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DA finds no SamTrans crimes: Investigation into financial practices shows some accounting shortfalls, but no wrongdoing
August 13, 2014, 05:00 AM By Michelle Durand Daily Journal

The San Mateo County Transit District’s accounting practices fell short of generally used principles in some areas but there is no sign the agency purposely cooked the books to justify more taxpayer money, prosecutors announced Tuesday.

The District Attorney’s Office said there was no evidence of wrongdoing and the investigation is now closed. Assistant District Attorney Al Serrato sent a letter to SamTrans counsel David J. Miller alerting him that the investigation “revealed no evidence of theft, embezzlement or other criminal conduct.”

SamTrans officials welcomed the news which confirmed what they said they already knew.

“We had full faith and confidence in our staff and never believed there was any intention to conceal or conduct business in an inappropriate manner,” said spokeswoman Jayme Ackemann.

SamTrans, also known as the San Mateo County Transit District, which claims a structural deficit, operates budgets for Caltrain, the county bus system, also known as SamTrans, and the Transportation Authority. The Board of Supervisors approved giving SamTrans $10 million in Measure A sales tax funds for the next two years to subsidize paratransit.

While the investigation yielded no signs of criminal acts, auditors “did note instances of accounting practices there were inconsistent with generally accepted accounting principles,” District Attorney Steve Wagstaffe said in an announcement of the investigation’s end.

SamTrans acknowledged the inaccuracies when they were made aware and has since taken improvement steps, Ackemann said.

The changes include bolstering staffing levels, implementing better supervision and upgrading the PeopleSoft software system, she said.

Ackemann declined further comment on the allegations and investigation, citing a pending federal lawsuit by one of the employees who made them.

The District Attorney’s Office launched its look into SamTrans last year after former employees David Ramires and Ling La, both accountants, claimed funds were improperly shifted into accounts for unauthorized projects or expenses by management. The pair alleged SamTrans purposely overstated its expenses and liabilities so that its bottom line looked worse, thereby justifying asking taxpayers for more money.

Serrato said audits by two separate accounting firms — whose costs were borne by the district — showed a different reality.

The first inquiry was by Maze and Associates, the firm employed by the district, and the second by MGO Certified Public Accountants, an independent agency with county government expertise. La and Ramires refused to speak with the Maze auditor which limited its findings to mistaken accounting entries. The second was brought in “because I wasn’t comfortable we were getting to the bottom line because Maze’s assessment had to include disclaimers that without speaking to the parties it couldn’t address all the claims,” Serrato said.

David Bullock, a partner with MGO, spoke with both Ramires and La, reviewed records and actually visited the district office. He noted that “the vague and unsupported nature of some of Ramires’ contentions made substantiation of the claims impossible,” Serrato wrote in the Aug. 12 letter to Miller.

Although there was no signs of criminal activity, Bullock did find accounting errors such as accruals between 2009 and 2013 not supported by documentation and accounts payable not being property reversed at year’s end.

The unliquidated balances accumulated over those years were reversed by the district in 2013 through a $2.5 million journal entry.

The findings corroborated Ramires’ and La’s claims about accounting irregularities but does not prove any of the money was lost, embezzled or otherwise unaccounted for, Serrato said.

“Our perspective is looking for criminal type of behavior. We’re not looking at it to say you could do a better job with the accounting,” Serrato said.

La has sued SamTrans, claiming the agency retaliated against her for whistle-blowing, her attorney Dow Patten told Bay City News.

Patten said that while the district attorney’s investigation was sound, it suffered from not being conducted by a forensic accounting firm familiar with criminal cases.

“When you don’t have full access and you don’t have a forensic accountant, you’re not going to be able to track down every expenditure and find out, where did this expenditure come from?” Patten said.

Patten said La was particularly concerned that the agency was not using proper competitive bidding procedures for contracts as legally required. But the findings of accounting irregularities support La’s claims, Patten said.

“What we do know is, her complaints have been justified,” Patten said.

Bay City News contributed to this report.

michelle@smdailyjournal.com

(650) 344-5200 ext. 102

 

 

Tags: accounting, district, samtrans, patten, serrato, there,


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