Will Great Park Contractors Sue Irvine Over Flawed Audit Claims

Jeff Lalloway and Christina Shea with Irvine Mayor Steven Choi-2014
Jeff Lalloway and Christina Shea with Irvine Mayor Steven Choi-2014
Jeff Lalloway and Christina Shea with Irvine Mayor Steven Choi-2014

The Voice of OC has a story on some of the misinformation used to paint a very negative portrait of the Great Park — and those claims were exploited for political purposes by Irvine’s Republicans. And frankly, given the sloppy work on HSNO, I’m wondering when some of the Great Park contractors will file suit against HSNO and the City of Irvine for defamation as the city prepares a lawsuit to hold former council member Larry Agran in contempt for failing to answer questions about campaign supporters and volunteers.

From the story:

Early last year, auditor Christopher Money presented an audit of the Great Park’s contracts to the Irvine City Council that suggested gross mismanagement of Orange County’s most notorious public works project.

His two-hour narrative included $12,000 spent to change just one word in a groundwater report; a politically connected consultant not being vetted; duplicate billings and project studies performed twice for no apparent reason.

The story left most observers in the room reeling, and the headlines next morning were sensational. But lost amidst the ongoing controversy – and the release of more audit reports – was the fact that some of the most damning findings were either false or baseless.

In fact, the forensic accounting firm that conduced the audit – Newport Beach-based Hagen, Streiff, Newton & Oshiro Accountants – officially withdrew those findings, which they have since emphasized were only “preliminary.”

There was no $12,000 contract change order to alter a single word; no project feasibility studies were done twice; the consultant was actually vetted; and the finding about duplicate billings was ultimately deemed “inconclusive.”

But the damage was done. The owner of San Diego-based Gafcon, one of the consultants and primary targets of the audit, told a state legislative committee that the firm hasn’t been able to attract any new business since the erroneous conclusions were reported. Voters ousted longtime council leader Larry Agran, and the Orange County District Attorney’s office launched a criminal investigation.

The $12,000 one-word change on a groundwater reporter was widely shared on social media by Irvine Republicans as were claims of misplaced money quickly resolved upon actual questioning.  Let’s not forget, HSNO had a $240,000 contract to conduct a Forensic audit that they later reported wasn’t an audit at all.  There were supposed to provide 30 day written status reports and never did that.  And they didn’t even contact designer Ken Smith, the principals of Forde & Mollrich, or Gafcon until about a week before the final report was supposed to have been submitted in the fall of 2013.

Most troubling is the city’s insistence that Forde & Mollrich open their entire company to review by the city — including clients that have nothing to do with their work for the Great Park or the City of Irvine.  Mayor Pro Tem Jeff Lalloway is a lawyer familiar with client confidentiality. Imagine for a moment. he’s your lawyer and suddenly, one of his angry former clients is demanding to review your file?

Back to the story:

“Wayne Kalayjian, senior manager at Deloitte Financial Advisory Services, said there are basic standards that auditors should meet when undertaking an investigation similar to what HSNO did with the park contracts.

For one thing, said Kalayjian, who also disclosed that he is part of a consulting team that includes Gafcon on another project, auditors should allow the client of an audit to see a draft audit report before its made final, so that basic mistakes aren’t made.

“You have to be prepared to bounce these facts off of people to make sure you’re getting an accurate assessment of what happened,” Kalayjian said. “We [at Deloitte] do not publish reports prematurely. We take that very seriously.

“The first thing you’ve got to remember is it’s very sensitive information. People’s reputation, their careers, their way of life, the way they make their living, are potentially at risk.”

Ellzey’s reaction when the initial audit report was presented publicly indicates that the findings weren’t completely vetted through city staff. At the council meeting, Ellzey said some of the findings were “inaccurate” and although “not necessarily the fault of the auditors… it would have been nice to be asked.”

“Some of these findings didn’t need to see the light of day,” Ellzey said. “Five minutes and they could have figured this out, if they had asked.”

Another point of clarification was a finding that auditors couldn’t locate $38 million in redevelopment funds. In the initial report, the wording made it seem like the money couldn’t be accounted for, an impression Money said was unintended. At the meeting, city staff gave a detailed answer about where the money went.

Predictably, Lalloway weakly defended his auditors and Shea wouldn’t return a call for comment.  Funny how when the story doesn’t break their way, their either guarded or missing in action.

For OC Democrats attending next weekend’s Democratic Party Convention in Anaheim, when you run into Kamala Harris, a candidate for US Senate and California AG, ask her to investigate the Irvine GOP Council majority for this taxpayer funded political witch hunt.  Believe me, I will ask her to.