Report I2001-2 Summary - September 2001

Investigations of Improper Activities by State Employees


February Through June 2001


State employees engaged in improper activities, including the following:


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). The hotline number is (800) 952-5665.

If the bureau finds reasonable evidence of improper governmental activity, it confidentially reports the details to the head of the employing agency or the appropriate appointing authority. The employer or appointing authority is required 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 eight investigations completed by the bureau and other state agencies on our behalf between February 1 and June 30, 2001, that substantiated complaints. Following are examples of the substantiated improper activities and actions taken to date.


A manager in the Office of Small Business Certification and Resources made verbal agreements with a consultant hired to perform information technology services costing $665,103 instead of following the State's formal contracting procedures, which require advertising the work, seeking competitive bids, and entering into formal contracts. She also improperly used CAL-Cards assigned to five of her subordinates to pay $463,444 to the consultant. CAL-Cards are state procurement cards intended for small purchases. Although she prepared purchase orders so she could pay the consultant the other $201,659, she did not actually issue them to the consultant, an action that would have established a formal, enforceable agreement. Finally, the manager did not notify the appropriate office within the Department of General Services (DGS) of the payments made through the purchasing cards so that office could report the payments to federal and state tax authorities. The manager took another job in state government before DGS discovered her activities. Consequently, DGS could not take action against her.


Several employees in the Department of Transportation's Sacramento warehouse used state time and resources to run and participate in an illegal gambling pool on the outcome of professional football games. The warehouse manager warned the employees to stop.


A Contractors State License Board (license board) investigator falsified investigative records to avoid having to conduct a more in-depth investigation of a consumer complaint against a construction contractor. Because the investigator retired, neither the license board nor the Department of Consumer Affairs was able to take action against the investigator.


An executive and contract manager in the Disaster Assistance Division of the Governor's Office of Emergency Services (OES) engaged in the following improper activities:


San Jose State University (university) gave one employee $129,304 in full pay and benefits from February 1, 1999, through May 31, 2000, without requiring her to report to work or to provide any services to the university. Because the university was only required to pay the employee for three months after notice of termination, $105,308 of the amount it paid her for no services amounts to a gift of public funds in violation of the California Constitution. In addition, the university paid five consultants $380,519 to perform some of the employee's duties in her absence. At least a portion of the cost for the consultants was a waste of state funds. If the university had promptly terminated the employee, it could have hired a regular employee to do her work.

The university disagrees that its payments constitute a gift of public funds and believes that it acted prudently in light of an unresolved lawsuit the employee had against it. The university also disagrees that any of its payments to the consultants were a waste of funds.


Employees of the Department of Education (education) engaged in the following improper activities:


The Office of the State Public Defender (public defender) inappropriately paid an employee $2,987 in commuting expenses. The Department of Personnel Administration directed the public defender to stop paying for the employee's commuting expenses.


An employee of the Department of Transportation (Caltrans) Division of Highways in Oakland used state time, telephones, and vehicles for his real estate business. Caltrans issued a letter of warning to the employee.

This report also summarizes actions taken by state entities as a result of investigations presented here or reported previously by the bureau.

Appendix A contains statistics on the complaints received by the bureau from February 1 through June 30, 2001, and summarizes our actions on those and other complaints pending as of January 31, 2001. It also provides information on the cost of improper activities substantiated since 1993 and the corrective actions taken as a result of our investigations.

Appendix B details the laws, regulations, and policies that govern the improper activities discussed in this report.

Appendix C provides information on actual or suspected acts of fraud, theft, or other irregularities identified by other state entities. Section 20080 of the State Administrative Manual requires state agencies to notify the bureau and the Department of Finance of actual or suspected acts. It is our intention to inform the public of the State's awareness of such activities and to publicize that agencies are acting against wrongdoers and working to prevent improper activities.

See the Index for an alphabetical listing of all agencies addressed in this report.