Preliminary findings include roughly $12M that may have been misused for 700 projects, potential for personal gain
Preliminary findings into facilities contracts awarded by College of the Canyons since 2000 showed that there was roughly $12 million in consulting and contracting fees that were potentially illegally awarded, according to the college’s legal counsel.
With that information, the Santa Clarita Community College District board of trustees, which oversees COC, unanimously voted at Monday’s special meeting for a third-party auditing firm to be secured in order to further investigate these findings and the potential misuse of public funds.
There was no discussion among the trustees after receiving information from district staff and legal counsel.
“We have never seen anything like this,” said Jessica Ehrlich, a partner at F3 Law, in reference to the preliminary findings, adding that there is the appearance of explicit intent to personally gain from facilities projects. “The level of conduct here, I think, is nothing short of egregious.”
Ehrlich and Sherman Wong, an attorney with Public Agency Law Group, which represents community college districts across the state, spoke on the findings. Wong said the district tasked legal counsel with investigating contracts being awarded outside of legal requirements, if the scope of those contracts was within reason for the college and whether a preliminary investigation warranted a further detailed review.
The board clearly agreed that further review is necessary, though no timeline has been given for when that review could be completed.
Eric Harnish, spokesman for the college, said after Monday’s meeting that it would likely be months, though as Ehrlich noted, further findings were being discovered just hours before the meeting began just after 4 p.m.
“This investigation is ongoing,” Ehrlich said, “and from what we can tell, looking at a very small sampling, is we only scratched the surface of the projects and contracts that require further review and investigation.”
Of the $12 million that was discovered, $8 million was for contracting fees and $4 million was for consulting fees, according to Ehrlich. She said that money was connected to more than 700 projects supposedly done between 2000 and 2019.
The college was under the direction of former Chancellor Dianne Van Hook during that time, though her name was not used during Monday’s meeting.
David Andrus was named the interim head of the college in July after she was placed on leave.
A Sept. 9 memo from Andrus to Erin Tague, vice president of facilities, was included with the agenda for Monday’s meeting, directing her to develop a “comprehensive report concerning the previous 20 years, or more, of facilities contracts.”
That work eventually led to Tague requesting legal counsel for assistance after finding that many projects were “violative of district policies and applicable California law,” according to Monday’s agenda.
Andrus had initially asked Tague to look into the purchase and sale agreement that the district had entered into for the advanced technology center that was meant to be built at 26650 Valley Center Drive. The district was in negotiations to cancel the contract, which, after further review, was found to be “unique in its terms and contractual structure, so much so that it fell outside customary public procurement practices,” according to the memo.
Many of the projects in question were awarded for less than $25,000, Ehrlich said, meaning they would not be subject to the bidding process as outlined in education and government codes. Rather, contracts for work of similar nature would be split up and handed to the same contractor.
“We saw a lot of contracts that coincidentally never reached a threshold above the $25,000 amount, which allowed requirements for bidding and bonding insurance not to be met,” Ehrlich said, adding that the contracts were also irregular in nature and did not adhere to education and government codes.
Contracts were also found to be given to the same person, but under different companies, and that person was found to not have the proper licensing or bond insurance at the time the projects were awarded.
Another issue with the projects is that some of them were never actually completed, Ehrlich said, referring to those as “phantom projects.” One of those was the renovation of 42 custodial closets and the painting of those closet floors, work that Ehrlich said would be irregular to be done, and likely was never done, based on vetting and research.
Projects awarded were also found to encroach on regular duties for classified staff. Ehrlich used gum removal, pine needle removal, the hanging of banners and relocating benches as projects that would normally be “standard maintenance staff projects.”
Further, payments were made to contractors without proper invoicing or proof of service, and many payments were made well above market rate.
“We found these consultants paid well above market and over another span of about 15 to 20 years, we found one consultant was paid almost $4 million for work that has yet to be able to be verified that it was performed,” Ehrlich said.
She reiterated at multiple times that these findings are preliminary.
“We have barely scratched the surface,” Ehrlich said. “We found that this conduct is so egregious it requires our request here tonight to ask the board to retain a forensic accounting firm. We believe that’s the only way to further establish credibility with this investigation and to create the necessary final findings that both the district and the public are entitled to.
“These are large sums of money that we’re talking about,” she continued. “The district is the steward of this money. We protect the public fisc (treasury), and it’s our inherent duty to look into these allegations and claims when they’re brought to us.”
