Treasurer, Aides Faulted for Absences During Audits
City Treasurer Leonard Rittenberg and some of his top investment officers were absent so often in the weeks surrounding a series of critical audits that they “reduced the effectiveness of operations” in a city department that manages $2.1 billion in city funds, according to the city administrative officer.
The absences continue as the treasurer’s office struggles to comply with a sweeping subpoena request for thousands of documents requested by a federal grand jury investigating Mayor Tom Bradley.
As senior treasurer’s office staff members feverishly arranged Friday for the first batch of documents to be delivered to federal investigators, Rittenberg left for Key West, Fla., to attend the weeklong convention of the National Assn. of Government Deferred Compensation Administrators, the mayor’s office said.
He was absent on eight of 28 working days between Aug. 10 and Sept. 19, according to City Administrative Officer Keith Comrie’s report Thursday to the City Council. Rittenberg could not be reached Friday for comment. He earlier said that he had the flu.
One of his investment officers, George Sehlmeyer, was absent 16 days during the same period and has yet to return to work. His attorney said Sehlmeyer has had the flu and dental surgery.
“There is no question the treasurer’s office is a mess,” said Councilman Zev Yaroslavsky who requested the report. “There is a problem in the treasurer’s office and it has not been resolved since all of this unravelled on them in the spring.”
The most recent of three city audits, by the city controller’s office on Sept. 18, found “major weaknesses " in the treasurer’s office, including violation of competitive bid policies and sloppy record keeping.
Rittenberg and Sehlmeyer were key figures in city investigations of Bradley’s relationship with Far East National Bank, which had paid the mayor $18,000 as an adviser in 1988. The mayor later returned the money.
In March, after the mayor talked to Rittenberg, the city reinstated a $1-million deposit with the bank and added another $1 million. Sehlmeyer later told a City Council hearing that he had noted on the Far East bid sheet that the deposit was being made “per the mayor.” Someone in the treasurer’s office obliterated the reference with correction fluid.
Deputy Put in Charge
Chief Deputy Treasurer Gerald Capodieci, who has been put in charge in Rittenberg’s absence, hunched over a personal computer terminal on Friday and said he was too busy to discuss the operations of the treasurer’s office. “I don’t usually type,” said Capodieci. “That tells you something.”
On Thursday, it was disclosed that the treasurer’s office has been hit with a subpoena from the U.S. attorney that requests “all notes, drafts, calendars, diaries, logs, account statements and other written material, photos, graphs, computer disks, tapes and other recordings,” relating to eight banks and brokerage firms that figure prominently in an expanding investigation of Bradley.
“It’s a lot of work, a major project,” said Rona Berns, administrative assistant to the treasurer, who was arranging stacks of computer printouts. “We’ve got to get some of this out today,” if the office is to comply with the Oct. 10 subpoena deadline, she said.
Cash Management Officer Henry Davis, who heads the team that invests the $2.1 billion of city funds, was clearly exasperated as he leafed through paper work on his desk. “I just can’t talk now,” Davis said in apology. “We’ve got to get these things out.”
Adding to the office’s problems, cash flow analyst William T. Hoss resigned in August. His replacement, according to Comrie’s report, “is on a steep learning curve” and has been absent five days.
Since March, when the city first launched an investigation of Bradley’s finances and conduct in office, the treasurer’s office and its senior officers have been under a nearly daily barrage of requests from local, state and federal investigatory agencies for documents, interviews and appearances at public hearings.
Efforts to comply with the U.S. attorney’s subpoena, the broadest of the requests, “will severely impact daily operations,” according to Comrie. His report quoted Deputy Treasurer Capodieci as saying that 60% of the work of collecting the required documents must be done by the small, three-man investment staff.
City investments appear to be safe, Comrie said, as only a small number of financial transactions are required each month. A large proportion of the $2.1 billion the office oversees is placed in medium- to long-term securities, which do not require constant reinvestment decisions, he said.
Yaroslavsky said Friday that the office has managed to keep a good return on investment but said he is concerned that poor management and morale could affect “our bottom line.”