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County supervisors got called out in public by their top prosecutor and treasurer for not explaining why they’re taking over direct control of a $17 billion investment fund after quietly moving for months to take control of the money.
“Quite frankly, there’s been not a lot of information,” said District Attorney Todd Spitzer at the board’s Tuesday meeting. “I’m deeply concerned.”
The push to take over the funds started last December, when the annual recertification for the county’s investment policy was quietly pulled off the supervisor’s agenda, letting control of the funds revert from the treasurer to them.
[Read: Santana: Mystery Crisis Brewing at the OC Treasurer Tax Collector]
The supervisors taking control of the fund comes after former County Supervisor Andrew Do pleaded guilty to bribery, admitting he helped redirect over $10 million in county contracts to a nonprofit his daughter worked at that took county staff years to find.
“The CEO’s office couldn’t keep track of $10 million that Andrew Do squandered,” Spitzer said. “If they couldn’t manage and oversee the going out of $10 million, how can they oversee billions of dollars?”
County Treasurer Shari Freidenrich also came out to defend her own oversight of the funds, which she’s held since 2014, highlighting how there hadn’t been any complaints or concerns around her handling of the money, saying she shared a “common goal,” to protect the funds.
“I’m asking the board to reconsider this decision,” Freidenrich said. “I’ve received significant feedback from the public, pool participants…they’ve expressed their satisfaction.”
None of the supervisors commented on Freidenrich’s work when they unanimously voted to take the money away from her and move it under the control of their CFO’s office, saying instead they were trying to exercise better oversight of their money.
“This is simply to manage our investment and make sure it’s safe,” said Supervisor Doug Chaffee.
The push to pull out came at the end of last year.
While supervisors have yet to publicly discuss Freidenrich’s management of her office, a 2021 performance audit showed her staff had one of the highest turnover rates in the county and ran the smallest staff in the region.
Supervisors and county staff also repeatedly emphasized that it was their legal right to have direct oversight of the funds, and that their newly approved investment policy offered strict controls on where the money could go.
“A county investment policy would actually impose more requirements more restrictive than state law as to how county monies should be invested,” said Leon Page, the county’s top lawyer. “It’s the safe, cautious, prudent thing to do.”
But the policy is almost identical to the one Freidenrich’s office has used for years, which also was approved by the board on an annual basis for over a decade.
The only major shift is Freidenrich’s removal, and she noted the policy was “very similar,” to the one she already follows.
Supervisor Vicente Sarmiento said they were taking over the funds to guarantee they’re properly invested and not hand off that responsibility to someone else.
“It’s not an easy decision to make, but I also think it’s a prudent one,” said Supervisor Vicente Sarmiento. “We’re well within our rights.”
Supervisor Katrina Foley also defended CEO Michelle Aguirre, highlighting how she didn’t hold the position when Do misspent the funds.
“While I also feel frustration about the fact that $10 million or more was lost due to lack of accountability, that was not this CEO,” Foley said.
But Aguirre was the chief financial officer while Do sat on the board and when the $10 million called out by federal prosecutors was lost.
Aguirre didn’t speak at the meeting, declining to comment on the treasurer issue after she told members of the Treasury Oversight Committee they were “nitpicking,” last month by bringing up concerns over how the funds were being moved around.
[Read: OC CEO Defends Stripping Elected Treasurer of $17 Billion Investment Pool]
Sarmiento pitched removing the Treasury Oversight Committee from overseeing the funds and having the Audit Oversight Committee instead pick it up, which is primarily made up of the supervisors themselves.
There’s also a question on if Freidenrich will continue to oversee the voluntary investment pool, which is separate from the county’s and holds over $44 million from a mix of local agencies and cities such as Villa Park, Tustin, Huntington Beach, Laguna Niguel and Lake Forest.
Leaders of the county’s toll roads agency just pulled their money out of that pool last month according to a county spokesperson, taking over $240,000 without publicly saying why.
“I want to see why this voluntary participant program is allowed,” Sarmiento said, “and whether or not we should simply terminate it.”
Noah Biesiada is a Voice of OC reporter and corps member with Report for America, a GroundTruth initiative. Contact him at nbiesiada@voiceofoc.org.
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