Q&A About City Auditor Doud

On March 2 an investigation report produced by the financial consulting firm  RSM – contracted by City Attorney Charles Parkin to conduct an investigation into whistleblower allegations of fraud and misappropriation of taxpayer funds by City Auditor Laura Doud – was released to the Beachcomber.

Since that time this newspaper has published three articles related to the RSM investigative report:

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

Pattern, Practices of Auditor Laura Doud

https://beachcomber.news/content/pattern-practices-auditor-laura-doud

Question and Answers

In a follow-up related to the content of the investigation and public response to the articles, the Beachcomber addressed a number of questions to City Attorney Charles Parkin and city attorney candidates Dawn Mcintosh and Gerrie Schipske.

When the responses were received, this newspaper then asked city auditor candidates Laura Doud and Dan Miles to provide their insight, comment and evaluation of the responses to the questions and to add any comment that each  believed may make a positive contribution to discussion of the issues by the Long Beach electorate.

All parties except Doud responded to the request. 

Dan Miles offered an overall response as well as specific comment relating to individual comments from the responders.

City Attorney Parkin’s Responses

Beachcomber:  Besides not obtaining and reviewing phone records, meeting records and Doud's personal emails, RSM did very little investigation on possible kickbacks (besides the mention of NCAA and baseball game tickets). There was no review of personal financial records. 

Question: Is an investigation into the possibility of kickbacks in progress?

Parkin’s Response: My Office retained RSM to investigate the whistleblower’s allegations that fall within the jurisdiction of my office, and their report, with their findings, recommendations and conclusions was made publicly available. You were provided a copy of the report in response to your PRA request.  My office concurs with the conclusions and recommendations contained in the report and is not currently conducting any further investigation into this matter. 

I understand the district attorney’s office is currently reviewing the matter, and the issues you mention should properly be addressed through their inquiry.

Dan Miles Response to Parkin: RSM’s findings validated the whistleblowers basic findings. The Los Angeles County District Attorney (DA) is now investigating on whether a crime or crimes have been committed.

Ms. Doud has the presumption of innocence should any charges result. Ms. Doud’s criminal defense attorney could provide us with a reason as to why the Auditor approved these payments over and over every month for 15 years.

Beachcomber: There was no mention in the report of whether the two vendors had proper insurance coverage to indemnify the city.

Question: Does the city intend to make that determination?

Parkin’s Response:  My Office retained RSM to investigate the Whistleblower’s allegations that fall within the jurisdiction of my office, and their report, with their findings, recommendations and conclusions was made publicly available.  You were provided with a copy of the report in response to your PRA request.  My office concurs with the conclusions and recommendations contained in the report. 

If RSM had recommended the return of city funds paid to the two vendors my office would have considered repayment options.  No such finding/recommendation was made by RSM.

Dan Miles Response to Parkin: RSM in their conclusion stated that: “There is no current contract agreement with Kindel Gagan which delineates services, terms and deliverables.

There is a single, two-year contract with Kindel Gagan for 2016 and 2017.

Historical contract and scope proposals are not legitimate given that Kindel Gagan does not have the requisite expertise for the proposed services.

Monthly invoices contain no information describing the services or hours that were rendered.

That is a fact.

Beachcomber: On page 31, RSM listed "Emails throughout the years that included forwarded articles and news regarding CalPERS" as a sample of Gagan's work provided to Doud. 

Question: Does the city attorney consider a forwarded article to be a deliverable?

Parkin’s Response: What constitutes a deliverable for a specific vendor engagement depends on the terms of the contract and, more specifically, the scope of work contained in the contract.  One of the findings made by RSM in the report included the conclusion that the scope of work in the Gagan contracts lacked the requisite description to determine what the contracted deliverable were under the contracts.

Beachcomber: Although CalPERS was referenced in the electronic record of Purchase Orders in 2012, 2013, 2016, and 2017; no emails were identified in the eDiscovery Search between Gagan and Doud that mention CalPERS between March 2011 and February 2017 or after August 2017.  When you do the math, you see that for a period of 10+ years (of the 16 years of payments), there were no emails about CalPERS between Gagan and Doud.

Question: What conclusion or comment can/will you provide related to this factual analysis?

Parkin’s Response:  What constitutes a deliverable for a specific vendor engagement depends on the terms of the contract and, more specifically, the scope of work contained in the contract. One of the findings made by RSM in the report included the conclusion that the scope of work in the Gagan contracts lacked the requisite description to determine what the contracted deliverable were under the contracts. 

As articulated in RSM’s report, the descriptions of work contained in the Gagan contracts included the provision of the general term “professional services”, and the RSM report found evidence of advice and work product being provided by Gagan that could fall within the general term of “professional services.”

Beachcomber: The RSM investigation into Doud's purchasing actions recommends that the city auditor, city attorney and city prosecutor "be required to follow city policy or develop a procurement policy for their offices.”

Question: As city attorney do you believe that the city's procurement and contracting policies be required of all elected and City Council offices and not just the city manager departments? 

Parkin’s Response: My office concurs with the conclusions and recommendations contained in the RSM report including the recommendation that all elected officials should be required to follow city policy or develop a procurement policy for their office.

Beachcomber: According to section 603 e of the city charter it is the responsibility of the City Attorney to “approve in writing the form of all bonds required by the city and all contracts before the same are entered into on behalf of the city.”

Question: In the case of the form of the contracts entered into between the city Auditor and Kindel Gagan and the Davis Group did your office approve the form of contracts, as required by the Charter?

If the form of the contracts was not submitted for approval by your office what remedy is available to the city relative to nullifying the contracts and recovering the monies expended?

Parkin Response: The powers and duties of the city attorney, as articulated in section 603 of the City Charter, are subject to the other provisions of the City Charter. Section 1800 of the City Charter provides that “[t]he City Council, by ordinance duly adopted, may authorize the city manager, or any commission or agent of the city, with the written approval of the city manager, to bind the city without a contract in writing for the payment of services, supplies, materials, equipment and labor or other valuable consideration furnished to the city in an amount not exceeding the limit established by ordinance of the City Council. (Charter Section 1800 and Ordinance No. Ord-12-0020 are included in the exhibits to the RSM report for reference.) As detailed in RSM’s report, Ms. Doud utilized purchase orders, blanket purchase orders and direct payment vehicles that do not require review and approval by the city attorney’s office, pursuant to Section 1800 of the City Charter, to engage Kindel Gagan and the Davis Group.  

Beachcomber Questions for City Attorney Candidates

The Beachcomber posed the following questions to City Attorney Candidates Dawn McIntosh and Gerrie Schipske.

The following are responses from Dawn McIntosh, candidate for city attorney presently employed as Parkin’s assistant city attorney.

Beachcomber: Besides not obtaining and reviewing phone records, meeting records and Doud's personal emails, RSM did very little investigation on possible kickbacks (besides the mention of NCAA and baseball game tickets). There was no review of personal financial records. 

Question: Should the report have gone into those issues?  If not, why not?  

Mcintosh response: RSM was hired to investigate the whistleblower's allegations that are within the jurisdiction of the city attorney's office.  RSM completed that investigation and produced the report that you received with their recommendations and conclusions. 

The district attorney's office is currently reviewing the matter for possible criminal activity and issues outside the jurisdiction of the city attorney's office.  

Beachcomber: There was no mention in the report of whether the two vendors had proper insurance coverage to indemnify the city.

Question: Should the city make that determination?  

Mcintosh Response: RSM was hired to investigate the whistleblower's allegations that are within the jurisdiction of the city attorney's office.  RSM completed that investigation and produced the report that you received with their recommendations and conclusions.  

If RSM had concluded that city funds paid to the two vendors should be returned to the city because there was no evidence of any work done by them in exchange for city funds, repayment options would have been explored.

Dan Miles Response to Mcintosh: What was requested of RSM? Was RSM constrained to answer just the whistleblower’s specific accusation of the Gagan/Doud payment scheme?

The whistleblower stated that they had no knowledge of other payment schemes with the possible exception of one other. Upon further work, RSM found the second payment scheme to be valid as well.

Why did RSM stop there?  A good auditor follows the trail to its conclusion.

Beachcomber:  On page 31, RSM listed "Emails throughout the years that included forwarded articles and news regarding CalPERS" as a sample of Gagan's work provided to Doud. 

Question: As city attorney would you consider a forwarded article to be a deliverable?  

Mcintosh Response: Whether an item should be considered a deliverable under the terms of a contract depends on the scope of work identified in the contract. 

As noted in the RSM report, the scope of work in Gagan's contracts are too vague and general to be able to determine what would be expected deliverables. 

Dan Miles Response to Mcintosh: That advice should be paid with city funds? The issue for voters is: do politicians have the right to use voter’s money to pay for political advice?

Beachcomber: Although CalPERS was referenced in the electronic record of Purchase Orders in 2012, 2013, 2016, and 2017; no emails were identified in the eDiscovery Search between Gagan and Doud that mention CalPERS between March 2011 and February 2017 or after August 2017.  When you do the math you see that for a period of 10+ years (of the 16 years of payments), there were no emails about CalPERS between Gagan and Loud.

Question: Please comment as to this absence of deliverables and what the omission means to you as a future city attorney. 

Mcintosh Response: Whether an item should be considered a deliverable under the terms of a contract depends on the scope of work identified in the contract. 

As noted in the RSM report, the scope of work in Gagan's contracts are too vague and general to be able to determine what would be expected deliverables. For example, the contracts provide for Gagan to provide other "professional services" in addition to CalPERS advice, and as the RSM report notes, there is evidence of other work and advice being provided. 

As noted in the conclusions of the report, City contracting procedures and requirements do not at present apply to Ms. Doud, so her failure to follow them in requiring more detailed accounts of services to be provided did not violate city policies. 

I fully support the recommendation of the RSM report that all elected offices in the city should either comply with city procurement policies or develop procurement policies for their offices. 

Beachcomber: The RSM investigation into Doud's purchasing actions recommends that the city auditor, city attorney and city prosecutor "be required to follow city policy or develop a procurement policy for their offices.”

Question: As a candidate for city attorney do you believe that the city's procurement and contracting policies be required of all elected and City Council offices and not just the city manager departments? If not, why not?  

Mcintosh Response: I agree with the conclusion of the report that the city auditor, city attorney and city prosecutor should either follow city procurement policies or develop procurement policies for their offices. 

Beachcomber: Do you believe that Doud should or should not seek re-election?  

Mcintosh Response: That is not my decision to make; it is Ms. Doud's decision.  And it is up to the electorate to decide who to elect. 

Responses from Gerrie Schipske, candidate for City Attorney

Schipske was asked the same questions posed to candidate Dawn Mcintosh.  Schipske chose to provide the following narrative response rather than reply to each individual question.

Schipske Response: At the outset, let me state that the City of Long Beach needs aggressive, proactive risk management to prevent what, to date, has been disclosed. 

We also need a strong anti-corruption effort that makes it clear through training and follow-up that the City of Long Beach has zero tolerance for anything less than open, transparent, and accountable elected officials and city employees. 

I cannot respond to specific questions concerning the RMS report because I do not have access to the scope of work they were given as to what they were to review and whether they needed to indemnify the city. 

I also do not have access to the contracts for services signed by the city auditor that are being questioned so I am unable to comment if the emails referenced are deliverables.

Finally, as potentially the next city attorney it would be inappropriate for me to offer a preliminary assessment as to whether any law was violated or anything improper or unethical occurred. Statements of this kind, even though based on preliminary information, can be used against the city.

I can offer that a thorough review of the current policies concerning personal services contracts that needs to be done. Any gaps that allow a lack of full accounting for the expenditure of taxpayer money need to be removed and replaced and enforced.

In most government policies on personal services contracts, such contracts are only allowed when the contract will result in a cost savings for the government. 

Other requirements include: The savings shall be large enough to ensure that they will not be eliminated by private sector and state cost fluctuations that could normally be expected during the contracting period; the amount of savings clearly justify the size and duration of the contracting agreement; the contract is awarded through a publicized, competitive bidding process; the contract includes specific provisions pertaining to the qualifications of the staff that will perform the work under the contract, as well as assurance that the contractor’s hiring practices meet applicable nondiscrimination, affirmative action standards; the potential for future economic risk to the government from potential contractor rate increases is minimal; the contract is with a firm.

A “firm” means a corporation, partnership, nonprofit organization, or sole proprietorship; the potential economic advantage of contracting is not outweighed by the public’s interest in having a particular function performed directly by the government.

In most instances, personal services contracts can not be longer than one year. 

Response from Dan Miles, candidate for City Auditor

It is the duty of the city attorney to protect the elected officials. Agree with Shipske. Not sure about candidates.

First ethical nature of maintaining two secret relationships beyond those as prescribed by the auditor’s office. The auditor is independent not autonomous.

Policies and procedures require that office be accountable to the public and not secretly for the benefit of her office.  Period.

The RFP RFQ process is open for public scrutiny therefore for 15+ years a duel relationship was created that neither adheres or follows the City Charter or Municipal Code.

Whatever the relationship the surface here has only been scratched. 

Second part to this is benefit did each of these entities play personally to the advantage (benefit) of Ms. Doud and how that ties to the city.

Anything being done in this matter should also be indicated on Ms. Doud's form 700 that shows and discloses any relationships or conflicts. There is none with the Davis group.

Not sure about Gagan.

What is being exposed is indeed a closed-door personal relationship between the auditor and these companies.

If these payments are of benefit to the city, and to Doud as an auditor, then why is it we cannot find any disclosure of funding as an elected official?

What is the return on dollar and the cost benefit to either the city or the auditor's office?  The question remains unanswered. 

Did she report this to the FPPC too?

Response from City Auditor Laura Doud, candidate for City Auditor

Laura Doud did not respond to Beachcomber requests for comment.

The last public statement made by Doud was through her criminal attorney, Kate Corrigan, as reported on March 5 in the Grunion Gazette following that newspaper’s reporting on the RSM investigation. 

At that time the Gazette reported Corrigan saying that Doud “did nothing wrong and did not misappropriate any city funds.”

Corrigan is also quoted as saying “Ms. Doud will continue to endeavor to be conscientious in serving the public and ensuring that the city continues to benefit from her office’s work.”

Stephen Downing is a resident of Long Beach and a retired LAPD deputy chief of police

stephen.beachcomber@gmail.com