$365,000 Missing From Jobs Agency : Audit: State investigators may be called in to check 1989 loss at Mid-Valley Manpower Consortium.

State auditors may soon be called in to help account for $365,000 missing from year-end budget audits at an El Monte-based job training agency.

The job training funds were apparently wiped off the books of the Mid-Valley Manpower Consortium in the space of a day, said Mid-Valley attorney Michael Colantuono. A fiscal year audit ending June 30, 1989, listed the $365,000. But the next year’s audit, beginning July 1, 1989, did not include the money, he said.

But the lawyer added that without further examination, the Mid-Valley board cannot know if the discrepancy is merely a clerical, paper error or an actual loss of funds.

Mid-Valley, a nonprofit agency with a $3-million annual budget to train 1,000 adults and youths, already is being investigated by the federal Department of Labor for the possible misuse of $230,000. The amount includes more than $120,000 paid to two Bradbury city employees over a six-year period, allegedly in violation of federal Job Training Partnership Act regulations. The two workers were listed as Mid-Valley employees, when they actually worked for the city of Bradbury.

Other alleged illegal spending includes use of Mid-Valley gasoline credit cards for personal trips, cash withdrawals from various accounts and use of Mid-Valley credit cards for such non-business items as Las Vegas hotel stays and gambling at Santa Anita Race Track.

The consortium’s former executive director Douglas Shaw, fired by the board July 9, could face criminal felony prosecution for the alleged misuse.

The $365,000 accounting discrepancy was discovered earlier this year. But the agency, which already is paying more than $40,000 for an audit of other records, lacked money to undertake another investigation, Colantuono said.

However, auditors from the state Employment Development Department recently indicated that they may be able to begin examining Mid-Valley records at state expense. Colantuono said Mid-Valley now just needs to indicate its willingness to have the auditors undertake the examination for work to begin. He said he expects the agency to agree to move forward with the probe.

The expanded investigation comes at a time when federal investigators are also broadening their examination of the agency.

In an apparent repetition of the scenario in which the two Bradbury employees were illegally paid with federal funds, an El Monte city employee is now suspected of also having been illegally listed as a Mid-Valley employee. He could have been paid as much as $18,000 from 1986 to 1992 in violation of federal funding rules, said sources familiar with the investigation.

Meanwhile, about five other people may have been fraudulently listed as Mid-Valley employees in order to receive medical benefits, sources said.

Richard Burriel, a federal investigator with the San Francisco office of the inspector general assigned to the case, declined to comment on these allegations, as did Mid-Valley’s acting executive director, Dan Garcia.

But Colantuono said Shaw earlier explained to the Mid-Valley board that the El Monte employee, Daniel Lindsay, was legally employed at Mid-Valley maintaining cars before he switched to working part time for El Monte and part time for the consortium.

El Monte Police Chief Wayne Clayton, whose department employed Lindsay as a mechanic, said Lindsay was paid legally by both agencies and that the agreement for part-time work was approved by the El Monte City Council. The employee has since gone on the city payroll as a full-time employee, Clayton added.

“This is not a Claudia Vestal situation,” Colantuono said, referring to one of the Bradbury employees whose salary was paid by Mid-Valley for a time.

Shaw is believed to have provided Mid-Valley money to pay for the salaries of Bradbury’s assistant city clerk, first Patricia Hutter and later Vestal. The payments were allegedly made as a favor to former Bradbury City Manager Aurora (Dolly) Vollaire, who is under investigation by the district attorney’s office for misuse of more than $80,000 in city funds.

As for those individuals who were fraudulently listed as Mid-Valley employees and received medical benefits, Colantuono said they paid Mid-Valley for the extra cost to be included under the agency’s health care coverage.

Said Colantuono:

“They (the insurance companies) got paid. We got paid. I don’t think there’s enough money at stake for them to care.”

Colantuono added that the agency has now begun reorganizing under new federal guidelines that will require a downsizing from 23 to 19 employees. All current Mid-Valley employees were given notices that they can be laid off and all are reapplying for continued jobs with the agency, he said.

Meanwhile, the board on Oct. 8 agreed with a hearing officer’s recommendation that Shaw was fired for just cause.

Shaw, 51, who headed the agency for 14 years, appealed the board’s action and asked for a hearing. But after three days of testimony, the hearing officer, a retired Superior Court judge, concluded that the board acted appropriately. Shaw could file a lawsuit for wrongful termination, but instead has asked for a cash settlement in exchange for not filing a lawsuit, said his attorney, Art Lindars. The board has yet to consider that offer, he added.

But, said Colantuono, “The chapter of our life related to Douglas Shaw is pretty much resolved.”