L.A. County auditors find widespread fraud

Los Angeles County auditors substantiated 101 instances of fraud during the last six months of 2009, uncovering cases large and small in which taxpayers were cheated, according to a report released Wednesday.

FOR THE RECORD:
County audit: An article in Thursday’s LATExtra section said that a county audit had identified Los Angeles County Fire Department Chief Helen Jo as having received a written reprimand for mishandling a personnel case. She was not the person reprimanded. The case involved the department’s hiring of the future son-in-law of a high-ranking county employee. The audit, which was released Wednesday, did not name Jo. It stated that a “fire manager” had received a reprimand. —

The county’s fraud hotline typically receives about 500 tips every six months. The latest report was unusual because it found misconduct that touched the highest levels of the Fire Department and the office of the county’s chief executive, as well as hundreds of thousands of dollars in fraud.

Fraud hotline auditors said that since July 2009, they found more than 360 tips either to be unsubstantiated or otherwise resolved. As of the end of 2009, more than 630 cases remained open.

The violations reported to the county’s fraud hotline include improprieties related to overtime, supplies and other misconduct. In several cases, county employees were found to have viewed Internet pornography on work computers, which is not allowed.

Among the most serious findings:

• A Department of Public Social Services employee obtained the personal and confidential information of 82 welfare participants and used the information to file fraudulent income tax returns for refunds totaling at least $100,000. The employee, Trang Dinh, was fired after the alleged conduct came to light, auditors said.

“He got this information during home visits and from the department’s computer system,” said Guy Zelenski, chief investigator for the auditor-controller. “He told us he was trying to pay off gambling debts.”

The 82 welfare recipients whose confidential information was breached have been informed by the IRS, and Zelenski said investigators are reviewing additional cases before filing charges against Dinh.

• The county paid hundreds of thousands of dollars to a janitorial services contractor, Grace Building Maintenance Co., for services never performed. The contracts with the Beaches and Harbors and Public Library departments were canceled, and owner Beong Jeong was convicted of a felony and ordered to surrender all rights to his personal residence to the county and pay restitution of $842,000.

• Three senior Fire Department managers played golf during county work hours but claimed a full day on their timecards, according to investigators. One of the employees also recorded overtime for that day, the report said. Two of the employees were not disciplined because at the time, Fire Department rules allowed them to report they had worked full shifts if they worked at least one hour, a practice that has since been changed.

Fire Chief Michael Freeman said all employees involved had worked extra hours on other days, and he disputed the auditors’ findings, particularly that one of the managers had been disciplined by his department. “There was no disciplinary action on any managers because there was no wrongdoing,” Freeman said.

After speaking with Freeman, the auditor-controller’s office said it had incorrectly reported that one of the managers received a letter of reprimand.

The audit also reported for the first time that Fire Department Deputy Chief Helen Jo had received a letter of reprimand as a result of her involvement in the hiring of the future son-in-law of a high-ranking county executive. The employee, Ed’ward Rhone, got a salary and employee benefits that were too high for his position.

The report also found that Sharon Harper, then the county’s second highest-ranking employee, gave her daughter’s then-fiance preferential treatment.

According to the audit, Rhone has since been transferred to a more demanding job in order to justify the salary, and Harper, who had been demoted, has retired.

The circumstances surrounding Rhone’s hiring and the involvement of Harper on his behalf were first reported by The Times in November.

Wednesday’s report did not name the individuals involved in the substantiated misconduct cases, but The Times was able to confirm many of their identities through interviews and county documents.

garrett.therolf@latimes.com