Two former city officials charged with embezzlement - CBS News 8 - San Diego, CA News Station - KFMB Channel 8

Two former city officials charged with embezzlement

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SAN DIEGO (CNS) - The former president and financial director of the Southeastern Development Corp. were each charged Tuesday with three counts of embezzlement and single counts of misappropriation of public funds and conspiracy.

The ex-head of the SEDC, Carolyn Smith, has not yet been contacted by prosecutors with the state Attorney General's Office, but the financial official, Dante Dayacap, was arrested, according to an office spokesman.

The charges contain special allegations that the offenses involved sums over $200,000.

The defendants were fired from the SEDC, which handles redevelopment east of downtown, in 2008 after allegedly handing out $872,000 in bonuses to themselves and other staff members over five years, which an auditor later called fraudulent.

An affidavit to support an arrest warrant reads, "Smith and Dayacap misrepresented SEDC's administrative costs to the City Council and inflated SEDC's administrative budget. Smith and Dayacap then used the excess budgeted funds to award themselves and other SEDC employees large bonuses, without the knowledge or approval of the SEDC Board of Directors or City Council."

Governance of the agency and its downtown counterpart, the Centre City Development Corp., have both since been reformed. More proposals are being floating to transform the city of San Diego's redevelopment structure entirely.

According to the affidavit, Smith and Dayacap began handing out a series of bonuses beginning as early as 2003.

In the 2005-06 fiscal year, the SEDC came in just under budget despite having a number of unfilled staff positions, with the money being paid out in bonuses. The affidavit alleges Smith received $33,440 that year in six bonus payments that were described as cost-of-living adjustments, holiday pay and "Year-end Acknowledgement."

Dayacap allegedly received six payments totaling more than $32,000.

The next year, the bonuses allegedly increased to nine payments worth a combined $82,700 for Smith and $67,300 for Dayacap. In 2007-08, the totals were allegedly $78,808 for Smith and $63,400 to Dayacap. The Attorney General's Office said no court dates have been set in the case.

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