LA Daily News: LA probes ‘questionable expenses’ by ex-treasurer of Porter Ranch council

Posted on January 11, 2017

By Brenda Gazzar


 In this file photo, an overflow crowd of more than 1,500 people attend the Porter Ranch Neighborhood Council meeting Wednesday, Dec. 2, 2015, that focused on the Aliso Canyon storage facility natural gas well leak. (Photo by Greg Wilcox/Los Angeles Daily News)


A former treasurer of the Porter Ranch Neighborhood Council has reimbursed the city of Los Angeles for more than $27,000 as a result of a city review into “questionable expenses” while police have launched their own probe, officials confirmed Wednesday.


The Los Angeles Police Department’s Commercial Crimes Division, which investigates fraud and other commercial crimes, is “actively investigating” the case, Lt. Carlos Solano said.

“Right now, it’s an ongoing investigation,” Solano said Wednesday. “Not much I can tell you.”

The city clerk’s office, which provides oversight of the funding program for the city’s 96 neighborhood councils, received a tip around July from the new Porter Ranch board that there were some anomalies — “expenditures that looked like they did not coincide with any board approval” — that it wanted examined, City Clerk Holly Wolcott said.

The city clerk’s office, in coordination with the city controller’s office, initially identified up to $40,000 in “questionable expenses” by the former treasurer, Sean O’Rourke, but later determined that about $27,380 spent over about a year “was not justifiable,” according to Wolcott. Neighborhood councils, which act as advisory bodies that are designed to connect Angelenos to City Hall, receive public funds of $37,000 each year to support their activities. 

O’Rourke, who resigned last year after serving on the Porter Ranch Neighborhood Council for at least four years, declined Wednesday to discuss the issue.

“I don’t have a comment,” he said.

After the city clerk’s office asked O’Rourke for “further justification” of the expenses, he sent a check to the city clerk’s office on Dec. 1 for $16,791.17, according to Wolcott and city documents. They then notified him that the amount was insufficient and on Jan. 4, they received an additional amount of $10,590.18. They plan to return about $27 back to him because it was an overpayment, Wolcott said.

 “We never received justification for the (spending of the) funds,” Wolcott said.

The reimbursements have been deposited into the Neighborhood Council Trust Fund and will soon be returned to the Porter Ranch Neighborhood Council, she said.

Wolcott would not identify the specific charges that were reimbursed but said generally funds received from the city must have a public purpose and cannot be used for personal expenses, for example, or given to political or religious organizations. She said her office is now putting together all relevant information to forward to police.

The LAPD’s Solano said the department will submit the case to the district attorney’s office for filing consideration once they complete the investigation.

Paula Cracium, the former president of the Porter Ranch Neighborhood Council, said she was “shocked” by the news, which she first read online Tuesday night in a KPCC article.

“We got monthly expenditure reports produced by the treasurer, which were sent to the city clerk and verified and on every one of those, everything seemed to look good,” Cracium said. 

Wolcott said part of the problem was that fiscal oversight was disrupted by the nation’s worst natural gas leak in U.S. history at Southern California Gas Co.’s Aliso Canyon storage facility near Porter Ranch because neighborhood councils in that area “were not required to turn in their monthly expenditure reports right away.” The nearly four-month gas leak, which prompted the relocation of more than 8,300 households and sickened many area residents, was stopped in February.

“That kind of opened a door to the lack of monitoring,” Wolcott said.

According to minutes from the neighborhood council’s Jan. 30, 2016, meeting, O’Rourke said he had prepared three months of monthly expenditure reports but could not find them when he went to print them. O’Rourke also said he had been given assurances by the city’s Department of Neighborhood Empowerment, which at that time provided fiscal oversight over neighborhood councils’ funding program, that extensions to submit the reports would be given to the neighborhood council “given the circumstances of (the) past few months,” the minutes stated.

City Controller Ron Galperin, who would not comment on this case, said during the course of a recent limited scope fiscal audit, it became clear that fiscal oversight of neighborhood councils would be better handled by the city clerk’s office rather than the city’s Department of Neighborhood Empowerment, which provides operational support and guidance to neighborhood councils. That change was made in July.

The audit, which was completed in December, found in part that there was inadequate enforcement of financial reporting requirements for neighborhood councils, such as ensuring that they submitted adequate and proper monthly spending reports along with requiring supporting documentation, he said. It also recommended that there be better compliance in terms of timely submission of financial reports, which Galperin said can be helped with better training of neighborhood council members, as well as conducting “spot audits” at any time. 

The audit’s recommendations are being put into action by both the Department of Neighborhood Empowerment and the city clerk’s office, he said.

Anyone who suspects waste, fraud or abuse related to a Los Angeles neighborhood council or employee can report information, even anonymously, to or call its ethics and compliance hotline at 866-428-1514, Galperin said.


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