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'Management, you really dropped the ball on this one' | SANDAG improperly used credit cards to spend taxpayer money

Auditor finds inadequate policies and missing receipts in 'purchase card' expenditures at SANDAG.

SAN DIEGO — An audit of credit card purchases by the staff at SANDAG, the San Diego Association of Governments, showed questionable and possibly improper spending of taxpayer money.

The agency’s independent auditor also found a lack of controls to keep credit card spending in check.

SANDAG’s Independent Performance Auditor, Mary Khoshmashrab, looked at four years of spending with taxpayer-funded “purchase cards” the agency issued to its staff and management.

In December 2019, SANDAG charged $20,808 in two separate credit card purchases to pay for an employee retreat at the Gaslamp Westin Hotel, billing the costs to federal, state and local taxpayers, according to the auditor.

The agency’s policy limited card purchases to a maximum of $3,500, the auditor revealed during a SANDAG board meeting.

According to the audit, in the San Diego region alone between 2017 and 2021, SANDAG staff used credit cards to charge:

  • $45,754 at eating places and restaurants
  • $17,492 at fast food restaurants
  • $5,884 at drinking places (alcohol)

Additionally, over the four years, the audit also found questionable purchases on non-work days.  

"Auditors identified 802 transactions totaling $197,538 that occurred on weekends and 124 transactions totaling $49,165 that occurred on holidays," the audit said.

Elected officials who sit on the SANDAG board were shocked by the findings.

“I think there was like $60,000 that was used for restaurants locally, which shouldn't have happened, I don't believe in many cases.  And some of them could be even drinking alcohol,” said Rebecca Jones, Mayor of San Marcos.

SANDAG’s independent auditor, Mary Khoshmashrab, told CBS 8 via email that taxpayer money should never be spent on alcohol.

Still, Khoshmashrab told the SANDAG board that in some cases it won’t be easy to prove wrongdoing.

“Yes, we found several transactions that showed the merchant code is alcoholic. The problem is some restaurants will put a merchant code that it’s alcohol when it's not. It's a soda that they get from a bar,” Khoshmashrab said.

The audit also showed credit card purchases were not approved, in some cases, and receipts were missing.

“Management, you really dropped the ball on this one. Any time you're dealing with public funds, and we find out after a period of time this much money can't be accounted for, that doesn't say much for this establishment's leadership,” said Carlsbad Mayor Matt Hall, who sits on the SANDAG board.

The audit recommended more than a dozen corrective actions and policies aimed at preventing future credit card abuse.  

SANDAG’s CEO Hasan Ikhrata agreed to implement all of them.

“We’re going to look at all of our procedures to make sure that we're transparent, obviously, we're accepting all the findings. We need controls,” Ikhrata said.

SANDAG currently has about 16 credit cards issued to staff members. The agency will cut that number down to six, immediately.

If it is determined that any staff members improperly used their SANDAG purchase card, they could be asked to reimburse the agency.

New purchase card policies should be voted on by board members in April.  Staff members who continue to use purchase cards will be trained in their proper use by the end of July.

WATCH RELATED: Caltrans, SANDAG open 9 new miles of carpool & HOV lanes on I-5 between Solana Beach and Carlsbad (February 2022)

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