Controller Galperin: Former Employment Center Executives Abused Public Trust

Posted on August 16, 2017

L.A. City Controller assisted District Attorney, Department of Labor investigations of Chicana Service Action Center

 

Los Angeles -- City Controller Ron Galperin released the following statement today following the Los Angeles County District Attorney’s announcement that three former executives of the nonprofit Chicana Service Action Center (CSAC) pleaded guilty to embezzling and misappropriating millions of dollars in public funds:

 

“These former Chicana Service Action Center executives defrauded taxpayers and stole funds meant for job training and placement programs to help unemployed L.A. residents get back on their feet,” said Controller Galperin. “Fraud and embezzlement are egregious acts, particularly when they impact those in need. I am gratified that CSAC’s executives will finally face the consequences of their deplorable actions.

“Last year, my office diligently assisted the DA’s office by detailing two years of bank transactions and identifying questionable, non-business uses of taxpayer dollars. We also provided information from City-funded programs to support the U.S. Department of Labor’s investigation into CSAC’s fraudulent job placement reporting. The evidence we found was used to help make the case against these corrupt individuals even stronger.

“As I said in my audit of the Economic and Workforce Development Department this year, we must be diligent in selecting and monitoring WorkSource Center service providers. EWDD agreed to implement all of the recommendations in my audit, including resolving allegations of fraud and abuse and increasing their ability to identify unsuitable service providers.”

Founded in 1978, the Chicana Service Action Center was contracted with by the City to provide job training and placement services for unemployed residents, domestic violence victims, and homeless Angelenos. CSAC received $16 million through the City of Los Angeles between 2005 and 2015, when the City terminated its contract.

On Tuesday, former CEO Sophia Esparza, former chief financial officer Silvia Gutierrez, and former vice president of corporate and government affairs Thomas Baiz pled guilty to misappropriation of public funds, embezzlement, and preparing false documentary evidence.

They will have to repay $1.4 million collectively to Economic and Workforce Development Department as part of their settlement. In addition, they will collectively pay $9 million to the Los Angeles County Department of Public Social Services and Community Senior Services and Esparza must pay an additional $103,000 to the California State Franchise Tax Board. The trio faces sentencing in October. Esparza is expected to be sentenced to six years in state prison, according to the District Attorney’s Office, while Gutierrez will receive a four-year suspended prison sentence and be placed under house arrest for a year and probation for five years. Baiz is expected to be sentenced to a three-year suspended prison sentence, one year in county jail and be placed on probation for five years. He also must perform 500 hours of community service.

This case was investigated by the District Attorney’s Bureau of Investigation with the assistance of the City Controller’s Waste Fraud and Abuse Unit, the Office of County Investigations, the U.S. Department of Labor Inspector General’s Office and the state Franchise Tax Board.

In addition to creating audits, reports, and recommendations, the Controller manages the City’s Waste Fraud and Abuse Unit. Residents can report tips about waste, fraud and abuse affecting City resources at 1-866-428-1514 or online at lacontroller.org/fraud_hotline.

 


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