Misappropriated Bond Funds

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Staff Report Update Number 2

Posted by Ender Wiggins on July 8, 2012 at 10:40 AM Comments comments (41)

The first Staff Report Update, under Observation #2, discussed the need for a law that would hold those responsible for misappropriating bond funds accountable and mentioned that State Senator Huff had introduced a bill, SB 633, to do just that.

This update is intended as an explanation of what happened to SB 633.


In 2011-12, there were 754 proposed bills that were chaptered into law out of 1799 bills submitted for consideration. Also, over 500 new regulations were approved last year by over 100 California regulating agencies. And, its like that every single year. In 2010-11, for instance, there were 1,990 bills considered of which 733 were eventually chaptered into law.


With all those laws and regulations stacking up to the rafters, you'd think by now California would have a passed law that enacted some kind of sanction on State agencies, boards, committees and other such entities if they made unauthorized expenditures of State bond funds. At a minimum, it seems reasonable to expect that when it was determined that a misappropriation of taxpayers' funds had occurred, part of the punitive corrective action would be that the taxpayers were reimbursed the amount stolen/misappropriated.


Incredibly, that's not the case.


Generating revenue from the sale of bonds is a popular trend in California. A recent Little Hoover Commission study, which uncovered several examples of the waste and abuse, reported that Californians authorized $77 billion in General Obligation bonds in the thirty-four years between 1970 and 2004. In the last six years, however, Californians have voted for $54 billion in bond spending. The report also revealed that there are "no hard sanctions for organizations that misuse bond money."


The study's first recommendation offered to correct this situation was that "the Legislature and state government entities administering bond programs must improve oversight to ensure bond money is spent efficiently and effectively and as voters intended." It even went so far as to suggest that, "Rather than a verbal slap on the wrist, the possibility of incurring a financial penalty might deter organizations from mishandling the money."

In an effort to correct this problem and bring greater accountability to the use of bond funds, State Senator Bob Huff (R-Diamond Bar), authored SB 633. SB 633 gives the California Department of Finance (DOF) the authority to issue a corrective action plan, if an audit uncovers that bond funds have been misspent by a state entity or agency. Furthermore, the Huff measure also enabled the DOF to issue “cease and desist” orders on the offending agency, suspending any further allocation of bond funds to the offending agency until the corrective action plan has been implemented.


SB 633 sailed through its Senate committee hearings and Senate Floor vote without opposition. In the Assembly, no opposition contacted the author prior to the bill's hearing by the ASSEMBLY COMMITTEE ON BUSINESS, PROFESSIONS AND CONSUMER PROTECTION on June 19, 2012, other than the Coalition for Adequate School Housing and the Los Angeles Unified School District.


Those two organizations were concerned that "This proposal put significant power and control in the hands of a single entity, as is the case with the State Allocation Board (SAB). The SAB consists of six legislative members, a Governor's appointee, and three state agencies, including the DOG, who chairs the SAB. The role and purpose of the SAB is to develop policies and or procedures for the administration of the School Facility Program to allocate state authorized bond funds. SB 633 would significantly increase the power of the DOF and restricts the ability of the remaining SAB members to develop or support policies or procedures opposed by the DOF."


Senator Huff indicated a willingness to work with the CASH and the LAUSD to amend the bill such as to leave the School Facility Program policies and procedures solely in the hands of the SAB.


The day of the Assembly committee hearing, opposition also appeared from three environmentalists groups including The Nature Conservancy, The Trust for Public Lands, and company by the name of the Conservation Strategy Group who said they were representing a "number of conservation groups".

The environmentalists primary objection was that the bill would take oversight power away from the State Legislature and give it to DOF, who they felt was an inappropriate authority to be overseeing these expenditures. They stated that they weren't aware of any agencies misusing funds or an abundance of problems to which this bill would apply.


Conservation Strategy Group is a company owned by Joe Caves. For a more complete discussion of Mr. Caves involvement in the misappropriation of State bond funds see the original Staff Report.


Protecting the best interests of the environmentalists and those that profitted from the misappropriation of state bond funds to the detriment of the taxpayer, the Democrat leadership of the ASSEMBLY COMMITTEE ON BUSINESS, PROFESSIONS AND CONSUMER PROTECTION killed SB 633 on a straight party line vote.


And, so, the situation continues. There are no repercussions for stealing taxpayers' money.  Neither the RMC nor the MRCA have repaid the misappropriated state bond funds identified by the DOF  

(Updated) The MRCA Strikes Again....

Posted by Ender Wiggins on March 17, 2012 at 2:30 PM Comments comments (0)

Stop-Sign Camera Traps Ticket 70,000 Angelenos

from: Page 1 - News - Los Angeles - LA Weekly.Com

The Santa Monica Mountains are among Los Angeles' most beloved treasures, stretching from the Hollywood Hills to the Pacific, perfect for hiking, biking or just enjoying the view. Aside from a few modest parking fees, For More, see:



If you like the above, then check out the next link to a better and more informative map of the above mentioned cameras' locations:, but when you're done with this:

from: Los Angeles Stop Sign Ticket Traps - Google Maps


Come back here to compare that map of the stop signs cameras to the map below of the National Park Service's proposed expansion of the SANTA MONICA MOUNTAINS NATIONAL RECREATIONAL AREA.

Looks like they are planning something a little more intrusive into those people's lives over in the Santa Monica NRA than they've been promising for their proposed San Gabriel Valley NRA.

In the SGV case, they talk about how their part-passive, friendly neighborhood interested innocent bystander, part stakeholder would never, ever, cross the line to meddling with any of the existing local governments' decision making responsibilities (like in the areas of, say, traffic control, for instance?). And, even if they did do anything like that, it would only effect properties that they owned themselves.



Posted by Ender Wiggins on January 3, 2012 at 11:40 AM Comments comments (0)



Updated August 2, 2011


Before specific concerns regarding this audit report are discussed, a few important general points need to be made:


Buried in an obscure State budget compromise package’s trailer bill in 20xx, the State Legislature abdicated its responsibility for fiscal oversight of the Santa Monica Mountains Conservancy. The bill passed authority to the State Attorney General for making all final rulings regarding the appropriateness of transactions conducted between the Conservancy and the Mountains Recreation and Conservation Authority (the JPA to which the SMMC historically awards 95% of all its grants and with which it shares the same individuals acting as senior-most Staff).


Every DOF audit of the financial transactions between the SMMC and the MRCA since has identified increased amounts of misappropriated funds. The latest audit brings into question transactions that total hundreds of millions of dollars.  (this version of the audit report can be found in our DOCUMENTS section for downloading.)


The most egregious of these transactions may be the case where, with the Attorney General’s, the SMMC’s and the MRCA’s approval, the MRCA and SMMC executed a legal document called an Irrevocable Offer to Dedicate (real property ownership to taxpayers) in lieu of repaying misappropriated funds. The real property identified in this document, formerly a part of Ahmanson Ranch, was already owned by the taxpayers.


The audit clearly states that it “did not include an assessment or an examination of the efficiency or effectiveness of program operations.” Further, “..no assessment was performed on the reasonableness of the land acquisition costs or the conservation value of the land acquired or projects completed.” Despite these general limits to their undertaken responsibilities, however, one conclusion drawn by this audit is that, in the case of the former Ahmanson Ranch property, “it is unclear what additional tangible value the state received in exchange for the relief of public debt, (given) the property was already public open space.” This dramatizes just how important the facts surrounding this particular instance of misappropriated funds truly are.


Although the report states, “This audit was conducted during the period October 2009 through May 2011”, which is already an unprecedentedly extensive amount of time to conduct such audits, it adds that this audit also served to act as, “ …a follow-up on Department of Finance’s prior audit reports issued May 4, 2004 and May 24, 2006.” Inasmuch as this audit’s finding that the SMMC/MRCA did not act in compliance with applicable legal requirements and established criteria actually relates to transactions first identified in those 2004 and 2006 audits, it would be more accurate to say that this audit actually has now taken more than seven years and the even the most serious problems first identified in 2004 have still not been corrected.


The report further states: “Multiple discussions were held with the Conservancy and Authority throughout our audit to discuss and provide specific project review details. Recommendations were developed based on review of documentation made available to us and interviews with Conservancy and Authority management and key staff directly responsible for administering bond funds” To gain a better perspective on the logic leading to the conclusions included in this audit, it would probably be a good idea to request copies of the individual auditors’ associated working papers and any related correspondence exchanged between the DOF and the Resources Agency/SMMC/MRCA and/or other government agencies and/or departments.


Finally, the report also states: “The Department of Finance is not independent of the Conservancy, as both are part of the State of California's Executive Branch……. However, sufficient safeguards exist for readers of this report to rely on the information contained herein.” Those “safeguards” are not revealed and should be better identified; especially given the fact that the Resources Agency essentially pays the DOF to conduct these audits and that the Resources Agency has recently demonstrated a certain level of contempt for any audit findings that reflect negatively upon those agencies under its organizational control. (e.g., Resources’ Deputy Cash instructed the RMC to respond by simply stating its disagreement with the auditors’ finding in which they concluded that the RMC had misappropriated over $2 Million.) In this case it would be of particular interest to learn how the absence of influence by the Resources Agency over the audit process, findings and conclusions had been ensured.


Given the recent recurrent calls for a constricted State Legislature, either through making it a part-time or unicameral body, it is important to document this example of what happens when the full effects of checks and balances designed into governments with three branches are removed, disregarded or altered to a point of unequal importance.


Daily acknowledgement of the importance of the Legislature’s responsibility to oversee the Executive Branch’s activities may not be a common occurrence, but it should be common sense. Just like questioning the wisdom of shortening one leg on a three-legged stool in the name of increasing the stool’s stability, it should be common sense to know that any unilateral reduction of responsibility, be it via constitutional limits on work hours or voluntary abdication of responsibilities, can produce dramatic negative consequences not always easily corrected.


The State Legislature’s voluntary abdication of its responsibility for fiscal oversight of the Santa Monica Mountains Conservancy is a perfect example of that fact.


As to the specific disconcerting points regarding this audit:




It is important to note that the originally reported misappropriation of funds was for a total dollar amount of almost $7 Million. This audit pares that dollar amount with a single sentence that states, “Pursuant to legislative directive, the Office of Attorney General (AG) reviewed the grants and concluded that $2.1 million in bond funds should be recovered.”


Given the additional $2.37 Million of misappropriated funds identified for the first time in Observation #2, those two totals AT THIS POINT approach $9 and $4.5 Million.





A primary point would be that, given the Resources Agency’s above mentioned demonstrated contempt for findings contained in past DOF Audit Reports, this audit’s recommendation that, “The Natural Resources Agency should, with the assistance of legal counsel, determine the appropriate disposition (recovery or refund) of all expended bond funds used for these purposes.” would seem to be nothing short of permission to steal. The Conservancy’s stated opinion that “no recovery or refund is warranted” validates the reason for this concern.


This point speaks to the need for SB 633. Once an audit has determined and reported that there has been a misappropriation of funds, in order to protect the interests of the taxpayers’, there not only needs to be a truly independent third party that acts to insure and have the final word on whether the appropriate final disposition occurs, but there also needs to be some kind of penalty for the misappropriation having occurred in the first place


Some possibilities for the independent third party could include the Little Hoover Commission, the LAO, a joint legislative sub-committee, or some derivative body of the Judicial Branch. The Attorney General’s office would not be considered an objective third party in such matters due to the fact that the AG would be the Conservancy’s legal council in any litigation related to misappropriated funds. (As stated earlier, legislation previously passed as a trailer bill to a state budget compromise package that assigned final approval responsibility for all grants awarded to the MRCA by the SMMC to the Attorney General’s office. As a result, it has been the same individual Deputy Attorney General that serves as SMMC Board’s official legal counsel that has also been providing the requested AG approvals.)


In determining the appropriate punishment for the act of misappropriating funds, in order to be an effective deterrent, the penalty should reach beyond the agency level to the individual in charge of that agency, similar to those cases in which a city manager can be held liable for certain inappropriate acts taken by a municipal government.


A second point under Observation #2 would be that, although the audit indicates that it covers transactions relative to five state bonds (Props 12, 13, 40, 50 and 84 totaling $153.4 Million), some of the stated results are not all encompassing.


For instance, in describing the total amount of funds expended (or committed) by the Conservancy it only includes those reported through two years ago (June 29, 2009). As a result, 12% of the total funds allotted to the SMMC from the five state bonds in question are not accounted for.


In another instance, in itemizing the total dollar capital outlay and local assistance expenditures that the MRCA received from the Conservancy as well as the percentage of the SMMC’s available 5-bond total that was awarded to the MRCA, this audit only reported a portion of those funds associated to Propositions 40, 50, and 84 (64% of the 5-bond total of $153.4 Million.)


As a result, whereas the report accurately states that: In terms of bond grants awarded, the Mountains Recreation and Conservation Authority (Authority) is the major JPA the Conservancy has partnered with” and that, “The Conservancy’s executive director, deputy director, and chief counsel have dual roles as both the Conservancy’s and Authority’s executive team.” It seriously understates the financial linkage between the two agencies by stating that the Conservancy had awarded only 88% of its available bond grants to the MRCA. All told that figure has historically been closer to 95%.


Further, inasmuch as this audit does not fully account for 100% of the bond funds allotted to the SMMC from all five bond measures, it further begs the questions as to whether this audit is actually complete some seven years, now, after it began.




Findings identified in Observation #3 through #7 dealing with a lack of cost and real property accountability provide reason to believe the total amount of misappropriated funds could jump from the earlier mentioned $9/$4.5 Million to in excess of hundreds of millions of dollars.




The MRCA attempts to make the point that it is adequately organizationally separated from the SMMC by stating that its revenue from the SMMC during FY 09-10 represented just 23% of its total revenue. Included in the revenue totals that didn’t come from the SMMC, (although not independently identified in this audit or the MRCA’s response as such), is the $2.1 Million of misappropriated funds identified in the DOF’s audit of the RMC.


Also, in calculating MRCA revenue sources, it is safe to say NONE of their revenue would be possible without past actions taken by the SMMC or their shared Executive Director. In the latter case, those would be actions that would have transpired solely to the benefit of the SMMC (The State) had the two agencies not shared an Executive Director.

The MRCA Strikes Again

Posted by Ender Wiggins on January 3, 2012 at 10:45 AM Comments comments (0)

The only place in the entire country where you can receive a $175 traffic ticket in the mail for having supposedly blown an automatic camera enforced stop sign is right here in Southern California.


Here's the back story:



The Mountains Recreation and Conservation Authority (MRCA), in 2007, introduced the nation's first stop-sign cameras ostensibly to improve public safety at seven scattered points in MRCA operated parks along the Santa Monica Mountains.


As far as government agencies go, the MRCA is an oddball creation, to say the least.


A Joint Powers Authority formed by the Santa Monica Mountains Conservancy (SMMC) and two San Fernando Valley parks and recreation districts; it stands as a separate legal entity from the SMMC, even though the SMMC gives 95% of all the multi-millions of dollars in grants it awards to the MRCA. The MRCA and the SMMC also share the same Executive Director.


The cameras, operated by Redflex Traffic Systems, are activated when a sensor in the road detects a vehicle moving faster than 7 mph approaches a stop. The camera captures the rear license plate of cars after they pass through the stop and an administrative ticket is issued via the mail to the registered car owner. The MRCA insists it installed the cameras at high-traffic areas where vehicles come too close to hikers, joggers and bicyclists.


A report released last year stated that, in the previous 18 month period ending May 31, 2010, the seven MRCA installations had issued about 35,000 tickets and that there had been a significant reduction in the number of people running stop signs since the cameras were installed. This would seem to add credibility to the MRCA's claim that they were located in high traffic areas that required increased safety precautions in order to protect lives.


As the number of victims of these robo-cop ticketed photo shoots have mounted and the initial nuisance fine of $100 has matured into a more serious "Administrative Fee" of $175, both the choir membership's rolls and volume of the dissenting opinion's collective voice have risen correspondingly. In November 2009, the MRCA lost their first ticket fight when they reached a settlement and agreed to "suspend the penalty" in a year-long suit and appeal brought by an early critic of the MRCA's stop sign camera use.


Statistical and photographic evidence has also surfaced that seems to tell a different story than the snake-oil tale MRCA Exec. Dir. Joe Edmiston had been selling for the last four years.


In the picture below, taken at Marvin Braude Mulholland Gateway Park at the top of Reseda Blvd in Tarzana, the stop sign sits pretty much in the middle of the road. There’s no cross street, no crosswalk, no intersection; no chance that any vehicle or pedestrian will cross your path. In fact, there’s absolutely no reason at all to have a stop sign here.

And just to drive the point home, the reverse view of this photo enforced stop sign installation (below) makes it even more obvious that it was placed in such a way as to ensnare the maximum number of park visitors and reap the greatest amount of revenue.


The fact that there has never been an accident or injuries that can be attributed to drivers failing to stop at the stop signs on the roadways within the jurisdiction of MRCA operated parks..... None.... not before nor after Mr. Edmiston's successful campaign to save the children of all the unsuspecting park visitors by installing these automated cash cows............does nothing to offset the rumblings of discontent that have been growing with each passing year they are allowed to remain.... especially since the MRCA has profited to the tune of almost $2 Million in the eighteen month period ending May 31, 2010.


After the cameras’ initial installation, and as residents complaints mounted, the MRCA came under growing pressure to prove that their cash-cow was legal. So, acting as the Executive Director of the Santa Monica Mountains Conservancy (SMMC), Joe Edmiston requested via an email, dated February 7, 2008, that the Office of the Attorney General review a legal opinion that the law firm of Richards Watson and Gershon (RWG) had provided to the Mountains Recreation and Conservation Authority (MRCA) concerning the MRCA traffic control ordinance that permitted the stop sign camera operation.


RWG's 2008 legal opinion concluded that the MRCA, as a JPA, could adopt a traffic control ordinance pursuant to Government Code section 53069.4, which authorizes "local agencies" to adopt ordinances and to make the violation of those ordinances subject to an administrative fine or penalty as defined within that ordinance.


RWG also concluded that the Vehicle Codes do not preempt the MRCA ordinance. RWG

based this conclusion on its opinion that the Vehicle Code provisions dealing with normal rules of the road are not applicable to roads in "MRCA parks" because those roads are not "public thoroughfares".


RWG also argued that the Vehicle Code only applies to "local authorities" and that the MRCA is not a "local authority" as defined in the Vehicle Code. (Yes. That does seem to conflict with their first argument.)


Finally, RWG argued that Section 40300 of the Vehicle Code, which limits the instances in which a driver may be cited for a vehicular violation to only those occurring in the presence of the arresting officer, did not apply to the MRCA's use of cameras to enforce vehicular violations because Section 40300 of the Vehicle Code only applied to violations of the Vehicle Code, and was not a limitation included in the MRCA's traffic ordinance.


On April 7th, 2008, in a letter to Joe Edmiston (in his capacity as Executive Director of SMMC), John A. Saurenman, Supervising Deputy Attorney General for Attorney General Jerry Brown, provided an Attorney General's Office "Informal Letter of Advice" in which...........,

.............without differentiating between parks "operated by the MRCA" and those "own and operated by the MRCA",

.............w/o comment as to whether roads on publicly-owned property were or were not "public thoroughfares" , and

.............w/o discussion as to whether "local authorities" were or were not the same thing as "local agencies"

.....he stated that the Attorney General's Office agreed with all of RWG's opinions, arguments and conclusions described above. That was taken by Mr. Edmiston to be the gospel.


And, then, in January 2010, SB 949 was introduced by Senator Oropeza.



SB 949 clarified that the provisions of the California Vehicle Code are applicable throughout the state, and that local authorities may not enact or enforce an ordinance or resolution related to matters covered in the state Vehicle Code, including ordinances or resolutions that establish regulations or procedures for, or assess a fine, penalty, assessment, or fee for a violation of the Vehicle Code, unless expressly authorized to do so.


On 5/4/10, in the State Senate Transportation and Housing Committee, and then again on 5/28/10 during the full State Senate Floor vote, SB 949 received unanimous support (8-0 & 28-0) and the bill was sent to the State Assembly for their review and concurrence.


Three months after Senator Oropeza's health had unfortunately deteriorated to a point at which she was no longer able to travel to Sacramento to participate in the Legislature's day-to-day proceedings, and despite the fact it was both the MRCA's and the Attorney General's opinion that the MRCA was NOT a "local authority" nor subject to the provisions of the Codes into which this exemption was inserted, on 8/20/10 the State Assembly amended SB 949 to "clarify" that this bill,


...to the extent permitted by current state law, does not impair the current lawful authority of the Mountains Recreation and Conservation Authority (MRCA)  to enforce an ordinance or resolution relating to the management of public lands within its jurisdiction,


On 8/26/10, The State Assembly passed SB 949 (with Amendments) unanimously (69-0)


On 8/27/10, just two months before Senator Oropeza passed away, The State Senate unanimously concurred with the Assembly's amendments (33-0)


HOWEVER, the Senate’s Republican analysis of the bill never mentioned the MRCA and reported that the Assembly amendments were semantic in nature and did not make any substantive changes to the bill as passed by the Senate in May. (This bill only required a simple majority to pass)


On 9/30/10 The Governor approved SB 949.


And, that is how the MRCA became the only authority in the entire Country authorized to mail $175 tickets to registered car owners for having supposedly blown one of seven automatic camera enforced stop signs located within MRCA owned properties.


There is no sane reason for the MRCA to be the only authority in the entire Country to have this ability. But, they are. They had to sneak their exception to the law in past a dying State Legislator’s good intentions in order to get it. But, they got it. And, that should not stand.


This year, there was hope State Sen. Joe Simitian would take the opportunity that his SB 29 provides him to do just that. His SB 29 would bar localities from weighing "revenue generation" as a factor in deciding whether to install automated traffic enforcement systems such as red-light cameras. The bill would also bar camera vendors from being paid based on how much revenue their devices generate.


An outright ban on MRCA’s use of camera enforced STOP SIGNS would be an easy and sensible addition to SB 29……. BUT IT WASN’T IN SB 29. (an analysis of SB29 is included in our DOCUMENTS area for downloading.)


SB 29, in fact, lumped red LIGHT traffic cameras together with STOP SIGN traffic cameras and, now, just refers to them collectively as “automated traffic enforcement systems”.


SB 29 actually passed in both houses of the State Legislature in 2011, however Governor Brown vetoed the bill and included the reasoning that “matters like those included in SB 29 were better handled at the local level”. (Obviously, the Governor was not aware of Senator Oropeza’s SB 949’s or its intent that all traffic laws in California be made to mimic the State’s Vehicle Codes.