Report: Top parks officials kept $20M hidden

Updated at: 01/04/2013 6:07 PM
By JULIET WILLIAMS and JUDY LIN

(AP) SACRAMENTO, Calif. - Officials at the highest levels of the California Department of Parks and Recreation helped keep millions of dollars secret for more than a decade, the California attorney general’s office said in a report released Friday.

The report said the "intentional non-disclosure" continued because employees feared the department’s budget would be cut if lawmakers found out, and that they would be embarrassed about the years of covering it up.

"Throughout this period of intentional non-disclosure, some parks employees consistently requested, without success, that their superiors address the issue," Deputy Attorney General Thomas M. Patton wrote in the report.

Parks Director Ruth Coleman, who had been director since 2002, resigned and a senior parks official was fired last summer after $54 million was found hidden in two special funds as up to 70 parks were threatened with closure because of budget cuts.

The report said the actual amount intentionally hidden in the State Parks and Recreation Fund was $20 million, and the remaining $34 million discrepancy was due to differences in the timing of the fund reports to the state finance department and the controller’s office. The amount of money kept hidden had grown as high as $29 million in 2003, the report said.

The parks fund generates about $100 million each year through visitor fees and rentals. The fund has become a more vital source for the department as lawmakers reduce general support in the face of budget deficits.

The state will review the findings and decide whether to forward materials to law enforcement for a possible criminal case, said Richard Stapler, spokesman for the California Natural Resources Agency, which oversees the parks department.

No employees were found to have stolen or wrongly spent any of the money, the report said, but senior officials made deliberate decisions not to report the additional funds to the state Department of Finance, which helps the governor establish the state’s annual spending plan.

Because the state Legislature did not know about the money, which was generated from park fees and rentals, officials had no authority to spend it, making it "an essentially useless reserve," the report said.

Coleman has denied knowing about the hidden money. She was the only current or former employee who would not agree to be interviewed by the attorney general’s office, the report said. The report is based upon interviews with 40 former and current employees.

The report said several senior officials "were all well aware of the discrepancy."

It said all indications were that Tom Domich, the department’s assistant deputy director of administrative services from 1987 to 2004, likely made the initial decision to keep the money secret, but several successive staffers continued the effort.

"The facts show that former budget officer Becky Brown noticed the growing disparity as early as 1998," the report said. By late 2002, "the budget and accounting officers and their supervisor ... were all aware of the discrepancy. Thereafter, from 2002 to 2012, numerous individuals failed to take appropriate action to ensure the monies were revealed to the DOF."

The report said Coleman’s second-in-command, Michael Harris, was the highest-ranking manager to order the continued secrecy of the funds. He was fired as chief deputy in July 2012 amid the parks scandal and now works at the California Department of Environmental Protection.

Parks officials’ ability to keep the $20 million in special fund money secret was partly due to accounting discrepancies between the state Department of Finance and the controller’s office, which rely on different calculations. A new law signed by Gov. Jerry Brown last year requires the departments to compare their annual reports detailing how much money is in the more than 500 special state funds.

At least two budget officials told investigators they reported the hidden money to Domich, but he "refuses to acknowledge these facts and unpersuasively denies all knowledge of the disparity and his role in the deception," the report said.

"Consequently, it also cannot be determined with certainty whether the matter was reported to Ruth Coleman, who became acting director in January 2002 and went on to serve as director until July 2012," the report said.

Messages left by The Associated Press at telephone listings for two people named Tom Domich and for Coleman were not immediately returned Friday. Coleman’s attorney, Malcolm Segal of Sacramento, declined comment.

In her resignation letter, Coleman said she was "unaware of the excessive balance" in the parks fund but accepted responsibility for the problem.

Harris did not immediately respond to an email message on Friday.

Rob Boriskin, who was assistant deputy director of administrative services from February 2005 to April 2006, told investigators that he recalls bringing the matter to Coleman’s attention, and she told him to focus on "the bigger overall pictures and not spending so much time doing spreadsheets."

Former deputy director of administrative services Manuel Lopez, who left the department in May after approving an unauthorized vacation buy-out scheme, told investigators he believed Coleman knew of the $20 million disparity.

Over five years, Lopez said, Coleman asked him each year why the parks fund failed to receive a financial performance award, and he would explain it was because there was extra money.

He told investigators the two even discussed asking finance officials for approval to spend it, "’so she knew that there was money available,’" the report states.

The report said claims that Coleman knew of the money were "unreliable."

(Copyright 2013 by The Associated Press. All Rights Reserved.)