Report I2003-2 Summary - September 2003

Investigations of Improper Activities by State Employees:

February 2003 Through June 2003

HIGHLIGHTS

State employees engaged in improper activities, including the following:

  • Embezzled more than $256,000 in money and goods.
  • Misappropriated $622,766 and directed a company to hold these funds outside the State Treasury.
  • Deposited $80,759 in fees and charges associated with a state conference into a personal bank account.
  • Claimed military leave even though his military orders were rescinded.
  • Used a state vehicle for personal use on nonwork days.
  • Stole a state-owned truck and forklift.
  • Inappropriately accessed confidential tax information and failed to disclose outside employment.
  • Inappropriately accessed Web sites unrelated to work, including chat rooms and adult Web sites.
  • Took two weeks off work without charging an official leave balance.

State departments engaged in the following improper activities:

  • Improperly granted its employees four days off, costing the State approximately $170,314.
  • Restricted competition for several roofing projects by setting proprietary bidding specifications.
  • Improperly reimbursed several of its employees $19,803 in unnecessary travel expenses.

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 with Section 8547, receives and investigates complaints of improper governmental activities. The act defines "improper governmental activity" as any action by a state agency or employee during the performance of official duties that violates any state or federal law or regulation; that is economically wasteful; or that involves gross misconduct, incompetence, or inefficiency. To enable state employees and the public to report these activities, the bureau maintains the toll-free Whistleblower Hotline (hotline): (800) 952-5665 or (866) 293-8729 (TTY).

If the bureau finds reasonable evidence of improper governmental activity, it confidentially reports the details to the head of the employing agency or to the appropriate appointing authority. The act requires the employer or appointing authority to notify the bureau of any corrective action taken, including disciplinary action, no later than 30 days after transmittal of the confidential investigative report and monthly thereafter until the corrective action concludes.

This report details the results of the 15 investigations completed by the bureau or by other state agencies on our behalf between February 1, 2003, and June 30, 2003, that substantiated complaints. This report also summarizes actions that state entities took as a result of investigations presented here or reported previously by the bureau. Following are examples of the substantiated improper activities and actions the agencies have taken to date.

UNIVERSITY OF CALIFORNIA, LOS ANGELES

An administrator at the University of California, Los Angeles (UCLA), used her position of authority to embezzle more than $256,000 in money and goods. The administrator generated at least 32 payroll payments totaling $246,085 that management did not authorize. She did so by asking subordinates for their log-on codes so that she could access the employee database, circumventing the feature that prevents an employee from making any changes to his or her own personnel or payroll record. While logged on under her subordinates' identities, she entered false justifications for payments. In addition, the administrator falsified accounting records to use UCLA funds to pay for $9,939 worth of unauthorized purchases that included two personal computers and a digital recording system for her husband's band.

UCLA terminated the employee and referred the matter to the university police for criminal investigation. In addition, UCLA stated that it would work to develop the appropriate tools to enable it to more successfully detect questionable transactions.

DEPARTMENT OF TRANSPORTATION

An employee misappropriated $622,776 by submitting purchase requests to a company for information technology (IT) products and verifying that the department received the products even though the company never sent them. The employee also violated state laws and policies by directing the company to retain state funds from these fictitious purchases in an account outside of the State Treasury and by allowing it to act as a fiscal agent for the State. Without department approval, the employee used these funds, which had been authorized for the purchase of specific IT products, to correct errors she made on previous purchase requests, to purchase training for department staff, and to purchase other IT products for the department.

PUBLIC UTILITIES COMMISSION

A supervisor improperly deposited into his personal bank account $80,759 in registration fees and other charges he received from participants in the annual state railroad conference he oversaw on behalf of his state employer during 1999, 2000, and 2001. Documentation we obtained suggests he profited by as much as $37,000. In addition, the supervisor used funds he received from the 1999 conference to pay for $1,408 in alcohol-related expenses incurred at that year's conference.

CALIFORNIA UNEMPLOYMENT INSURANCE APPEALS BOARD

The California Unemployment Insurance Appeals Board (Appeals Board) improperly granted all employees one day off for each quarter of 2002 in exchange for their dealing with increased workloads. Although the Appeals Board has some flexibility in granting informal leave to those employees who work in excess of 40 hours a week but hold positions that prohibit them from receiving overtime, the same flexibility does not extend to granting informal leave to employees who hold positions that entitle them to receive cash or time off for any overtime they work. We determined that the Appeals Board improperly granted leave valued at an estimated $170,314 to 314 employees who were already compensated for their overtime. In addition, the Appeals Board failed to track its employees' use of the administrative leave.

We asked the Appeals Board to investigate another allegation on our behalf, and it found that an employee took two weeks off without charging the time to any officially recorded leave balance. Her supervisor erroneously believed that the employee was in a classification that did not permit her to earn official overtime. To compensate her for the extra hours she had been working, the supervisor granted the employee informal time credits and approved the employee's use of these time credits for her two-week absence. To correct this error, the Appeals Board charged 80 hours to the employee's official leave balance for the two-week absence. Further, the Appeals Board said it would give the supervisor a memorandum instructing him to comply with all attendance rules and requirements of the State and the Appeals Board, including proper tracking and compensation for employee overtime hours.

UNIVERSITY OF CALIFORNIA, SAN FRANCISCO

The University of California, San Francisco (UCSF), used proprietary bidding specifications for several roofing projects that restricted fair competition. The specifications placed unnecessary requirements on potential bidders, which limited the number of contractors able to submit competitive bids for the projects. Further, the specifications unnecessarily forced contractors to use a specific manufacturer's products and limited the contractors' ability to use substitute products, even if the substitute products were less expensive and superior in quality.

CALIFORNIA HORSE RACING BOARD

The California Horse Racing Board (Horse Racing Board) improperly reimbursed several employees for travel expenses incurred on days they did not work. Because the Horse Racing Board offered its employees the option to stay out of town at the State's expense on their days off and did not require them to demonstrate how this arrangement was in the State's best interest, it incurred unnecessary travel expenses totaling $11,812 in 2000 and $5,830 in 2001. One employee also improperly claimed and received reimbursement for excessive mileage totaling $2,161, bringing the total improper travel costs to $19,803.

DEPARTMENT OF MOTOR VEHICLES

An employee claimed military leave even though he did not engage in military-related activities during a period he was absent from his state job. The employee, as a member of the National Guard, was entitled to take military leave for the first 30 calendar days of active duty served. However, during the period in question, the employee failed to notify the Department of Motor Vehicles (Motor Vehicles) that his military orders were rescinded. As a result, Motor Vehicles recovered $2,954 from the employee for the period it determined he was absent without leave and dismissed him from his state position.

CALIFORNIA CONSERVATION CORPS

A California Conservation Corps employee used a state vehicle to make personal trips. Records obtained from an institution that housed an inmate the employee visited indicated that the employee used a state vehicle to travel to the institution 21 times for personal visits on days she did not work. The employee failed to record these trips on the vehicle mileage logs. The employee acknowledged the improper use of the state vehicle and resigned from state service.

DEPARTMENT OF DEVELOPMENTAL SERVICES, LANTERMAN DEVELOPMENTAL CENTER

An employee at the Lanterman Developmental Center (center) stole a state-owned truck and forklift. Although it could not determine the precise value of the stolen property, the center reported that when it first received the property, the truck was valued at $500 and the forklift was valued at $9,858. The center retrieved the truck and the forklift.

FRANCHISE TAX BOARD

An employee inappropriately accessed the confidential tax information of a close relative and failed to disclose her outside employment for one of two businesses she operates. Upon reviewing the employee's state computer, the Franchise Tax Board (Tax Board) found that she accessed her personal Internet e-mail account on 73 occasions and maintained a list of 38 clients' names and their Social Security numbers on her state computer. It also found that the employee used a state-owned fax machine and cell phone to conduct personal business. The Tax Board suspended the employee for 30 days without pay for inexcusable neglect of duty, dishonesty, willful disobedience, misuse of state property, and failure of good behavior causing discredit to the Tax Board.

In another investigation, the Tax Board concluded that an employee misused his state-issued computer by inappropriately accessing 428 Internet sites for personal use. The employee admitted the misuse. The Tax Board suspended the employee without pay for three days and will periodically monitor his Internet usage.

DEPARTMENT OF TRANSPORTATION

An employee used his state computer to visit Web sites unrelated to his work, including chat rooms, retail establishments, an on-line auction site, and adult-oriented Web sites. Because the employee left state service before the Department of Transportation (Caltrans) completed its investigation, it did not take formal action against him. However, Caltrans placed a letter in his personnel file to alert a hiring manager to these issues should the employee attempt to return to state service.


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