursday, March 3, 2011
Kenny’s Role A Nebulous One
Part VI
The trail of the $12.5 million insurance claim against various county officials and the role of Attorney John Kenny as legal counsel to the Modoc County Board of Supervisors is a steep and curvy one at best.
The misappropriation of treasury funds, which the current Board of Supervisors hopes to recover through an insurance claim by showing that the county’s highest ranking officials were to blame, was exposed in early 2009 when then-CAO Mark Charlton discovered funds were missing from an otherwise sacrosanct bank account.
Kenny, according to statements in the claim written by then-DA Gary Woolverton, appears to be absolved of any culpability in the misappropriation -- with reservations.
“There is no evidence that county counsel had knowledge of the diversion of public funds and there is no evidence that county counsel ever advised the Board of Supervisors that inappropriate accounting practices were occurring,” Woolverton writes, with a proviso.
“This observation is tentative at this time,” Woolverton continues. “Again, that raises the question of whether county counsel knew or should have known and whether the Board of Supervisors, each and every one of them, should have known by virtue of the duties imposed upon them by state law that restricted fund monies were being inappropriately utilized.”
Backtracking the trail:
“At some time between the spring of 2009 and the fall of 2009, the fidelity bond claim department of proof of loss was sent to Modoc County for completion,” according to a statement in the claim obtained by the Modoc County Daily News blog.
That meant the probability of a claim against the performance bonds covering various county officials was with Trindel Insurance Fund, but nothing happened. No action was taken, according to Woolverton.
“It was apparently sent to Modoc County Counsel John Kenny for completion and for reasons unknown (the claim) was not completed,” Woolverton wrote referring to the request for proof of loss.
“In approximately June 2009 the Modoc County’s CAO’s office decided that the fidelity bond claim department proof of loss would be sent to the Modoc County district attorney for completion,” Woolverton notes. “Thus, the district attorney was being requested to provide a summary of the facts leading up to the loss to Trindel and then within a few days was requested to prepare and submit the proof of loss.”
By the first week in 2011 Kenny, a Redding attorney contracted by the county, used the Brown Act as his reasoning for not discussing the contents of the claim with the Modoc County Daily News blog, arguing that because it was “threatened or anticipated litigation” it could only be heard in closed sessions of the board.
It was not known at the time that Kenny’s role or lack of it was mentioned in the claim. Kenny had maintained that no one was actually named in the claim, although Woolverton contradicted that assertion in interviews with the Modoc County Daily News blog.
However, it was learned later that Kenny had recommended to the board in closed session that a special counsel who was expert in insurance claims be hired. Apparently the board did not act on that recommendation.
-- Ray A. March
Next: Mark Charlton Exposes Misappropriation
Part VI
The trail of the $12.5 million insurance claim against various county officials and the role of Attorney John Kenny as legal counsel to the Modoc County Board of Supervisors is a steep and curvy one at best.
The misappropriation of treasury funds, which the current Board of Supervisors hopes to recover through an insurance claim by showing that the county’s highest ranking officials were to blame, was exposed in early 2009 when then-CAO Mark Charlton discovered funds were missing from an otherwise sacrosanct bank account.
Kenny, according to statements in the claim written by then-DA Gary Woolverton, appears to be absolved of any culpability in the misappropriation -- with reservations.
“There is no evidence that county counsel had knowledge of the diversion of public funds and there is no evidence that county counsel ever advised the Board of Supervisors that inappropriate accounting practices were occurring,” Woolverton writes, with a proviso.
“This observation is tentative at this time,” Woolverton continues. “Again, that raises the question of whether county counsel knew or should have known and whether the Board of Supervisors, each and every one of them, should have known by virtue of the duties imposed upon them by state law that restricted fund monies were being inappropriately utilized.”
Backtracking the trail:
“At some time between the spring of 2009 and the fall of 2009, the fidelity bond claim department of proof of loss was sent to Modoc County for completion,” according to a statement in the claim obtained by the Modoc County Daily News blog.
That meant the probability of a claim against the performance bonds covering various county officials was with Trindel Insurance Fund, but nothing happened. No action was taken, according to Woolverton.
“It was apparently sent to Modoc County Counsel John Kenny for completion and for reasons unknown (the claim) was not completed,” Woolverton wrote referring to the request for proof of loss.
“In approximately June 2009 the Modoc County’s CAO’s office decided that the fidelity bond claim department proof of loss would be sent to the Modoc County district attorney for completion,” Woolverton notes. “Thus, the district attorney was being requested to provide a summary of the facts leading up to the loss to Trindel and then within a few days was requested to prepare and submit the proof of loss.”
By the first week in 2011 Kenny, a Redding attorney contracted by the county, used the Brown Act as his reasoning for not discussing the contents of the claim with the Modoc County Daily News blog, arguing that because it was “threatened or anticipated litigation” it could only be heard in closed sessions of the board.
It was not known at the time that Kenny’s role or lack of it was mentioned in the claim. Kenny had maintained that no one was actually named in the claim, although Woolverton contradicted that assertion in interviews with the Modoc County Daily News blog.
However, it was learned later that Kenny had recommended to the board in closed session that a special counsel who was expert in insurance claims be hired. Apparently the board did not act on that recommendation.
-- Ray A. March
Next: Mark Charlton Exposes Misappropriation
Wednesday, March 2, 2011
General Fund Losses
Part V
Editor’s Note: The data below titled “General Fund Losses on June 30, 2009” is an analysis of the amounts of money belonging to various departments that were misappropriated by county officials. Each use of the treasury funds, as illustrated in the data, was an alleged violation of state laws. This information is one of the exhibits in the claim against performance bonds prepared by former DA Gary Woolverton.
General Fund Losses on
June 30, 2009
Other General Fund $273,674.
Alcohol and Drug $423,358.
Family Support $ 88,554.
Library $258,519.
Mental Health $2,619,406.
Public Health $1,691,635.
Roads $5,503,204.
Social Services $697,586.
Waste Management $104,221.
Other Non-General Fund $3,127,704.
Total Department Loss $14,787,861.
Next: Kenny's Role, A Nebulous One
Tuesday, March 1, 2011
Fired By Maxwell,
CPA Suspicious,
Asked to Audit MMC
Part IV
Mike Maxwell, former Modoc County chief administrative officer, is listed as “level two” in the claim to collect $12.5 million in insurance coverage, but that is a qualified ranking, according to the former DA Gary Woolverton who drafted the county’s effort in seeking in damages against various county officials allegedly responsible for the misuse of treasury funds.
Although Woolverton notes that Maxwell has denied any involvement in the misappropriation, Woolverton states, “There is some evidence that the auditor (Judi Stevens) was conferring with CAO Maxwell about the invasion of restricted funds, but that evidence is somewhat tenuous.
“It is believed that the CAO, even if he knew of the inappropriate diversion of restricted funds, may not have advised the Board of Supervisors,” Woolverton writes in reference to the board’s emphatic denial of any knowledge of the misappropriation.
However, Woolverton points out that Maxwell fired an outside certified public accountant brought in to examine the financial records of the social services department at the voluntary request of department head Pauline Cravens.
“It appears that Pauline Cravens did suspect that there could be problems and commissioned a CPA to do a superficial forensic accounting,” Woolverton continues. “That person began her job and discovered some inappropriate accounting practices but was unable to perform and complete her task due to a termination of her contract/employment by Mike Maxwell.
“The facts seem to suggest that the CPA commissioned by Cravens discovered suspicious accounting practices, but before the CPA was allowed to complete her forensic accounting, she was terminated by CAO Maxwell and the accounting project for social services abruptly terminated,” Woolverton states again in the claim
The Modoc County Daily News blog has learned that the CPA, whose identity is being shielded because she is out of the country and not available for comment, suspected more than just questionable accounting practices.
“She discovered that either someone was siphoning funds or there was something else going on,” said a source familiar with the audit who spoke on the condition of anonymity because he was not authorized to discuss the audit referred to by Woolverton.
“The audit led to the unanswered question of how honest were Maxwell and Judi Stevens,” the source said, “but the CPA did not have enough evidence, only suspicions that something was going on. She asked Maxwell if she could audit the hospital and Maxwell said no.”
Apparently some of the alleged inappropriate accounting practices referred to by Woolverton included destruction of journal entries, accounts payable and accounts receivable, according to the source.
The source noted that the audit of the social services department was approved by then-supervisors Dan Macsay and Dave Bradshaw, along with Maxwell’s initial consent. All three are named in the performance bond claim.
Because the audit was a departmental-level audit, it was not forwarded to the State Controller’s Office, according to the source. The date of the audit is not known.
“Maxwell takes the position that he did not know that funds were being taken from restricted accounts and used to pay the bills of the county, primarily the county hospital,” Woolverton states in the claim.
“He further takes the position that he did not advise the Board of Supervisors that the practice of diverting funds from restricted funds into the general account was occurring. There is evidence he was receiving the complete monthly treasurer’s report from the treasurer," Woolverton continues.
Woolverton further states, “Modoc County government, through automatic electronic banking transfers, accessed over a million dollars of cash on deposit from other depositors in the Modoc County treasury and used this cash as assets of county government. The Board of Supervisors, CAO, county auditor and/or treasurer would normally be responsible for reporting a loss.”
In a draft of the claim obtained by the Modoc County Daily News blog, Woolverton alleges “Stevens’ admission tends to confirm that (Cheryl) Knoch should be in level one, but also strongly suggests that she (Stevens) and CAO Mike Maxwell should also be in the level one category, excepting for his denial of knowledge.”
That statement was deleted in the final draft signed by Supervisor Loren “Shorty” Crabtree before it was sent to Trindel Insurance Fund for processing to National Union Fire Insurance Company. Woolverton said he was not aware of any last-minute editing of the claim although there had been “subtle changes” from draft to draft.
-- Ray A. March
Next: General Fund Losses
CPA Suspicious,
Asked to Audit MMC
Part IV
Mike Maxwell, former Modoc County chief administrative officer, is listed as “level two” in the claim to collect $12.5 million in insurance coverage, but that is a qualified ranking, according to the former DA Gary Woolverton who drafted the county’s effort in seeking in damages against various county officials allegedly responsible for the misuse of treasury funds.
Although Woolverton notes that Maxwell has denied any involvement in the misappropriation, Woolverton states, “There is some evidence that the auditor (Judi Stevens) was conferring with CAO Maxwell about the invasion of restricted funds, but that evidence is somewhat tenuous.
“It is believed that the CAO, even if he knew of the inappropriate diversion of restricted funds, may not have advised the Board of Supervisors,” Woolverton writes in reference to the board’s emphatic denial of any knowledge of the misappropriation.
However, Woolverton points out that Maxwell fired an outside certified public accountant brought in to examine the financial records of the social services department at the voluntary request of department head Pauline Cravens.
“It appears that Pauline Cravens did suspect that there could be problems and commissioned a CPA to do a superficial forensic accounting,” Woolverton continues. “That person began her job and discovered some inappropriate accounting practices but was unable to perform and complete her task due to a termination of her contract/employment by Mike Maxwell.
“The facts seem to suggest that the CPA commissioned by Cravens discovered suspicious accounting practices, but before the CPA was allowed to complete her forensic accounting, she was terminated by CAO Maxwell and the accounting project for social services abruptly terminated,” Woolverton states again in the claim
The Modoc County Daily News blog has learned that the CPA, whose identity is being shielded because she is out of the country and not available for comment, suspected more than just questionable accounting practices.
“She discovered that either someone was siphoning funds or there was something else going on,” said a source familiar with the audit who spoke on the condition of anonymity because he was not authorized to discuss the audit referred to by Woolverton.
“The audit led to the unanswered question of how honest were Maxwell and Judi Stevens,” the source said, “but the CPA did not have enough evidence, only suspicions that something was going on. She asked Maxwell if she could audit the hospital and Maxwell said no.”
Apparently some of the alleged inappropriate accounting practices referred to by Woolverton included destruction of journal entries, accounts payable and accounts receivable, according to the source.
The source noted that the audit of the social services department was approved by then-supervisors Dan Macsay and Dave Bradshaw, along with Maxwell’s initial consent. All three are named in the performance bond claim.
Because the audit was a departmental-level audit, it was not forwarded to the State Controller’s Office, according to the source. The date of the audit is not known.
“Maxwell takes the position that he did not know that funds were being taken from restricted accounts and used to pay the bills of the county, primarily the county hospital,” Woolverton states in the claim.
“He further takes the position that he did not advise the Board of Supervisors that the practice of diverting funds from restricted funds into the general account was occurring. There is evidence he was receiving the complete monthly treasurer’s report from the treasurer," Woolverton continues.
Woolverton further states, “Modoc County government, through automatic electronic banking transfers, accessed over a million dollars of cash on deposit from other depositors in the Modoc County treasury and used this cash as assets of county government. The Board of Supervisors, CAO, county auditor and/or treasurer would normally be responsible for reporting a loss.”
In a draft of the claim obtained by the Modoc County Daily News blog, Woolverton alleges “Stevens’ admission tends to confirm that (Cheryl) Knoch should be in level one, but also strongly suggests that she (Stevens) and CAO Mike Maxwell should also be in the level one category, excepting for his denial of knowledge.”
That statement was deleted in the final draft signed by Supervisor Loren “Shorty” Crabtree before it was sent to Trindel Insurance Fund for processing to National Union Fire Insurance Company. Woolverton said he was not aware of any last-minute editing of the claim although there had been “subtle changes” from draft to draft.
-- Ray A. March
Next: General Fund Losses
Monday, February 28, 2011
Dunn Not To Escape Claim
Supervisors’ Duties Explained
Part III
Although former Supervisor Mike Dunn does not appear as one of the principle players named in the misappropriation of the Modoc County treasury he has not escaped involvement.
That’s the opinion of former DA Gary Woolverton who drafted the claim in which the county is seeking $12.5 million in performance bond damages as a means of replacing funds taken from the treasury over an eight to 10-year period.
Woolverton said Dunn was not listed along with former supervisors Dan Macsay and Dave Bradshaw and incumbent supervisor Patricia Cantrall because at the time the claim was under investigation Dunn could not be reached.
“I didn’t have the factual information to include him,” Woolverton told the Modoc County Daily News blog. “I tried to get a hold of him, but I didn’t make contact and I was not in a position to get to him and interrogate him.”
Woolverton said that since the completion of the claim he now has more information to implicate Dunn in the misappropriation along with supervisors Macsay, Bradshaw and Cantrall and the county’s highest echelon of officials including Treasurer Cheryl Knoch, former Auditor Judi Stevens and former CAO Mike Maxwell.
“After I completed the claim I received more information that suggests all the Board of Supervisors for the last eight to 10 years are all in the realm of culpability. Dunn has not escaped, nor did I intend that he would,” Woolverton said.
While Dunn is not named specifically in the various “levels” of blame for the misappropriation, Woolverton points out in the claim that at one point Dunn guaranteed the Save Our Hospital Committee that the county would cover the hospital’s debt if voters passed a measure to form a special district.
“Supervisor Mike Dunn, in a meeting in September, 2007, as Save Our Hospital was forming, guaranteed the county would cover the debt if a district was approved because the county had ‘a reserve of $14 million,’ indicating neither he nor the Board of Supervisors were aware of getting into restricted funds or did not understand the difference,” Woolverton states in the claim.
Woolverton stressed that Dunn, as a member of the Board of Supervisors subject to general law, shared in various duties including the supervision of the “official conduct of all county officers and officers of all district and other subdivisions of the county, particularly those charged with assessing, collecting, safekeeping, management or disbursement of public funds.
“The Board of Supervisors are the trustees of the county fund for certain specified purposes and they may not allow them to be applied to other purposes,” Woolverton contends in the claim. “While not accountable for mere errors, if they willingly appropriate the money for a purpose not authorized by law, they are liable both civilly and criminally. Liability on the supervisor’s official bond is in addition to any other penalty prescribed by law.”
Next: Back to former CAO Mike Maxwell.
Supervisors’ Duties Explained
Part III
Although former Supervisor Mike Dunn does not appear as one of the principle players named in the misappropriation of the Modoc County treasury he has not escaped involvement.
That’s the opinion of former DA Gary Woolverton who drafted the claim in which the county is seeking $12.5 million in performance bond damages as a means of replacing funds taken from the treasury over an eight to 10-year period.
Woolverton said Dunn was not listed along with former supervisors Dan Macsay and Dave Bradshaw and incumbent supervisor Patricia Cantrall because at the time the claim was under investigation Dunn could not be reached.
“I didn’t have the factual information to include him,” Woolverton told the Modoc County Daily News blog. “I tried to get a hold of him, but I didn’t make contact and I was not in a position to get to him and interrogate him.”
Woolverton said that since the completion of the claim he now has more information to implicate Dunn in the misappropriation along with supervisors Macsay, Bradshaw and Cantrall and the county’s highest echelon of officials including Treasurer Cheryl Knoch, former Auditor Judi Stevens and former CAO Mike Maxwell.
“After I completed the claim I received more information that suggests all the Board of Supervisors for the last eight to 10 years are all in the realm of culpability. Dunn has not escaped, nor did I intend that he would,” Woolverton said.
While Dunn is not named specifically in the various “levels” of blame for the misappropriation, Woolverton points out in the claim that at one point Dunn guaranteed the Save Our Hospital Committee that the county would cover the hospital’s debt if voters passed a measure to form a special district.
“Supervisor Mike Dunn, in a meeting in September, 2007, as Save Our Hospital was forming, guaranteed the county would cover the debt if a district was approved because the county had ‘a reserve of $14 million,’ indicating neither he nor the Board of Supervisors were aware of getting into restricted funds or did not understand the difference,” Woolverton states in the claim.
Woolverton stressed that Dunn, as a member of the Board of Supervisors subject to general law, shared in various duties including the supervision of the “official conduct of all county officers and officers of all district and other subdivisions of the county, particularly those charged with assessing, collecting, safekeeping, management or disbursement of public funds.
“The Board of Supervisors are the trustees of the county fund for certain specified purposes and they may not allow them to be applied to other purposes,” Woolverton contends in the claim. “While not accountable for mere errors, if they willingly appropriate the money for a purpose not authorized by law, they are liable both civilly and criminally. Liability on the supervisor’s official bond is in addition to any other penalty prescribed by law.”
Next: Back to former CAO Mike Maxwell.
Sunday, February 27, 2011
Treasury Misappropriation
Officials Failed In Their Duties
Part II
Editor’s Note: The following article is part of an on-going series examining the recent Board of Supervisors’ action to pursue performance bond insurance damages against various county officials for the loss of money from the county treasury.
“Over a period of an undetermined number of years Modoc County government and its officials consisting of the Board of Supervisors, county administrative officer, county auditor and county treasurer failed to perform their duties to insure government funds were legally spent and properly accounted for.”
The above statement is taken from the summary section of the $12.5 million insurance claim drafted last year by then-District Attorney Gary Woolverton.
The claim, a public document withheld for months by the county, was obtained by the Modoc Independent News just 24 hours before it was officially signed Feb. 24 by Loren “Shorty” Crabtree, chair of the board.
(See Modoc County Daily News blog Feb. 23, 2010)
It will be sent to Trindel Insurance Fund which then will file it with National Union Fire Insurance of Pittsburgh, PA, the county’s insurance carrier.
Named are various bonded county officials including current treasurer Cheryl Knoch, former auditor Judi Stevens, former CAO Mike Maxwell, current supervisor Patricia Cantrall, former supervisors Dan Macsay and David Bradshaw and various others.
The claim is an effort by the 2011 Board of Supervisors to recover money misappropriated from the county’s treasury over an estimated eight to 12 years apparently to off-set a growing deficit at the county-owned Modoc Medical Center.
To date, there has been no public accounting of how the money was actually used by the hospital’s administrators.
“The fiduciary responsibilities of the county auditor and county treasurer were disregarded,” Woolverton states in singling out Stevens and Knoch as two officials “most likely” to have violated state law.
“The treasurer and auditor were elected positions,” Woolverton stated. “Their elected position status created a firewall which protected them from intimidation by the Board of Supervisors or the chief administrative officer.
(In an interview last August with the Modoc County Daily News blog Stevens said she had been intimidated by the board and Maxwell into using restricted funds from the treasury to pay down the growing hospital debt.)
“By virtue of being elected rather than appointed, they have independent authority and are situated in a manner and place to say “no” to inappropriate action(s) in the county,” Woolverton continues in the claim. “Checks and balances which should have prevented inappropriate activity …were disregarded…as a result huge debt was incurred and probably resulted in exhausting all cash on deposit by the Modoc County government and the Modoc County treasury by the month of May 2009.”
Continuing, Woolverton states, “The level of impropriety is very much in issue. The identity of those committing the improprieties is also in issue, although the finger of culpability seems to point squarely at previous auditor Stevens, the current treasurer (Knoch) and previous CAO Maxwell.
“Whether this/these impropriety/improprieties amounts to a crime under Penal Code section 424 and 425 needs to be investigated and resolved, ”Woolverton said. “That being said, if all affected county officials had known their duties and jobs and faithfully performed those duties and jobs, the county would not be in the situation it is in at the present time.”
The “situation” Woolverton alludes to is a cash-strapped county that came close to filing for bankruptcy last year and is still looking for ways to replace $12.5 million to the depleted treasury.
The claim was only filed when a new board -- consisting of newly-elected supervisors Geri Byrne and Dave Allan -- convened in January. Last year’s board, chaired by Macsay, delayed taking any action with Macsay actually suggesting the claim could be “thrown in the garbage” and current CAO Rick Rudometkin saying it had no validity.
Rudometkin, as director of public works, is also named in the claim, but Woolverton states it is not clear what his level of culpability may be.
Next: What about Supervisor Mike Dunn’s involvement?
Officials Failed In Their Duties
Part II
Editor’s Note: The following article is part of an on-going series examining the recent Board of Supervisors’ action to pursue performance bond insurance damages against various county officials for the loss of money from the county treasury.
“Over a period of an undetermined number of years Modoc County government and its officials consisting of the Board of Supervisors, county administrative officer, county auditor and county treasurer failed to perform their duties to insure government funds were legally spent and properly accounted for.”
The above statement is taken from the summary section of the $12.5 million insurance claim drafted last year by then-District Attorney Gary Woolverton.
The claim, a public document withheld for months by the county, was obtained by the Modoc Independent News just 24 hours before it was officially signed Feb. 24 by Loren “Shorty” Crabtree, chair of the board.
(See Modoc County Daily News blog Feb. 23, 2010)
It will be sent to Trindel Insurance Fund which then will file it with National Union Fire Insurance of Pittsburgh, PA, the county’s insurance carrier.
Named are various bonded county officials including current treasurer Cheryl Knoch, former auditor Judi Stevens, former CAO Mike Maxwell, current supervisor Patricia Cantrall, former supervisors Dan Macsay and David Bradshaw and various others.
The claim is an effort by the 2011 Board of Supervisors to recover money misappropriated from the county’s treasury over an estimated eight to 12 years apparently to off-set a growing deficit at the county-owned Modoc Medical Center.
To date, there has been no public accounting of how the money was actually used by the hospital’s administrators.
“The fiduciary responsibilities of the county auditor and county treasurer were disregarded,” Woolverton states in singling out Stevens and Knoch as two officials “most likely” to have violated state law.
“The treasurer and auditor were elected positions,” Woolverton stated. “Their elected position status created a firewall which protected them from intimidation by the Board of Supervisors or the chief administrative officer.
(In an interview last August with the Modoc County Daily News blog Stevens said she had been intimidated by the board and Maxwell into using restricted funds from the treasury to pay down the growing hospital debt.)
“By virtue of being elected rather than appointed, they have independent authority and are situated in a manner and place to say “no” to inappropriate action(s) in the county,” Woolverton continues in the claim. “Checks and balances which should have prevented inappropriate activity …were disregarded…as a result huge debt was incurred and probably resulted in exhausting all cash on deposit by the Modoc County government and the Modoc County treasury by the month of May 2009.”
Continuing, Woolverton states, “The level of impropriety is very much in issue. The identity of those committing the improprieties is also in issue, although the finger of culpability seems to point squarely at previous auditor Stevens, the current treasurer (Knoch) and previous CAO Maxwell.
“Whether this/these impropriety/improprieties amounts to a crime under Penal Code section 424 and 425 needs to be investigated and resolved, ”Woolverton said. “That being said, if all affected county officials had known their duties and jobs and faithfully performed those duties and jobs, the county would not be in the situation it is in at the present time.”
The “situation” Woolverton alludes to is a cash-strapped county that came close to filing for bankruptcy last year and is still looking for ways to replace $12.5 million to the depleted treasury.
The claim was only filed when a new board -- consisting of newly-elected supervisors Geri Byrne and Dave Allan -- convened in January. Last year’s board, chaired by Macsay, delayed taking any action with Macsay actually suggesting the claim could be “thrown in the garbage” and current CAO Rick Rudometkin saying it had no validity.
Rudometkin, as director of public works, is also named in the claim, but Woolverton states it is not clear what his level of culpability may be.
Next: What about Supervisor Mike Dunn’s involvement?
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