What We Know/Don’t Know About Doud Investigaton

By: 
Stephen Downing

92 emails, a letter, a handful of reports, an article and a speech are used to justify spending $1,036,200.

In November 2006, the first month of assuming the office of Long Beach City Auditor, Laura Doud paid her long-time friend and mentor, Los Angeles-based lobbyist Michael Gagan, $6,000 in city/public funds for “consulting services.”

The $6,000 payment turned out to be the first of 181 recurring monthly payments over a span of 15 years to Gagan that have cost the public $1,036,200, according to an investigative report prepared by the financial consulting firm RSM, hired by the city to investigate a whistleblower’s allegations against Doud.

RSM reported that Doud hired Gagan to provide professional financial analysis focused on the city’s pension and retirement costs.

The RSM report cited several statements of work and a single two-page “Agreement for Consulting Services” executed by Doud and Gagan in 2015 that repeatedly defined pension-related financial analysis as Gagan’s service deliverables. Doud relied upon these documents to justify and sustain 15 years of monthly payments totaling $1,036,200. 

The RSM investigation identified a handful of reports, a letter, an article, and a total of 92 emails between Gagen and Doud that were related to the 2015 agreement’s scope of services, most of which were provided to Doud prior to 2010, with no substantive work products provided thereafter.

RSM listed the following work products provided by Gagan to Doud:

  • “Reports in 2007 from Gagan to Doud regarding CalPERS budget, investment performance, proposed revised disclosure requirement, Public Employee Post Benefits Commission, unfunded liabilities and state legislation
  • Letter prepared in 2008 for Doud regarding CalPERS prepayment
  • Speech for Doud in 2010 regarding pension benefits”

RSM did not list any other written deliverables from Gagan.

RSM conducted a search of emails between Doud and Gagan from September 2006 through September 2021 to determine whether the expected scope of services were a topic of discussion between them.

Of the 2,960 emails exchanged, only 92 emails included a “deliverable” topic, and that was related to CalPERS and pensions.

 

Total Emails

2,960

Total Pension-Related Emails

92 (3%)

Total Months of Payments

181

Total Months w/o Pension-Related Emails

153 (85%)

Total Years w/o Pension-Related Emails

12.75

Total $ Payments During Months w/o Emails

  $878,100

Total $ Payments

  $1,036,200

 

 

As shown in the above chart, of the 92 emails, 83 were exchanged prior to November 2010 during Doud's first term. Only seven emails were related to pension discussion over the 12 years that followed and monthly payments continued.

Of the $1,036,200, a total of $878,200 (85%) was paid to Gagan during months in which he and Doud never exchanged emails discussing CalPERS and pensions. 

According to the RSM report, Doud and Gagan both claimed they met and exchanged phone calls. But RSM failed to obtain and analyze meeting and phone records.

Report Misses Red Flags

RSM concluded that it was “able to substantiate in part the allegations” of the whistleblower but “did not find clear evidence of misappropriation.”

However, in its own analysis of the data and information, the Beachcomber found serious flaws and red flags in RSM’s investigation and primary conclusion, including:

  • RSM concluded that it did not find clear evidence of misappropriation, yet monthly payments were made during a total 153 months or nearly 13 years where Gagan did not provide any tangible service or activity.
  • RSM failed to obtain and analyze meeting records and phone records to determine the full extent of Gagan’s relationship to Doud and its impact on her role as city auditor regarding city matters. Kindel Gagan is a registered lobbyist with the city. Some of Kindel Gagan’s corporate clients have or are currently doing business within Long Beach.
  • RSM failed to obtain the financial records of Doud, Gagan and his company, Kindel & Gagan, to determine whether there were financial kickbacks.
  • RSM did not search the emails between Doud and Gagan for keywords or other red flags that would lead to evidence of kickbacks or other of corruption.
  • RSM interviewed only 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 Gagan

City Hall Response

In a question and answer exchange with the Beachcomber, City Attorney Charles Parkin stated: “My office concurs with the conclusions and recommendations contained in the (RSM) 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.”

City Auditor Laura Doud, currently certified as a candidate for city auditor in the 2022 election, has yet to respond to multiple Beachcomber requests for comment.  It is unknown if she plans to discuss the RSM investigation in public forums during her campaign for re-election.

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

In our next installment the Beachcomber will provide analysis of the RSM findings related to the Davis Group, a political consulting firm to which Doud reportedly paid $527,073 in public funds.

 

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

 

 

Category:

Comments

The RSM “investigation” is a whitewash just like the Best, Best, and Krieger investigation into the TigerText scandal. Nothing initiated by our city attorney’s office or our city manager’s office can ever be considered fair, unbiased, just, or thorough. We need someone like Gerrie Schipske as City Attorney to begin to get some semblance of ethics.

Hello Carlos, can you say "WHITE PRIVILEGE" Why would anyone in the LBC think that City Attorney Charles Parkin would file on this criminal? LOL this office only goes after people of color. Sadly the people of color that hold LB office are complacent and should be ashamed of themselves. SHM these people are just as guilty as this criminal. This city is so blatantly corrupt its ridiculous. But I guess you get what you VOTE for, wake up LBC!!

It's apparent the city, in hiring RSM, got the report they wanted. The only objective is to protect the current regime at any cost. Any cost to the public, that is. And the more money squandered, the better? All current occupants of city office need to be removed. Start with city mis-manager Tom Modica, mentored by Pat West.

Almost all of the long time Long Beach elected officials like Laura Dowd said they supported term limits when they originally ran for election, much like Russian President Vladimir Putin and Chinese President President is Xi Jinping. And once they were in office, those same Long Beach elected officials, much like Putin and Xi Jinping eliminated term limits so they could rule their kingdom forever. While not originally in favor of term limits, I can now see their need to prevent evil dictatorships.

I agree with the RSM conclusion that there is NO clear evidence of misappropriation.This is straight out corruption and embezzlement!!!!. Of course the City Attorney Charles Parkin "concurs with the conclusions and recommendations contained in the (RSM) report and is not currently conducting any further investigation into this matter". Because they help these corrupt city thieves!! Am more than sure that this racist city attorney would've have surely filed charges on this person if the suspect was of person of color!!, But no this "CAUCASIAN" lady is assisted with the theft of over a million tax payer dollars. I guess here in the LBC justice is not blind, just color blind. The city attorney is a dirty corrupt office, but not surprised the LBC is a corrupt organization. SMH

Well, once again, a half-truth is a whole lie. Next to paying for something in advance and having no contract, RFP, RFQ proforma, or perspectis, or work order to track progress is intentionally deceptive.
The report says they cannot tell what these consultants/lobbyists were paid for. What they did do was flimsy at best. I call them lobbyists because they were obviously asked to do these things for Doud representing her office. They were a consultant paid for who knows what? So, If money was kicked back in goods and services there is a conflict of interest and that is where form 700 should be talked about because of her special interests. If money came back to her it is a kickback and fraud. We do not know how the dollars were dispersed because there is no way to follow where the money went. Seems there an equal number of skimming by what was done by RSM too. There is also, depending on how it was utilized, no reasonable way to find what else it was used for. A second guess is maybe a shot in the dark.

It is a fraud, or downright embezzlement to utilize taxpayer dollars for more or less ongoing personal activities under the Auditor's control. That might include campaign consulting during work hours from the Davis group. They were her campaign managers when she first ran and was elected. They have never been too far behind in guidance or sway since she was elected. A pretty sweetheart deal if you ask me. Sure an elected representative of the city can enter into these unusual contracts with little or no scrutiny. She basically held the purse strings and direction of how things were spent. However, being an independent elected auditor you would think policy and procedures would be in place to prevent that type of skimming and be available not only for auditing but for monitoring the dollars that are paid to an outside consultant for certain contracts. A look at personal service contracts based on the knowledge of the Auditor and City Manager also comes into play to see what is completed. The logical conclusion on some of these things is like the 23 Million she was attempting to locate from Urban Commons and the Queen Mary. Now you see it...Now you don't
Gifting of taxpayers' dollars is also a crime. So are the City correspondence missing that were sent from her Yahoo mail and any other communication with Gagen or the Davis Group. Makes you wonder what other candidates received sevices from either of these two consulting/lobbying groups. One last question, where are filings for being a lobbyist? What happened to the financial guru's that moniter these things or the ethics commission. They could not take a look? If they were working on Calpers, who spoke to Sacramento and the retirement account if Doud needed that much guidance for over 15 years regarding our underpaying of CALPERS?

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