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CBS News 8 - San Diego, CA News Station - KFMB Channel 8 | cbs8.com

Alleged San Diego City employee fraud case to be presented to City Council

"As far as I'm concerned, this is just theft of taxpayer money," said Councilman Scott Sherman, chair of the Audit Committee.
Credit: KFMB

SAN DIEGO COUNTY, Calif. — The San Diego City Council's Audit Committee Wednesday approved four recommendations regarding an investigation into a city employee who allegedly accepted more than $3,000 in gifts while awarding millions of dollars in public contracts.

"As far as I'm concerned, this is just theft of taxpayer money," said Councilman Scott Sherman, chair of the Audit Committee. "We need to send a message as a city."

The unanimously approved recommendations, which deal both with the specific unnamed employee's case and with broader changes to city employee ethics training, will next be presented to the full city council for approval.

The city audit office recommends adding classified employees to the jurisdiction of the Ethics Commission -- a step which would require the hiring of two to four employees to provide ethics training to those workers.

When city auditors were tipped off about the alleged behavior nearly five years ago, the city employed around 750 classified city workers who were required to file a financial interest statement but were not under the Ethics Committee's jurisdiction for education and enforcement.

According to a report by Interim City Auditor Kyle Elser, released April 13, auditors received the tip on the employee in September 2015 and began an investigation. Eventually, they referred the case to law enforcement, who began a criminal investigation.

Ultimately, law enforcement officials closed the investigation without charging anyone with a crime. The city reopened its internal investigation in March 2019.

The second recommendation approved by the Audit Committee would be to take action against any city employees involved, which audit office staff said could include an investigation by the FBI's Public Corruption section.

The last two recommendations would be the debarment of the two unnamed vendors that allegedly gave the employee gifts. The debarment could range from banning those vendors from performing any business in the city of San Diego for a period of time, or as drastic as going after their business license and banning them from doing business in California.

According to the auditor's report, the employee "covertly advised" the vendors on how to increase revenue from city contracts, using a private email account to do so. In at least one instance, the employee allegedly advised one of the contractors on methods to increase the amount they could bill the city by $37,000. The employee allegedly also used the private email account to communicate with the vendors about concrete cutting and disposal work at his home.

The gifts the employee allegedly received in return for awarding contracts include a paid trip to attend a professional sporting event in San Francisco; free contracting work performed at city employee residence; two tickets to a Las Vegas show; annual entry fees to a golf tournament; and amusement park tickets for the person's family.

The employee failed to report those gifts on annual statements of economic interests until after questioned by law enforcement, according to Elser's report.

The individual worked for San Diego's public works department between 2012 and 2016, according to the city's audit office, and the two vendors under investigation still have contracts with the city.

The employee, reportedly claimed he did not know accepting gifts was unethical, audit office staff said on Wednesday.

Elser's report found that the employee had not undergoing ethics training.

"I don't buy that excuse," Sherman said. "You don't have to be taught what is right and wrong."