County Begins Probe of Alleged $145,000 Theft From Fire Dept. Fund

Authorities are investigating the reported embezzlement of at least $145,000 from the Los Angeles County Fire Department over a year or more, The Times has learned.

The probe is being conducted by investigators from the county’s chief administrative office, the auditor-controller’s office and the forgery-fraud detail of the Sheriff’s Department.

No charges have been filed, but the prime suspect under investigation is a Fire Department accountant, according to court documents filed in the case.

County Fire Chief John Englund declined to comment on specifics of the probe. “It’s out of our hands,” he said. “It’s in the hands of the Sheriff’s Department.”

The alleged embezzlement involves the manipulation of a petty cash fund used to pay minor expenses for such items as miscellaneous hardware and supplies incurred by firefighters at more than 160 fire stations throughout Los Angeles County.

Shifted to Bank

The revolving petty cash fund was administered by the Fire Department but was maintained at the F & A Credit Union, 5051 3rd St., which serves county firefighters. The account has since been shifted to a commercial bank.

The petty cash account was designed to fluctuate within prescribed limits--never exceeding $6,000--as money was withdrawn to pay expenses at fire stations and then was reimbursed by the county auditor’s office.

When suspicions about the fund’s operation were voiced in late summer, a Fire Department accountant investigated and told a sheriff’s detective that money had been deposited in the petty cash account in amounts exceeding the limit and was then transferred by wire to accounts in several financial institutions.

Some of the deposited checks were greater than the $6,000 limit and did not come from the county to reimburse firefighters’ expenses, the Fire Department accountant said. Instead, the payments appeared to have been checks from outside organizations to pay for fire protection services.

Authorized Signers

According to a search warrant affidavit filed by Sheriff’s Detective Bobbie McDonald, there were four authorized signers of the petty cash account. But, she said, William Paternostro, 39, an accountant who had worked for the Fire Department since 1976, was the only one of the four empowered to transfer funds by wire.

“Beginning in August, 1986, wire transfers started transferring funds from (the) petty cash account into (the) suspect’s accounts,” the affidavit said. “As of July 15, 1987, evidence reveals approximately $145,000 in questionable wire transfers.”

McDonald secured a search warrant in Municipal Court late last month and, in cooperation with Los Angeles police, searched the employee’s Highland Park home.

According to a report to the court on what was taken from the home, investigators seized F & A Credit Union deposit slips and checks, automatic teller deposit slips, and statements and canceled checks from Bank of America.

Records Sought

The search warrant also listed the numbers of more than a score of accounts in two banks and two savings and loans that investigators suspected were linked to Paternostro. The financial institutions have been asked to produce their records.

Paternostro has been transferred from his accounting post to a job as a clerk in the Fire Department’s Hazardous Materials unit. Reached there by telephone Tuesday, he said, “I have no comment.”

After discovering the possible embezzlement, the Fire Department asked the county’s auditing office to advance a scheduled department-wide review of its accounts. That audit is under way.