Pattern, Practices of Auditor Laura Doud

In 2006, a 39-year-old staff accountant from the Water Replenishment District named Laura Doud shocked City Hall watchers when she unseated the 14-year incumbent, Gary Burroughs, taking over the reins of the influential city auditor’s office.

In her inaugural speech, right after conveying her gratitude to her family and loved ones, Doud expressed her “many thanks” to Rick and Joanne Davis, the husband-and-wife duo behind the Davis Consulting Group (Davis Group), a political consulting firm that spearheaded Doud’s improbable campaign.

Davis Group, Auditor Race

The 2006 race for City Auditor was ugly. The Los Angeles Times reported on April 13, 2006 that Burroughs charged Doud with inflating her credentials, that she lacked experience and had filed for personal bankruptcy.

Burroughs also criticized Doud for her lack of campaign finance transparency as Norm Ryan’s treasurer during his 2002 failed mayoral campaign.

In turn, according to a July 25, 2009 Press-Telegram article, Doud “criticized Burroughs’ decision to renew contracts without seeking competitive bids and accused him of pushing his wife’s Amway products on city employees – an allegation he denied.”

As a seasoned campaign manager assisting GOP-leaning candidates such as George Bush, Mitt Romney and Dan Lundgren, the Davis Group expertly commanded Doud’s reform campaign strategy.

Pattern, Practice of Corruption?

Shortly after crushing Burroughs in the election, Doud paid the Davis Group $17,500 in city funds for “consulting services” in her first month in office, in addition to the $6,000 she paid to Kindel Gagan for “consulting services” the same month – as reported in the Beachcomber’s March 18 article headlined, What We Know/Don't Know About Doud Investigation.

Also similar in pattern and practice to the recurring monthly payments Doud made to the lobbyist firm, Kindel Gagan, Doud’s November 2006 payment made to the Davis Group – a political consulting firm – was the first of 98 payments of public monies made to the firm over the next 15 years, costing taxpayers a total $527,073.

Ironically, the recent city attorney-led investigation conducted by the RSM accountancy firm found that Doud’s payment scheme paralleled the same pattern and practice that Doud had once accused Burroughs of committing – repeatedly renewing contracts for 15 years without seeking competitive bids.

The RSM report found that Doud was responsible for a host of other highly questionable acts, including setting up contractual arrangements for Gagan and Davis Group without clear service deliverables, hourly rates and other industry-standard contract terms, as well as paying both firms for non-existent or dubious services.

Vague Deliverables Expected

Between 2006 and 2016, Doud paid the Davis Group between $5,000 and $7,500 per month, totaling $434,073 in public funds for consulting services.

However, the RSM investigation found no scopes of work (SOW) expected of the Davis Group prior to 2019.

In March 2019, after a three-year period in which no payments were made to the Davises, Doud re-entered into an agreement with the Davis Group to begin payments of $3,000 per month.

According to the RSM investigation Doud made payments to the political consulting group over the next three years using the following vague and imprecise outline to define deliverables:

• “Strategic message development and implementation”
• “Advise and assist city auditor in developing and strengthening positive relationships and partnerships with city stakeholders”
• “Advise and assist city auditor in establishing the Long Beach city auditor’s office as a leader in the industry…”
• “Assist in monitoring significant city issues and provide an outside perspective”

The Doud structured Davis agreement had no tangible, measurable deliverables, no hourly rates or any other contract terms considered to meet professional contract standards.

Among a host of other accounting deficiencies, RSM also found that Doud paid 40% of the Davis Group’s monthly invoices in advance of the dates for which the alleged services were rendered.

The RSM investigators also established that the services provided by the Davises appeared to overlap with the responsibilities of Doud’s communications manager, a duplication of work that could be found to violate city regulations.

However, RSM did not interview the communications manager or other auditor staff to determine whether there was – in fact – work duplication.

Prop H, Measures AAA & BBB

As reported above, Doud began paying public funds to the Davises on a monthly basis after they led her to victory in 2006.

Over the next several years, the Davis Group was also involved in another of Doud’s successful political campaigns – the passing of the oil tax measure, Proposition H, which was listed as a past client on the Davis Group’s website (taken down shortly before the Beachcomber first reported on the Doud scandal).

During the campaign period (2007-08) for Proposition H, the Davises were paid $157,400 by Doud, as indicated in the RSM report.

Doud admitted to RSM that Kindel Gagan assisted her with the Proposition H campaign.

According to the RSM report the Davis Group also assisted Doud with Measures AAA and BBB, the charter initiatives passed by voters in November 2018 that changed the city auditor powers and extended term limits.

During this period in 2018, Doud and Mayor Robert Garcia also vigorously campaigned for Measures AAA and BBB along with CCC (Ethics Commission) and DDD (Redistricting Commission).

In  2018, Doud was not paying the Davis Group. RSM reported no payments to the Davises from 2016 through 2018. However, several months later, in March 2019, Doud reinstated monthly payments to the Davis Group.

Shortly thereafter, according to the RSM report, the whistleblower protested Doud’s payment schemes and refused to approve and sign any future invoices from both the Davises and Gagan.

By September 2021, when the whistleblower filed their report with the city attorney, Doud had paid the Davis Group $93,000 in taxpayer funds.

Public Funds for Campaigns

Expending public funds for political campaigns is against the law. The RSM investigation did not determine whether laws were broken via the payments made to the Davis Group or to Gagan.

RSM failed to obtain and analyze personal emails and phone records to determine whether there was collusion to pay for political activities with public funds.

Doud stated to RSM that “the Davis Group is the only city vendor that she intentionally communicated with using her personal Yahoo account,” but offered no explanation for the incongruous practice.  

RSM did not investigate the ramifications of the practice beyond their reporting of Doud’s statement.

Report Misses Red Flags

In addition to the missed red flags described in the Beachcomber’s previous article on Doud and Gagan, serious flaws and red flags in RSM’s investigation related to Doud and the Davises, include:

• RSM failed to obtain and analyze meeting records, phone records and Doud’s personal email account to determine the full extent of Doud’s relationship to the Davises, particularly regarding their involvement in the various political campaigns in which she was personally involved.
•  Doud claimed that she exclusively used her Yahoo email account to communicate with the Davises. The RSM investigation did not explain why Doud believed she needed to communicate privately with the Davises – and no one else – to conduct city business.
• RSM failed to obtain the financial records of Doud, the Davises and their company, the Davis Group, to determine whether some or all payments were in fact financial kickbacks.
• RSM interviewed the whistleblower once. RSM did not interview other current or former auditors and administrative staff within the city auditor’s office who may have additional information on Doud’s payment transactions to the Davis Group, as well as whether there was duplication between the Davis Group’s services and the work of Doud’s staff.
• RSM did not verify whether the work products provided by the Davis Group to RSM were actually completed by them.
• The RSM report did not include any examples of the Davis Group’s work products, although the report included examples of Gagan’s work.
• RSM concluded that it did not find clear evidence of misappropriation, yet its report noted payments were made when there appeared to be no services provided.
• RSM concluded that “it is not possible to determine the reasonableness, appropriateness, applicability of the work, or the fairness of the cost to the city for the services provided by Kindel Gagan and the Davis Group “because the manner in which contracts and invoices were documented was lacking in detail.”

There is no evidence that RSM investigated or reported upon interviews that examined the possibility that Doud, Gagan and the Davises were deliberate in providing as little detail as possible in their contracts, invoices and services in order to avoid scrutiny and accountability.

Crickets at City Hall

In our next installment the Beachcomber will report on answers to our questions about the Doud investigation provided by City Attorney Charles Parkin, city attorney candidates Dawn Mcintosh and Gerrie Schipske, city auditor candidate Dan Miles and City Auditor Laura Doud. (Note: Doud is the only city official/candidate for office who has yet to respond – the deadline for which has been extended to Monday, March 21)

Laura Doud, Mayor Robert Garcia – a candidate for Congress - members of the City Council, including candidates for the mayor’s offices – have yet to offer any comment on the findings, recommendations or the shortcomings of the RSM investigation. 

The district attorney has not yet announced whether criminal charges will be filed – or not.

Stephen Downing is a Long Beach resident and a retired LAPD deputy chief of police
stephen.beachcomber@gmail.com

Related Beachcomber Reporting

Previous Beachcomber reporting on the Doud scandal can be read at the following website links:

Misappropriation of Public Funds by City Auditor Alleged

https://beachcomber.news/content/fraud-misappropriation-public-funds-city-auditor-alleged

Former Mayoral Candidate Rationalizes Alleged Payment Scheme

https://beachcomber.news/content/former-mayoral-candidate-rationalizes-alleged-payment-scheme

Doud Investigation – A Velvet Covered Hammer

https://beachcomber.news/content/doud-investigation-velvet-covered-hammer

What We Know/Don’t Know About Doud Investigation

https://beachcomber.news/content/what-we-knowdont-know-about-doud-investigaton