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Orange County is facing another searing accountability crisis just ahead of the 30-year anniversary declaring the nation’s first county bankruptcy.
County officials are grappling with an oversight bankruptcy of sorts as millions of COVID bailout dollars are unaccounted for – with county lawyers alleging some of that was used by contractors to buy million-dollar homes, including one for a county supervisor’s daughter.
[Read: Orange County Sues County Supervisor’s Daughter and Nonprofit Over Missing COVID Money]
While there’s been a lot of focus on OC Supervisor Andrew Do and his connection to the nonprofits, there’s also an underlying theme here, now visible through stacks of flimsy invoices in legal filings – exposing the culture at the County of Orange that paid them.
Six separate questionable invoices – each one for the exact amount of $166,666.66 – were approved by County of Orange bureaucrats over the course of several months in 2020 with a one line explanation from the Hand to Hand Relief Organization, according to recent legal filings by the county.
Click here to read the lawsuit.
This week, county officials announced the filing of a lawsuit against the nonprofit for failure to show how $3 million in federal COVID dollars meant to feed seniors and poor residents was actually spent.
Those aren’t the only questionable invoices approved by county bureaucrats.
There’s another 24 bills worth about $4 million submitted from another nonprofit – billing now also called fraudulent in a separate lawsuit filed by the County of Orange last week.
“Between May 2021 and May 2023, VAS(Viet America Society) submitted a minimum of 24 invoices to the County pursuant to the ARPA Contract, for a total amount of $3,999,984.00,” stated the county lawsuit filing.
For each of those invoices, under the description of services, it simply states, “Services for the County of Orange Nutritional Gap program.”
According to the county filings, “the invoices fail to include the specificity required under the ARPA Contract, such as number of meals delivered per day, number of deliveries made per delivery day, and total number of meals served. Upon inquiry, VAS provided inflated, facially unrealistic, and fraudulent information to the County.”
The lawsuit alleges Viet America Society claimed to serve double the number of required meals but when asked about it revised the number down from 20,000 to 10,000.
Without justification.
“VAS and other Defendants provided fabricated, false numbers to the County that in a post-hoc attempt to hide their fraudulent scheme. The County, unaware of the falsity of the records, statements or claims made or caused to be made, by Defendant, paid the claims, which would not have been paid but for Defendant’s illegal conduct,” reads the filing.
In all, the spending of more than $13 million in federal funds by the two nonprofits, meant to feed seniors and poor residents, is now being publicly questioned.
The nonprofits, chiefly through attorneys, argue the funds were spent properly.
An Oversight Failure
These revelations from the initial legal filings on the two lawsuits detail a stunning lack of internal controls, especially for a public body like the County of Orange, which on Dec. 6, 1994 had to declare bankruptcy – a first for the nation – because county supervisors didn’t question their treasurer’s fantastic earnings enough.
In the wake of the bankruptcy, Wall Street investors insisted on three central themes in reforms: a strong CEO, a fleet of auditors and a host of oversight panels.
But decades later, these revelations seem to prove what I’ve written about so often: Orange County has become adept at adopting mirages of oversight and accountability.
[Read: Santana: Getting $9.5 Billion in County Taxes To Work on Behalf of OC Residents]
There’s the appearance of an independent CEO, surrounded by oversight commissions, ordinances, auditors, even a hotline for employees.
Now, sources already indicate that there were line staff on these contracts ringing alarm bells from the start.
Those people should be celebrated, studied, emulated by other public bureaucrats.
As a matter of culture.
Yet it’s clear these officials didn’t feel supported because the checks to these nonprofits kept getting processed and approved, again with little back up.
Since the 1994 bankruptcy, the mantra often heard inside OC government circles is to protect the brand.
Don’t air dirty laundry in public.
It seems clear some top level managers allowed these payments to continue despite county workers on the inside raising objections.
“They raised the questions,” said Supervisor Katrina Foley referring to workers when asked about accountability mechanisms in place, “and then the people that were supervising them made decisions.”
“All of this is going to come out in the wash,” Foley said, adding that she’s asked Supervisors Chairman Don Wagner and acting CEO Michele Aguirre, “to help us develop better guard rails for when a line staff is concerned about an ethical or contractual issue and they disagree with their manager.”
The nonprofits in question got part of their federal funding through contracts with the county government Health Care Agency and Community Services Department as well as from discretionary funds controlled by Supervisor Do, whose daughter also was listed on a series of tax filings for one of them, the Viet America Society.
The connection to Do is the clearest indicator of the politicization of the contracting process – a connection first reported on by the local NPR station, LAist last year.
Do also was close to former Health Care Agency Director and Public Health Officer Dr. Clayton Chau, who county supervisors placed in that position after former Public Health Officer Nicole Quick resigned her post.
[Read: Santana: As Omicron Eases, Orange County Ponders The Future of The Public Health Department]
In an interview, Foley said that Chau added the Viet America Society to the county contracts after they’d already been voted on by the board, noting that supervisors don’t generally get to see what happens to contracts after they vote on them.
Yet nearly a year after that connection was revealed, there’s been very little public discussion about how so much in federal COVID funds was issued to untested nonprofits with very little contract monitoring much less realtime accountability in place as bills continued to be paid, month after month.
When asked about the issue by Voice of OC reporters, county spokesperson Molly Nichelson declined to comment now that the county is suing.
No executive has ever been questioned publicly on the issue by county supervisors..
Lagging Accountability
Indeed, it was only after media reports on the controversy that the County of Orange began publicly stepping up enforcement of its deadlines for receiving back up information from the nonprofits that the COVID bailout money had been properly spent.
County officials spent the remainder of this year setting deadlines through a series of demand letters.
As those letters and deadlines passed, according to County of Orange legal filings, the nonprofits in question moved the money and left the organizations largely as shells.
While a final accounting deadline of Aug. 26 was coming up, county officials chose to initiate litigation ahead of that date.
County supervisors have yet to meet in closed session to discuss the filing of the lawsuits – raising some questions about the process used by County Counsel Leon Page to brief the full board on the developments – including Do himself.
Page filed both recent lawsuits on his own authority, Foley said.
For once, the board of supervisors as an institution had to be kept out of the process.
According to Supervisor Foley, there is no formal communication with Supervisor Do on this issue.
There’s already a host of calls from officials like Foley and Supervisor Vicente Sarmiento for investigations ranging from the district attorney to state auditors and federal officials.
[Read: Two OC Supervisors Call For State and Federal Investigations of Missing COVID Money]
Going forward, it’s unclear how the board, which meets next Tuesday for its regularly scheduled meeting, will address the controversy in closed session with a supervisor’s daughter as a named defendant in one of the cases.
The most troubling aspect of the entire controversy is that former boards of supervisors gave out nearly $200 million during the pandemic with very little public discussion, much less analysis, transparency or accountability.
Foley has already acknowledged the board of supervisors needs to tackle the issue of giving line staff a clearer way of calling out bad management practices – completing the unfulfilled legacy of the 1994 county bankruptcy reform efforts.
Both Foley and Sarmiento also have taken the lead on the fact that there needs to be a real look at how the $200 million in federal COVID funds were handed out.
That kind of leadership is key in instituting a real culture of quality and accountability over the $9.5 billion that taxpayers – Democrats, Republicans and political independents – entrust to our county government to protect and enhance local quality of life.
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