Report I2014-1 Summary - December 2014

Investigations of Improper Activities by State Agencies and Employees


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


The California Whistleblower Protection Act (Whistleblower Act) empowers the California State Auditor (state auditor) to investigate and report on improper governmental activities by agencies and employees of the State. Under the Whistleblower Act, an improper governmental activity is any action by a state agency or employee related to state government that violates a law, is economically wasteful, or involves gross misconduct, incompetence, or inefficiency.1

This report details the results of four particularly significant investigations completed by the state auditor or undertaken jointly by the state auditor and other state agencies. This report also outlines the investigative results from another six investigations that were best suited for other state agencies to investigate on behalf of the state auditor. The following paragraphs briefly summarize the investigations, which are discussed more fully in the individual chapters of this report.


A manager at the State Water Resources Control Board (Water Board) embezzled more than $3,500 in state funds that she received when she recycled surplus state property on behalf of the Water Board. The manager embezzled the funds by directing a moving company under contract with the State to take the surplus property to a local recycling center and, contrary to common practice at the Water Board, instructing the movers to obtain payment in cash from the recycling center instead of by check. She then took the cash to her house instead of submitting it to the Water Board's accounting office. After the manager learned about our investigation, she tried to cover up the embezzlement by filing a police report stating that someone had broken into her personal vehicle and stolen the funds. She later repaid more than $2,500 to the Water Board; however, this amount was nearly $1,000 less than she embezzled.


The California Military Department (Military Department) failed to keep an accurate inventory of state property at its Camp Roberts training facility, which led to a June 2011 loss of inventory valued at $33,400. The Military Department subsequently implemented a corrective action plan intended to prevent further waste. However, more than three years after the Military Department provided the state auditor with its plan, the Military Department still has not completed its effort to ensure accountability for state inventory.


A manager at the Employment Development Department (EDD) failed to accurately designate an employee's office headquarters. As a result of the inaccurate designation, the employee's supervisors approved $20,700 in improper travel payments between July 2007 and January 2010 for expenses improperly incurred within 50 miles of her proper headquarters. In addition, when EDD promoted the employee in early 2010, EDD staff again erroneously designated her headquarters, and her supervisor approved another $6,100 in improper travel expenses incurred within 50 miles of her proper headquarters from January 2010 through July 2012. In total, EDD improperly reimbursed the employee $26,800 during the five-year period.


A full-time employee at the Department of Industrial Relations (Industrial Relations) lied to his manager about needing to telecommute and took advantage of his manager's neglect of his supervisory duties and Industrial Relations' failure to establish an effective telecommuting program to work a second full-time job, without Industrial Relations' knowledge, that conflicted with his state employment. As a result, the employee performed less work than the average of 40 hours per week that Industrial Relations generally expected him to perform and for which he was being compensated. Although he was not an hourly employee, we estimated that the State may have paid the employee at least $12,200 for time when he was not available to perform his job. Due to the manager's lax supervision of the employee, however, Industrial Relations was unable to determine how much work the employee actually performed.


In addition to the investigations described previously, the state auditor referred numerous investigations to the affected state departments to perform in response to whistleblower complaints that the departments appeared best suited to investigate. The following investigations substantiated improper governmental activities that have particular significance.


An employee of the California Department of Water Resources (Water Resources) recycled state property without permission, retained the proceeds of at least $1,300 from the recycling, and was untruthful with Water Resources officials about his actions.


The California Department of General Services (General Services) allowed a private security firm's guards to park their personal vehicles in a state-owned garage free of charge, contrary to the provisions of a contract between General Services and the private security firm. This practice, which began in 2007, constituted a gift of public resources prohibited by state law and cost the State at least $12,800 in lost revenue.

Table 1 summarizes the improper governmental activities appearing in this report, the financial impact of the activities, and their status.

Table 1:
Issues, Financial Impact, and Status of Recommendations for Cases Described in This Report
Status of Recommendations
Chapter Department Issue Cost to the State as of June 30, 2014* Fully Implemented Partially Implemented Pending No Action Taken
1 State Water Resources Control Board Theft of state funds $994 X
2 California Military Department Waste of public resources 33,411 X
3 Employment Development Department Improper headquarters designation and improper travel expenses 26,847 X
4 Department of Industrial Relations Dishonesty, incompatible activities, neglect of duty, and failure to establish a telecommuting program 12,197 X
5 California Department of Water Resources Misuse of state resources, dishonesty 1,341 X
5 California Department of General Services Gift of public resources 12,825 X
5 California Department of Motor Vehicles Falsification of driver's license records 1,200 X
5 California Department of Transportation Misuse of state vehicles 415 X
5 California Department of Corrections and Rehabilitation Waste of state resources NA X
5 California Department of Motor Vehicles Failure to keep state offices open to the public NA X

Source: California State Auditor.

NA = Not applicable because the situation did not involve a dollar amount or because the finding did not allow us to quantify the financial impact.

* We estimated the cost to the State as noted in individual chapters of this report.

1 For more information about the state auditor's investigations program, please refer to the Appendix.