By Katy Grimes

The crime is one thing — the cover up makes it worse. But in the case of the state Parks and Recreation agency, it could be that the lack of prosecution of the crime is the real crime.

Late in the day on Thursday, the Sacramento County District Attorney Jan Scully announced she would not pursue criminal charges against California state parks officials “because of a ‘failure to identify any crime’ by the state attorney general.”

“At the outset, we note that both the reason and the basis for referral to our office is unclear,” Scully said in a letter to Deputy Attorney General, Michael Farrell. “There is no indication who your office considers to be suspects, and if so, what crime they may have committed.”

If the DA can’t identify who committed the acts of fraud and covered up the millions, did the Attorney General’s office even do their job?

Attorney General does incomplete investigation

“The Attorney General’s Office in this instance clearly asserted that authority when it assigned a deputy attorney general to question individuals regarding the unreported funds.  It is thus unclear why the matter has been referred to our office at all, and whether your office intends to retain its historic authority in the prosecution (if that be warranted here) of such cases,” Scully said.

“The referral to us contains only transcripts of some of the witness interviews; not the final report (apparently for reasons discussed below), and no supporting or related documentation.”

Scully continued: “Second, the investigation was not conducted in a manner consistent with or conducive to its use for criminal evaluation purposes.  Specifically, the investigation consisted of the interview of 40 current or former state employees.1

“Thus, your referral package to us does not include the compelled statements.  Still, it does not appear that any effort was made in this process to identify and differentiate potential targets or defendants from mere witnesses, nor to assure that statements taken from targets did not serve as the basis for developing further information as the investigation progressed, nor to meaningfully segregate out any such ‘product’ information.”

The Attorney General’s office handed the DA an incomplete file, and never bothered to identify who the perpetrators were.

Ironic crime

While the State Parks and Recreation department, under agency Director Ruth Coleman’s leadership, had been soliciting private donations to keep state parks open, top agency employees were bilking the state for vacation pay buyouts, and covering up a stash of cash totaling more than $54 million.

I wrote about the illegal vacation buyout scandal in the State Parks and Recreation agency in “Scandalous state parks department needs privatization.” I questioned who it was that authorized the checks that were paid to the parks employees, and said that everyone involved should be brought up on charges.

It doesn’t take an Attorney General to peel back the layers of this onion. So was this negligence or another deliberate cover up by the AG?

The scam(s)

The scam goes like this: In the past, state employees have been allowed to sell unused vacation time back to the state for cash payouts. But these employees hadn’t received the proper authority to do this from the California Department of Human Resources.

They did it anyway, and someone at the state approved the checks cashing out the vacation time.

The allegations of stashed $54 million have greatly upset the many groups that worked tirelessly with state and local officials to try and save these parks. The discovery that the budget situation wasn’t as they were told merely added insult to injury. A quarter-cent sales tax measure in Sonoma County was even recently shelved in light of the secret special fund discovery.

“The alleged multiyear misreporting by DPR officials of tens of millions of dollars of fund balances in Governor’s Budget documents is unacceptable,” the Legislative Analyst Office stated in a recent report about the ongoing special funds issue. “The Legislature must be able to rely on the accuracy of such budget documents, which are an important part of the annual decision making process.”

Statewide, park volunteers, donors and non-profit organizations entered into public-private partnerships to save the parks.  They raised funds, donated their time, and performed maintenance on state parks.

During this time of crisis, the Parks Department Director Ruth Coleman testified to the Legislature about the need to close the 70 parks and lay off agency staff. She has since resigned, and placed the blame on senior administrative employees, while insisting that she did not know about the secret special funds accounts or the vacation buyout scandal.

But as I wrote in “State Parks Director: Negligent or Incompetent?,” there are numerous current and former Parks Department employees who claim that Coleman knew about the special fund accounts, and knew about the vacation buyout scheme. The Parks and Recreation Department scandals were common knowledge in some state government circles.

 ‘Special funds’

The state has more than 500 “special” funds, which are funded through fees that we all pay for services, schools, environmental issues, on products, in our utility bills, and at the checkout counter at many stores.

These special funds were ostensibly created to help pay for specific programs. However, with the spotlight on the Department of Parks and Recreation’s two secret special fund accounts, which the Department of Finance and State Controller insisted they had no idea existed, it is clear that investigations and audits into these funds are desperately needed, as well as the other 570 special funds.

DA tosses case back to Attorney General

After the AG punted the incomplete case to the Sacramento DA, with little or no information, , the DA obviously had no choice other than to toss the case right back.

“If your office conducts a criminal investigation and then determines that it appears a crime has been committed, that a specific suspect or suspects are identified as having committed the crime, and that the case can be proved without Lybarger information (or its product) from the target suspect(s), our office will then consider whether it is proper to file the charges and issue the warrants that you request,” the DA said.

Case closed on one of the biggest scams in California state government?

read Scully’s letter here

By Wayne Lusvardi

The first wisdom of politics is that things often are not what they seem.  This appears to be the case with the much ballyhooed report that former California State Parks Director Ruth Coleman “hid” $54 million in the off-road vehicle recreation special fund.

A scandal broke out based on reports that the state was too broke to keep open 70 state parks while the Parks Department allegedly had $54 million or more in so-called “hidden” accounts.

In her resignation letter, Coleman said that she was “unaware of the excessive balance” of $133 million in the Off-Highway Vehicle Trust Fund (see Item Nos. 111, 112, 113 in Department of Finance report on special funds).  If Coleman was “hiding” funds. as charged John Laird, Secretary of the Natural Resources Agency:

* Why was the money hidden in plain sight in three accounts designated “Off-Highway Vehicle Trust Fund,” under Fund No. 0263. Which was authorized under the: (a) “Budget Act of 2008 as amended by Chapter 2, Statutes of 2009, Third Ext. Session,” (b) the “Budget Act of 2009,” and (c) the “Budget Act of 2010 as amended by Chapter 13?”

* Why, on May 31, 2011, did State Assembly Budget Committee No. 3 on Resources and Transportation vote to raid the Off-Highway Fund to transfer the funds to the General Fund, as reported by many off-road vehicle recreation organizations?

* Why, on June 6, 2011, did the Public Employees for Environmental Responsibility, stacked with envious state park employees, publicly protest that Off-Road Vehicle fund manager Daphne Greene was not sharing her program’s surplus with its “impoverished agency”?

* Why, on May 6, 2011, did the State Parks Department issue a solicitation for consulting real estate appraisal services through BidSync online bidding services for the acquisition of 415 acres of land to expand the Ocotillo Wells State Off Road Vehicle Park in Imperial County? The likely source of the funds for this land acquisition would have been the Off-Highway Vehicle Trust Fund.

* Why was the Off-Highway Vehicle Trust Fund reported to be a “Special Fund” instead of a “Trust Fund”?  According to off-road organization attorney Diana Tweedy, Trust Funds do not have the same legal status as a Special Fund and cannot be transferred to the General Fund without a state constitutional amendment.

* How could the Off-Highway Fund be “hidden,” when it was re-authorized and amended so many times by the Legislature since 2008?  How could it have been “hidden” if the state Assembly voted to raid the fund in 2011?  How could the fund have been “hidden” if “Public Employees for Environmental Responsibility” brought it to the public’s attention way back in mid-2011?  Why did State Parks initiate activities to expand existing state off-road vehicle parks in mid-2011 from the same fund, if the fund was “hidden?”

An Old Fashioned Grab of Highway Funds

Perhaps the answer to these questions lies with off-roader attorney Diana Tweed’s “Legal Memo” that the Off-Highway Vehicle Fund was a Trust Fund that was funded from a share of gasoline taxes and user fees from state off-road recreation parks.

Which brings us to the second wisdom of politics: “What is alleged to be ‘hidden’ may be a ‘red herring’ meant to divert attention from what is really going on.” Just as smelly fish were used to throw hound dogs off the scent of a fox, so it is with political diversions.

The recent state park special fund scandal apparently is an old-fashioned raid on highway funds.  Only in this case the highway funds are sitting in the accounts of the State Parks Department designated for land acquisition for off-road vehicle recreational parks.  Then why is there what appears to be a cover-up?

Why a Diversion?

While Coleman was allegedly hiding funds, cities and non-profit agencies were raising funds to keep state parks open in their regions so as not to deter tourist trade. How could politicians explain that they were exaggerating that the state was broke, and had no funds to keep all state parks open during an election year?   What Gov. Jerry Brown is doing is purging “Special Funds” — also known as “political earmarks” — and transferring those monies into the deficit-plagued “general gund.”

The Off-Highway Vehicle Recreation Division is a section of the State Parks Department that is not dependent on general funds.  It is self-sufficient and relies on a share of the gasoline taxes generated from the mileage of off-road vehicles and user fees from state off-road recreation parks.  Technically, the Off-Highway Vehicle Trust Fund is not a “special fund,” but a trust fund, just as there is a highway trust fund.

Another apparent reason for the political diversion about “hidden funds” is that there has been an ongoing political and bureaucratic tug-of-war between “preservationists” and “off-roaders” within the Parks Department and the state Legislature.  Off-roaders also tend to be inclined toward being Republican.  A question remains as to whether off-roaders will find a basis to sue the state over the transfer of these “hidden funds.”

Coleman is a registered Democrat with a long track record in state government.  She will likely end up serving elsewhere in government after serving as the “sacrificial lamb” in this political charade.

Fund Raid Takes from Double Tax — When Will It End?

Off-road attorney Diana Tweedy sumed it up best:

“With hundreds of millions of dollars in unpaid loans and the latest permanent and ongoing taking of OHV funds, off road enthusiasts are feeling the pinch. The general fund is supported with income and sales taxes paid by all the Californians. The diversion of OHV Trust Fund moneys to the General Fund is a second tax exclusively paid by off road enthusiasts on top of taxes they pay to the General Fund. These taxpayers are angry and will not put up with politics as usual unless something is done to address their grievances.” 

“Due to hundreds of millions of dollars in unpaid loans and the latest transfer of almost ten million dollars a year from the OHV Trust Fund, the mission of the OHV Program is in jeopardy. The transfers are interfering with Core Program objectives preventing the OHV Program from achieving its purpose. The loans must be paid back and the latest transfer must be revoked before the OHV Program can meet its objectives. 

“Epilogue — In May 2012, the Assembly Budget Committee voted to take more money from the OHV trust fund. When will this ever stop?”

Californians just want to have fun. But the politicians just want more money to waste and are grabbing it wherever they can.

By Katy Grimes

The recent scandal inside of the State Parks and Recreation Department is no surprise to anyone, but the levels of corruption, schemes and deceit, is.

The agency director, Ruth Coleman, resigned. But as she resigned, she tried to distance herself from the vacation buyout scheme, and the $54 million surplus hidden away in two accounts. As the parks department was making cuts, threatening to close 70 state parks, and claiming to need to make $22 million in cuts, Coleman was accepting private donations.

I wrote about my sources at the state who say that Coleman’s fingerprints are all over the evidence, and now we see that the agency attorney, Ann Malcolm, resigned, as did Colemen’s special assistant, Jay Walsh.

But these people are resigning–they weren’t fired. They will keep their taxpayer paid benefits, and taxpayer-paid pensions, and probably get hired elsewhere by the state at some point.

Meanwhile, Gov. Jerry Brown is publicly playing down the scandal, glibly saying that it was the first time the government is in trouble for saving money. “When somebody comes and says, ‘Hey, guess what, we have some money over here,’ that’s better than saying ‘Whoops we don’t have the money.'”

Arrogance in high places

Former Assemblyman Chuck DeVore, R-Irvine, had a few run-ins of his own with Parks Director Ruth Coleman.

During his time in the Assembly, DeVore found that there were Parks Department employees and Fish and Game employees and volunteers living on state property, paying no rent or nominal rent, far below fair market value.

The Bureau of State Audits was already investigating the Fish and Game employees in 2003, when DeVore presented evidence of Parks employees doing the same.

DeVore said that he was a freshman Assemblyman when his office discovered this. He contacted Coleman and invited her to meet with him. But DeVore said that Coleman appeared unconcerned, which DeVore attributed to term limits. “She knew I’d be gone at some point,” DeVore explained, “and that this would probably blow over.”

But during the investigation, the state auditor found that there were 13 state departments which own property and had employees living rent-free and not reporting, or were underreporting this. “Additionally, because departments charged employees rent at rates far below market value, the State may have failed to capture as much as $8.3 million in potential rental revenue in 2003,” the report stated.

According to the state auditor’s report, the Parks and Recreation department was the biggest offender with 487 housing units available for state employees.

If rented at fair market value, the income to the state should have been more than $4.7 million.

But the Parks and Recreation agency took in only $763,488 of actual rent charged to state employees or volunteers, losing the state more than $4 million in revenue.

The taxable fringe benefit should have been $373,198. The unreported taxable fringe benefit amounted to $3,641,810.

And Coleman was unconcerned with these findings, according to DeVore.

Legislating a resolution with AB 1708

Undeterred, DeVore authored a bill to address this specific problem. Democratic Assemblyman Alberto Torrico signed on as a co-author, and AB 1708 passed through the Legislature and was signed into law.

Under AB 1708, the state would be required to charge state employees renting housing on state property on a sliding scale, depending on location. Prior to AB 1708, departments only charged $148 a month per unit, and did not differentiate between prime beachfront locations or inland locations. DeVore said that, at the time of his bill, approximately 443 parks employees lived in park housing, but that the number fluctuates based on season.

AB 1708 requires the Director of the Department of Personnel Administration to determine, by rule, the fair and reasonable value of maintenance, living quarters, housing, lodging, board, meals, food, household supplies, fuel, laundry, and other services furnished by the state as an employer of its employees.

But DeVore said that he is concerned that the law is not being enforced.

Investigations

There have been several calls for additional audits of the Parks and Recreation Department.

Assemblywoman Beth Gaines, R-Rocklin, called for a special audit of the agency. As members of the Budget Committee, Gaines and Assemblyman Jim Nielsen, R-Gerber, appear to be pursuing this corruption.

The California State Parks Foundation submitted a letter to the governor and Legislature asking for an investigation, as well. The non-profit foundation has been a partner with the state, and surely must be feeling the sting of Director Coleman’s and the agency’s deceit.

“On behalf of the California State Parks Foundation, our 130,000 members statewide, and our 43 year history of enhancing, protecting and advocating for California’s state parks, I cannot convey  enough how deeply shocked and dismayed we have been to learn of the irregularities that have surfaced from the Department of Parks and Recreation (DPR) in the last several days,” Parks Foundation President Elizabeth Goldstein wrote.

“The news of the unauthorized vacation buyout program, coupled with the discovery of more than $50 million in 12 year fund balances that should have been disclosed and directed to parks and recreation operations, has affected our members, our partners, and the public’s trust in our state park system.”

The foundation was working with Coleman to get volunteers to help work at the parks, and asking for donations.

HERE is the letter from the Parks foundation.

Katy Grimes: The California State Parks agency has been sullied by a growing scandal.

Three days ago I wrote about the illegal vacation buyout scandal in the State Parks and Recreation agency in “Scandalous state parks department needs privatization.” I questioned who it was that authorized the checks that were paid to the parks employees, and said that everyone involved should be brought up on charges.

Today, Parks Director Ruth Coleman resigned, and her second in command was fired.

That’s a good start. But according to my sources at the state, Coleman is getting off easy. My sources said that this was a highly orchestrated resignation, and appointment of an interim parks director. It’s carefully orchestrated damage control, along with very little hard-hitting journalism over a scandal.

Janelle Beland, former senior advisor and caucus director for Sen. Pres Pro Tem Darrell Steinberg, has been named Interim Director.

My sources work for the state. Apparently because the parks department was conducting its own bogus internal audit of the vacation buyout scandal, no one at the Parks Department would officially confirm the allegations when I inquired.

Now that the story has broken wide open, more information is coming out from sources all over the state. But my sources, who wish to remain anonymous to avoid retaliation, have clammed-up since the story broke fearing whistleblower retribution.

But they still want to make sure that the goings-on within the Parks Department is not sugar-coated, or covered-up.

Issues and Allegations

My sources say that most of the parks employees in the headquarter administrative office in Sacramento knew what was going on. They say that director Coleman not only knew about the vacation buyout scandal, but that she sat in on the meetings as the scheme was hatched by senior parks employee, Manuel Thomas Lopez, who was demoted in October, and resigned in the Spring.

But my sources say Lopez was not alone. He couldn’t have been operating solo in a vacation buyout scandal. As I wrote earlier this week, someone had to authorize and approve the buyout requests in order for employees to receive the money from the state.

According to my sources, an Assistant Personnel Officer for the State Parks Department was responsible for keying in the post-it notes amounts, which were used for the buyout requests to avoid a paper trail.

My sources say that the Personnel officer is now in training to be a peace officer for the department, as a sort of payoff for helping with the scandal. And, that the usual peace officer criteria was waived for this Personnel Officer to change jobs. Adding to this job change, sources say that her husband is allegedly a convicted felon.

Other highly questionable activities allegedly took place within the Parks department as well, according to my sources. In addition to the information that the Parks agency has been sitting on nearly $54 million in surplus money for as long as 12 years, it is widely rumored that Coleman knew about the surplus and approved it, despite the reports where blamed she mid-level managers for the cover-up.

Additionally, they say that the state Parks department intentionally understates and under-projects its annual budget to be able to hide money, despite what the agency receives from the state. And remember that the Parks Department handles a great deal of cash. Sources say that the cash income is also under reported.

During a recent taping of Politics on Tap in which I was a guest panelist, with host Greg Lucas, Coleman talked about the success she was having raising money from private sector donors to keep the state parks open. “We’ve spent the last year-and-a-half working on partnerships,”  Coleman said.

But, Coleman stressed on the show that although almost all of the parks on the original closure list would stay open as of July 1, the donations and financial partnerships, and help in the recently approved state budget doesn’t mean that the crisis is over. “I wouldn’t say they’re safe, I think ‘reprieve’ is a better word,” Coleman said, knowing that there was a $54 million surplus in two accounts, as reported in news stories today.

Gov. Jerry Brown has been threatening to close 70 state parks, claiming that looming budget cuts and the inherent budget deficit were to blame. This is the same tactic the government has been using under Democratic control, to try and squeeze tax increases out of taxpayers. They threaten to cut police, fire fighters, let parks disintegrate, cut back garbage services, and cut teachers, in order for voters to finally become convinced that there is a budget crisis, and vote to pass a tax increase.

It’s a tired, old, worn out lie. Fortunately, California voters have not bought into the lie, and have killed the last eight attempts to raise taxes in ballot initiatives.

During the taping of Politics on Tap, Coleman even expressed dismay that voters killed the $18 DMV tax ballot initiative, which would have gone to helping fund state parks.

Allegations and Issues

These issues taken individually is cause enough for an in-depth investigation, preferably by an outside agency. Taken together, one can assume that as the layers are peeled back, there will be more issues, allegations, illegal and scandalous behavior uncovered.

The buck always stops with the agency head, but it appears that it didn’t with Coleman in charge. Coleman’s resignation is a face-saving gesture, and will ensure that she receives her state benefits and pension, and possibly, find a soft landing in another agency. However, given the criminal financial allegations involved with her agency, under her leadership of one decade, it is debatable whether or not she is entitled to state benefits or state employment any longer.

She either knew about the schemes and scandalous behavior, or she was oblivious to it, making her negligent, and incompetent, or complicit.

Investigate this

Earlier this week, Assemblywoman Beth Gaines, R-Rocklin, called for an Parks Department investigation, and has now sent a letter to the Joint Legislative Audit Committee calling for a further review of the State Parks Department.

“It is clear that our office has only touched the tip of the iceberg on the culture of corruption within state government,” Gaines said.  “Where was the Department of Finance and the Controller’s Office in reviewing these obvious accounting gimmicks?”