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Investigations of Improper Activities by State Agencies and Employees
Wasteful and Improper Personnel Decisions, Improper Contracting, Conflict of Interest, Misuse of State Resources, and Dishonesty

Report Number: I2020-2

October 29, 2020
Investigative Report I2020-2

The Governor of California
President pro Tempore of the Senate
Speaker of the Assembly
State Capitol
Sacramento, California 95814

Dear Governor and Legislative Leaders:

The California State Auditor, as authorized by the California Whistleblower Protection Act, presents this report summarizing some of the investigations of alleged improper governmental activities that my office completed between January 2020 and June 2020. This report details nine substantiated allegations involving several state agencies. Our investigations found wasteful and improper personnel decisions, improper contracting, a conflict of interest, misuse of state resources, and dishonesty. In total, we identified more than $800,000 of inappropriate expenditures and millions of dollars more that the State will wastefully spend unless it takes appropriate corrective action.

For instance, several years ago the Department of State Hospitals began a telepsychiatry program and allowed its telepsychiatrists to receive State Safety retirement benefits even though they do not have regular, substantial, in-person contact with patients as required. We estimate that this decision will result in millions of dollars in overpaid retirement benefits if left uncorrected.

In another case, executives within the California Department of Veterans Affairs (CalVet) improperly approved 10 emergency contracts that totaled $628,000 under circumstances that did not qualify as emergencies according to the law, including nearly $187,000 to remodel two employee housing units intended for administrators. As a result, CalVet failed to solicit legally required competitive bids.

One more example involves a conflict of interest that occurred when a battalion chief for the California Department of Forestry and Fire Protection participated in making a $100,000 contract with a construction company that employed his wife and was owned by his wife’s family. The battalion chief’s superiors knowingly allowed the conflict to occur.

State agencies must report to my office any corrective or disciplinary action taken in response to recommendations we have made. Their first reports are due within 60 days after we notify the agency or authority of the improper activity, and they continue to report monthly thereafter until they have completed corrective action.

Respectfully submitted,

California State Auditor