Report I2004-2 Summary - September 2004

Investigations of Improper Activities by State Employees: January 2004 Through June 2004


State employees and departments engaged in improper activities, including the following:


The Bureau of State Audits (bureau), in accordance with the California Whistleblower Protection Act (Whistleblower Act) contained in the California Government Code, beginning with Section 8547, receives and investigates complaints of improper governmental activities. The Whistleblower Act defines an "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. The Whistleblower Act authorizes the state auditor to investigate allegations of improper governmental activities and to publicly report on substantiated allegations. To enable state employees and the public to report these activities, the bureau maintains the toll-free Whistleblower Hotline (hotline): (800) 952-5665 or (866) 293-8729 (TTY).

If the bureau finds reasonable evidence of improper governmental activity, it confidentially reports the details to the head of the employing agency or to the appropriate appointing authority. The Whistleblower Act requires the employer or appointing authority 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 18 investigations completed by the bureau or by other state agencies on our behalf between January 1, 2004, and June 30, 2004, that substantiated complaints. This report also summarizes actions that state entities took as a result of investigations presented here or reported previously by the bureau. Following are examples of the substantiated improper activities and actions the agencies have taken to date.


In violation of state law, a Department of General Services (General Services) employee fueled his personal vehicle with gasoline he stole from a state garage. The employee admitted that on at least five occasions he improperly fueled his car with gasoline from a General Services garage. We estimate that for these five transactions, the employee stole 68 gallons of gasoline worth $136. In addition, we identified 141 other questionable transactions by the employee that took place between August 2001 and March 2004 involving a total of 1,910 gallons of gasoline worth $3,752. Although the employee told us that most of these transactions were legitimate, many involved inconsistencies or discrepancies that he could not sufficiently explain.

General Services issued a counseling memo to the employee and recovered $139 from him for the value of the gasoline he admitted stealing.


In an effort to justify a business need for the number of vehicles leased by a Department of Health Services office (office), the office manager allowed employees under her supervision to use state vehicles for their personal commutes to increase the monthy mileage figures. Nine employees, including the manager, used state vehicles to commute between their homes and the office in violation of state laws and regulations. We determined that as a result of their misuse of state vehicles, office employees received a personal benefit of $12,346. Because the employees received a personal benefit as a result of the manager's decision, it appears that they violated state law prohibiting the use of state resources for personal gain.


An Air Resources Board (air resources) employee used his state credit card to steal 2,092 gallons of gasoline at a cost of $3,634, none of which was used in a state vehicle. The employee also drove the state vehicle assigned to him for personal purposes. Air resources developed procedures to prevent its employees from stealing gasoline, but the employee did not follow them. Specifically, air resources requires its employees to submit monthly mileage logs and gasoline receipts for all state vehicles. Although air resources notified the employee four times to comply with this requirement, the employee did not complete the logs as required. As a result, air resources could not account for 2,000 miles for two vehicles that it assigned to him at different times. Air resources dismissed the employee.


Between July 1, 2001, and June 30, 2003, 19 employees at two of the California Military Department's (Military Department) three training centers received increased pay associated with inmate supervision even though they did not supervise inmates for the minimum number of hours required to receive the pay. For the two years we reviewed, the Military Department paid its employees at two of the training centers approximately $128,400 more than they were entitled to receive. We were unable to determine to what extent, if any, the Military Department's third training center also improperly granted its employees the increased pay because it was not able to provide supporting documents for 23 of the 24 months we requested. At least 10 of its employees received the pay increase at some time during that two-year period.

The Military Department agreed with our findings and reported that it has implemented changes to correct the problems identified. Specifically, it reported that it has returned all employees receiving the pay increase to their original pay level and implemented a policy at all three training centers for certifying when employees are eligible for the pay increase. The Military Department also implemented a policy that requires the training centers to maintain employee compensation documentation for two years. Further, the Military Department reported that its state personnel director, or his representative, will complete periodic inspections of the required documentation.


An employee of the Department of Insurance (Insurance) inappropriately accessed confidential information. Specifically, the employee obtained private and personal information regarding an individual and then faxed the information to her secondary employer, putting both the individual and Insurance at risk for having made an unauthorized disclosure of confidential information. Although the employee maintained that she had mistakenly faxed the information to her other employer and that she had accessed the data because it pertained to work she conducted on behalf of Insurance, Insurance investigators determined that the employee had no work-related reason for accessing the individual's records. On another occasion, the employee searched a confidential database for information pertaining to a family member but could not explain why such a search was made. Insurance also found that the employee misused various state resources.

Insurance reported that it has initiated adverse action against the employee to reduce her salary by 5 percent for 10 months for inexcusable neglect of duty, dishonesty, willful disobedience, misuse of state property, and behavior that causes discredit to the department.


An employee of the California Unemployment Insurance Appeals Board (appeals board) mailed copies of letters received from the Employment Development Department (department) to individual claimants even though the letters contained names and Social Security numbers of numerous other claimants. State and federal laws prohibit the divulging of confidential information, specifically including Social Security numbers. Although the employee improperly divulged confidential information pertaining to 231 individuals, department investigators concluded that there was no intent to defraud or to cause injury to the State or to the parties whose information was divulged. Nevertheless, the appeals board violated the privacy rights of these individuals.

To prevent the situation from occurring again, both the department and the appeals board have changed their procedures for processing appeal documents involving multiple names and Social Security numbers. The appeals board counseled the employee following the incident. In addition, when the appeals board learned of the improper disclosure, it took immediate steps by sending security breach notification letters to the individual parties advising them that their Social Security numbers were erroneously released and subsequently sending a follow-up appeal acknowledgment to each party with the Social Security numbers removed. Finally, the appeals board completed security incident reports pursuant to state policies and counseled support staff regarding new procedures for handling appeals with multiple Social Security numbers.


A State Controller's Office (Controller's Office) employee used state resources to operate his private business. An investigation by the Controller's Office showed that between August 2003 and March 2004 the employee used his state computer to create and access numerous documents not related to his state job that were related to his private accounting business, most of which appeared to have been created during his normal state duty hours. The employee explained that he kept his business records on his state computer in addition to maintaining these records on his personal computer because his state job required a considerable amount of travel and he did not want to have to carry two computers while away on state business. The Controller's Office did not specify the amount of time the employee spent creating records unrelated to his state job on his state computer during his normal state work hours.

In addition, the Controller's Office reviewed telephone calls the employee made during January 2004 and found that he made several calls to his clients. The employee admitted that he made a few phone calls to his clients using the state telephone and on occasion used the state fax machine to receive faxes from his clients. The Controller's Office has not yet decided what action to take against the employee.