Ojai City Council Special Meeting

First our special meeting,

Thank you very much

Do I have an approval of the special session agenda?

I'll move to approve it.

Thank you, second? Second. Any objections? Wonderful. Let's go on to the discussion, Special Forensic Financial Examination. Thank You, Mr. Harvey

Thank you, Mayor. And joining me for this presentation will be Ms. Billings, our Interim Finance Director. So as I'm sure you know from reading the staff report we have before you tonight four proposals from qualified firms who are available to conduct a special forensic financial examination for the city in the wake of the findings The city has of charges against the former assistant city manager Mr. Carl Alameda, so We have Interviewed the four firms I should say we miss Billings interviewed all them. I participated in half of those any of them could do a reputable and good job for the city to determine what needs to be determined and provide a level of comfort and Based upon the interviews completed, however we are recommending Kroll be hired.

But again it is you know certainly if Council wishes to go with a different firm that would be fine. We're both here to answer any questions short and sweet agenda report I'm sure you probably have some public comment. Ms. Billings anything you want to add to that?

Thank you very much.

And had a grasp of where the weaknesses could be, and the team of investigators was very well qualified. I was particularly impressed with the director who graduated valedictorian from Quantico and was very well spoken, and I thought she would present the report well for the council at the end. But all of the firms had really strong leadership and good qualifications. I just felt that Kroll had a better grasp of our size of agency and what we would need to get this done.

Any questions?

Yeah, I noticed the person that I think you're talking about from Kroll, and I'm wondering if there's any Do we have any assurances that he would be the one working on our audit or participating in it?

They would be overseeing our audit, but they probably would not be the person doing the actual work. But if you look at each of the people on the team, they were all very well qualified and they had a good background and were able to get started on our audit. So I thought that led to my recommendation as a firm I felt was the most qualified. But again, all of them were outstanding

I had a question about, I see that there's timelines. What's a reasonable amount of time do you think before we would get something that we could look at and have some confidence in?

I believe that they were all recommending about 120 to 160 days, so assuming they start June 1st. That's going to be September to October when they provide us with a final report. I'm sure they will be updating us along the way as it's moving forward but that would be when the report would be ready for release.

Any other questions? Yeah, and this is maybe tangential. We just received the audit report. Different document than we're talking about but can you explain the difference between the two things?

So, the report before you is the City's first called Annual Comprehensive Financial Report. In the past we have done an annual financial report but it didn't have that comprehensive package Along with it, which means he didn't have the management's discussion and analysis of the report or the statistics. Which I will say are building we need to have 10 years out for every category.

We're just getting started on that so it'll get more robust as the years go by. So that annual financial report, the audit It tells us that the auditors have looked through all of our financial statements and then within a degree of reasonableness, they so I apologize. I don't know but let's probably around $200,000 for this city this size there feel assured that the numbers are accurate. They did look at our accounts payable. They looked at our bank reconciliations.

went through different processes that they can run things through a computer model, and they felt comfortable with our numbers and with what they saw. Did they look at every single transaction or every single way? No. An audit does not offer that level of assurance. It offers a level of reasonableness to say that things are fairly and accurately presented. And they issued their opinion to that effect.

And then how is the forensic audit going to differ from that more, you know, broad

I apologize, it didn't answer part two. That's okay. The forensic investigation will be more focused on the types of things that someone could alter like maybe someone alters a payee on a vendor check and that hasn't been caught or perhaps they are doing something that is not being recorded on the books like they're doing billings and Thank you very much. Those types of things, and that's just an example of different things that a forensic audit would look at. And they'll go through and hone in on different things, and if they notice anything that needs more work, they'll do more work. They'll talk, they'll do interviews with staff, talk more to people, see if they noticed anything that maybe needs some more investigation, think more Like if you were doing an investigation for any other type of crime where you're going to, you know, talk to people look at things a different approach than just looking at the numbers and confirming that way.

Thank You. Ms. Rule? Yeah

I have two questions thank you one is did all four of the companies that submitted or that we broached did they all have municipal finance experience

To the best of my knowledge, they all did. They all stated that they had worked in that arena. I did not with the timeline do a very extensive check of all of their background. I did it more on the oral interview and word of mouth. Some of them were referred from our insurance firm, some from our legal team, some came from other CPA firms that I've worked with. So they all came as reputable firms within this arena. Yes.

OK, thank you. And so from what I heard, all of them were able to the timing was good. They were available to start at our on our schedule basically? Yes. Okay, great. Thank you so much.

Any other

questions? Yes. Do we have any information about the investigation that La Cunada did to see if there are places where we should be looking for our own

We do not. We are going to be approaching the LA County District Attorney's Office and the City of Law at Kenyatta-Flintridge because as indicated in the media statement, we just became aware when the public became aware and we were advised that it was a confidential investigation and that you know there was more work that was still ongoing but that is something we'd like to know as well.

Just one

quick question. When they reach

out to employees, do you know if it's possible to reach out to previous employees maybe for a little insight? That will be up to our... Once we meet with the team and they set the parameters, we'll do everything that they recommend and the staff will cooperate and see what can be done.

And I'll add given the timeline, we would expect certain key formers after we reach out to as well.

Any other questions? Yes.

Yeah, I was just going to follow up on Council Member Lang's interest in contacting Mr. Alameda's previous employer the city it might be something that we request to find out what they actually found given that you know methodology might might be the same So I'm sure they're planning to, but we might also request that they do that. And I guess also give a call to the L.A. District Attorney or whomever might have records that we could look at.

I think that's a good idea. And

we'll also ask Chief Jenkins to contact the relevant LASD folks as La Cunada does not have its own police department, they operate with the Sheriff's Department. So a sheriff-to-sheriff contact will be helpful as well.

Thank you. Any other questions? I'll move to public comments. Let me start with Larry Steingold and then move to Jeffrey Starkweather.

Larry Steingold, City of Ojai resident. I feel your pain. This is not something that is a fun thing to do. Mr. Almeida has been here for almost a year and a half, I believe? He was hired by Mr. Vega? Two years. So he's been here for two years so you have to go back two years And talk to former employees such as Pam Greer and the supervisor for the trolley, and what have you. And I assume a former mayor?

And what have you regarding his involvement with dignity all the way to the beginning of going to LA, going to San Francisco, what have you. He's responsible for, I guess everything over $2,500 for payments? I think that's right. Not wrong. Okay. Thank you. Rumor. Discovering money, you know, $50,000 from OVI. Was that picked up? Did it go collected? Did it go sideways? Is that out there also?

Pam Greer, she's to be asked because she was let go for something she did do, something she didn't do, something she missed, something she didn't miss, why, what have you, what have you. I mean the whole thing just is a mess. And to go back, I hope that you find out. Also, I wonder if you could look at emails, all that stuff because we've got to solve this and make sure it doesn't happen here.

Have you contacted the insurance companies that operate for Ojai? Because if that's what the modus operandi was in Good luck and I feel your pain.

Thank you, Mr. Steingold. Jeffrey Starkweather and then Renee Roth.

Could I just very briefly ask Ms. Billings? Forensic accounting in this sort of a forensic investigation goes deep and goes broad, does it not? They're going to follow everything to see that it ended up in the right place. I assume that's the case.

They'll start with very reasonable reviews, and then if they find something that triggers a deeper investigation, they'll go deeper to review in more detail.

Mr. Starkweather?

Thank you. As someone who is a federal public defender, I've dealt with the FBI, the Secret Service, and I can guarantee you they know how to interview people And if the FBI were on this guy to begin with, we would never have hired him. And I've represented a lot of embezzlers over those years and they have amazing ways to embezzle money and change records and so forth. So it's a totally different type of investigation than a typical audit because the audit accepts records as though they're accurate and you know, you don't do that at a forensic audit.

My concern is not the forensic audit. My concern is what I'd call an independent forensic personnel or management audit. How did we end up hiring this guy who was already being investigated by the SBI, or whoever it was investigating? And how did he continue to be investigated and we know nothing about it? I'm not saying we did anything wrong, but there's something wrong in the system of government that we could be stuck with someone that the LADA is investigating.

Normally, when I had clients in those kinds of circumstances and my client was decided to leave their job because they're being investigated, they weren't able to get another job. Because as soon as they did that investigator, LADA would contact us and say hey this guy's under investigation we can't tell you what it is but you should know that. I mean I just think this crazy I think we need to look at how that happened I know we were in a weird time when he was hired. It was between managers. In fact, it was the very night that Betsy and so forth tried to kick him off the planning commission.

And so there wasn't much time to investigate it but it's not just so much to find somebody at fault. It's like how do we prevent something like this in the future because we've had so much turnover And we're dependent on a manager. There should be some really strict rules. If somebody has left their job and they've been out of it for two months, and by the way I was told that we offered this job to other people who didn't take it, that makes you suspicious right there. Why did he leave his good-paying job and want to come here?

I mean, there's people that will talk to you. As a former investigative journalist, you can talk to employees. You could talk to the city newspaper. You could find something out. So I think we need to be thinking about the future, about how we can prevent something like this from happening because I think it's pretty outrageous.

Thank you.

I'll be very brief because I know you need to discuss this, but I just want to say Renee Roth, oh hi. And Carl Alameda and I had several emails and discussions, and he was very prompt courteous, informed and knew what he was talking about when he responded to my questions. And I really appreciated his professionalism. I have no disparaging remarks or anything to say about him or Pam Greer. But I would like to say now that they're both no longer with us the questioning that I was pursuing with him had to do with reserves and reserve fund balances and how those reserve fund balances are being used internally.

And I knew that there were some reserves that were showing up, and revenue sources that were showing up much higher than were expected. And that to me is a red flag because reserve policies typically state where your funds are supposed to go when you have excess reserves. And my understanding, and I tried to clarify this with Carl was that excess general fund reserves were supposed to be going to the capital improvement project And the reserve policy actually stated that, and I was looking to see if there were any transactions or documents that would verify that excess reserve funds were being transferred properly to the capital improvement projects.

I never received those, I never heard back. It was all part of the budgeting process and the mid-year budget process and I attended those meetings and was very concerned about his presentation. Both he and Pam Greer did a very professional job. There was a lot of information there to take in. So I hand it to them for that. So, I'm just bringing this up as background because I do think those reserves are important and what happens to excess revenues above what you expected to receive is a very important thing to look into as far as any kind of auditing. Thank you very much.

Thank you very much Mr. Montgomery anybody online?

Yes, Mayor. Talking to our Zoom participants it's now the public comment period for this special meeting agenda. First we have Starchild. Starchild you can unmute now.

Good evening as I look at this situation I wonder how effective an audit will be. Carl Alameda is accused of Embezzling $200,000 and City Council is contemplating spending $30,000 to see if he's embezzled anything from the city. If we're successful and we determine he's embezzled anything from Ojai, will we be able to recover that money? In six months Carl Alameda will have spent much of it probably on his defense.

If we determine that he stole money, will he go to jail any longer? He's looking at 33 years in jail already for the embezzlement he's accused of. I think one of the only reasons why we should do a financial audit is to make sure that there were no other Ojai employees involved in any potential embezzlement scheme here And I just want to make sure that any financial audit does look for any possible co-conspirators.

As we talk about some potential red flags, one that comes to mind is the case of Anthony Palacios who is the transportation director who's on paid administrative leave. My understanding is that Carl Alameda put him on leave and I'd like to know more about why he's on leave because the whole situation seems very fishy to me. Thank you.

No more raised hands, Mayor. Okay. Discussion? Anybody?

Yeah, actually this is more a question. Great! It just came to mind. Super. So when I look at the rates and the timeline for crowl—and I assume it's the same—there's a Phase 1 which is $25,000-$30,000. There's a Phase 2 which is TBD and there's a Phase 3 which is TBD. And from what I understand, it really depends on what's found in Phase 1 so I'm So I guess my point is that $30,000 is best case scenario if nothing is really found or it's easily – it's not layers and layers and layers deep. Is that correct?

That is correct. All of the firms could only propose on doing the first review and seeing what they see, and all of them would have additional charges if it turns out that there needs to be more of a deep dive.

Yeah, and that makes perfect sense. I just wanted to make sure that it was public that you know, that part of the reports had been verbalized. Thank you.

Thank

you. I actually do have one more question, and that is if we do find issues in phase one would I know we would have the option of going to Phase 2 and doing a deeper dive. Do we have any cause for concern right now about Phase 1? Is there anything that is...

Mr. Billings, do you want to take that question?

At this point, we have been audited through 2024. All of the bank reconciliations are up to date and so from what we can see on from that level, we don't see the concerns but there is always the opportunity for somebody to have money that we didn't receive or they've altered something that we just didn't notice a payee gets altered those types of things That's what we'll be looking for in the review. And I do want to point out that if there is something found, there is insurance up to a certain point that would kick in for the city and our employees are insured. So I'm hoping that we don't use that though. There's nothing found.

I think you've got a hardworking team, we've got good internal controls and people that are doing their best on a day-to-day basis. That's why we're doing the review and nobody knows what the long answer is yet.

Just one point of clarification, the different companies are using phases differently. So in one of the cases, phases 1, 2 and 3 is in the scope of the work just so we're not confused. So they're not all using this rollout the same way. But so I'm just going...so Kroll's basically they're offering the same amount of service as the others which is why you're recommending it. Okay any other discussion?

I'm tending to want to defer to your suggestion of Kroll being the person with the most experience in the room, so would someone like to entertain that motion or do you feel more discussion is warranted? Yeah.

I'll make a motion that we follow the recommendation of our finance director and that we award the contract to Kroll.

Second. Oh yeah, great. Mr. Montgomery?

Yes Mayor, roll call. Mayor Pro Tem Lang?

Yes.

Great

Yeah,

I did make the motion. So anyway, yes,

they are random roll call.

Thank you. All right. Wonderful. So we are done with that item for the special session. My inclination is to I defer to the council as to wait until six because other people will be coming for regular session. Is that acceptable? And legally you have to. So no choice. So we will close this special session and take a 30 minute break until 6.