Alameda Project Ex-Official Gives Her Side of Story

The former controller and chief financial officer for the $2-billion Alameda Corridor project said Tuesday that she committed an egregious error when she transferred $3 million in project funds into her personal bank account in February.

“This is all from the simple click of a mouse,” said Nancy Schafer, who was dismissed from her post at the Alameda Corridor Transportation Authority about a week after the transaction. “I don’t know how much longer I will have to pay for this.”

Although Schafer said she accepts responsibility for the mistake, she contends that other agency executives, who she says are charged with double-checking transfers of funds, may have failed to do their jobs.

In one internal memo she provided to The Times, Schafer told agency officials Feb. 25 that the checks and balances designed to control project funds are meaningless if people don’t use them. “Others might be negligent in their roles,” she wrote.

Schafer, of Dana Point, was removed from the job March 1. The Los Angeles County district attorney’s office and the corridor authority have been looking into the transaction to determine what happened.

Last week, the Los Angeles city controller’s office called for an independent audit committee to oversee corridor authority expenditures and contracts as the project heads into its most important phase.

In an interview with The Times, Schafer, a financial consultant, detailed her version of the events that led to her sudden departure from a job she had held almost two years.

She was responsible for managing hundreds of millions of dollars in government funds and bond proceeds earmarked for the main portions of the project. Her salary was $83,762 annually.

Major work is scheduled to begin soon on the most expensive element of the Alameda Corridor: a 10-mile concrete-lined trench that will contain two train tracks. Overall, the new rail and truck route will extend 20 miles from the county’s ports to transcontinental freight yards near downtown Los Angeles.

Schafer said the mistake occurred during the first two transfers of proceeds from the corridor authority’s sale of $1 billion in revenue bonds. About $3 million, she recalled, needed to be sent from a bond trust account to a corridor authority operating account, so contractors could be paid.

Two transfer requisitions, which Schafer supplied to The Times, show that the paperwork was prepared Feb. 19. The documents were signed by Schafer and Tim Buresh, director of construction and engineering on the project.

The requisitions, however, bear Schafer’s personal Bank of America account number, instead of that of the agency’s operating account.

Schafer said that before the requisitions were prepared, she had uploaded information from a Palm Pilot, a hand-held computer, into her regular computer at agency headquarters in Carson. Her Palm Pilot was supplied by the agency.

The uploaded information, she said, happened to contain her bank account number, appointments and credit card numbers. She said she kept those personal items in her agency-owned Palm Pilot as a matter of convenience.

Schafer said that Feb. 23, the day of the transfer, she called up what she thought were agency accounts on her office computer and mistakenly selected her bank account as the destination for the $3 million.

She said she did not recognize her own account number or realize that it could easily be confused with agency accounts because they too were at the Bank of America.

“My bank data somehow got uploaded from my Palm Pilot,” she said. “That is how it happened.”

Schafer said she did not consider her personal use of the Palm Pilot a breach of the agency’s financial controls. “It was human error,” she said. “Just a freak accident.”

According to Schafer, the transfer requisitions bearing her account number were sent to Buresh, corridor authority Treasurer James P. Preusch, the bond trustee and the agency’s investment managers.

Although an agency manual contained the appropriate corridor account number for bank transaction, Schafer said, apparently no one checked the requisitions for accuracy before the transfer was made.

“This is an example of how even the best system in the world can break down for a day,” she said. “I did everything in accordance with our procedures.”

Authority chief executive James C. Hankla’s only comment on Schafer’s remarks was: “Clearly, the controller has the primary responsibility.” He said he could not discuss the situation further because it is a personnel matter.

Sources told The Times last week that the Bank of America initiated steps to return the $3 million to the agency. But Schafer said she discovered the transfer during lunch an hour after the funds were moved.

Schafer recalled that she was trying to balance her checkbook and called the bank for account information. “It said I had a balance of over $3 million in my account,” she said. “I thought, ‘Oh, my God. Did I do what I think I did?’ ”

Schafer said she immediately called the bank, contacted the corridor authority’s top managers and arranged to have the money returned to the agency within hours.

Although Schafer said she uncovered the problem, sources said again Tuesday that the bank had started to look into the transfer independently of Schafer.

Schafer said she fully cooperated with an internal review of the transfer, offering her personal financial records for scrutiny.