The special district oversight board which last year spared the scandalized mosquito abatement district despite questions about management allowing an $800,000 embezzlement by workers may reconsider the idea of transferring its functions to the county’s Environmental Health division.
In July, the San Mateo County Civil Grand Jury concluded that mismanagement, insufficient accountability and inadequate oversight were behind the crimes at the Mosquito and Vector Control District. The jury also urged the county’s Local Agency Formation Commission — which opted in 2012 to maintain the status quo near-unanimously after the embezzlement came to light — to take a second look at dissolving the district and transferring its services to the county’s Environmental Health division.
The San Carlos City Council — whose representative to the district is the one who prompted discovery of the stealing — agrees the idea needs further revaluation. The City Council signed off on its mandated response to the grand jury Monday night. LAFCo will gets its turn Wednesday afternoon.
Although county Supervisor Don Horsley, who chairs the LAFCo board, voted against dissolution last year, he said a decision this time depends greatly on whether the district has instituted recommended controls to prevent future errors. Horsley said he remains unsettled the district doesn’t contract its human resources to a more experienced agency and retains a 21-member governing board.
“I still have concerns about the governance. They may have some good processes and procedures in place but governance remains a problem for me,” Horsley said. “I’ll reserve judgment.”
The jury report also took aim at the board, arguing the district’s insurance company denied its $790,000 loss claim because of its failure.
The report said trustees are “confused” about their responsibilities and cities don’t prioritize having representation on the district board. The internal financial controls were “inadequate,” important policies were not followed and there were significant differences of opinion about whether district manager Robert Gay is equipped to manage the district, the jury concluded.
Gay hired finance director Jo Ann Dearman, otherwise known as Joanne Seeney, without a background or reference check and she in turn hired bookkeeper assistant Vika Sinipata. Between 2009 and 2011, the women embezzled district money by giving themselves extra pay at a higher pay rate and fraudulent time off, excessively contributed to their deferred compensation funds, used credit cards for personal purchases and electronically transferred money into their own accounts. Dearman even charged defense attorneys fees for an earlier embezzlement case to the district and at one point took medical leave, claiming she needed to care for her mother but in actuality served two years and eight months in prison for the two different embezzlement cases. In one of those previous cases, Dearman ran up more than a half-million dollars on her boss’ credit card.
Dearman pleaded no contest to 10 felonies and Sinipata faces eight years on 12 counts. Both are due in court Sept. 13 for sentencing.
Gay was placed on a performance improvement plan by the district which later extended his contract and LAFCo toyed with dissolution. The county previously handled rodent responsibilities but transferred them to the district in 2008 and shifted all vector control three years later.
The LAFCo board ultimately decided that while the district needed monthly auditing and scrutinizing of its operations, dissolution would only jeopardize public safety and punish the agency.
But while LAFCo, in its draft grand jury response, agreed dissolution warrants further evaluation, it continues that the Environmental Health division and the district are best equipped to study the transfer of employees, accountability and any possible cost savings.
In an Aug. 7 letter to LAFCo Executive Officer Martha Poyatos, district staff called dissolution “unnecessary” and said it would make maintenance of quality service “difficult.”
LAFCo meets 2:30 p.m. Wednesday, Sept. 11 in Room 101 of 455 County Center.
(650) 344-5200 ext. 102