More Arrests Possible in City Payroll Inquiry

A Huntington Beach police investigation into alleged overtime abuse by a city supervisor could lead to more arrests and has revealed other possible payroll abuses in the Public Works Department and a lack of internal purchasing controls, according to officials and court documents filed in the case.

Up to now, City Council members have maintained a hands-off attitude toward the police inquiry, allowing the investigation to proceed without any council involvement.

But on Friday, after council members heard portions of court documents describing a lack of financial oversight, some were shocked by the broader implications of mismanagement and vowed to take corrective action.

“I was floored,” said Councilwoman Debbie Cook, who plans to discuss the matter at today’s meeting. “None of us on the council will let this go by.”

“It sounds bad, but there is a police investigation going on, and we don’t want to tip off [other suspects]. All I can say is, it’s not over,” Cook added.

Jerry Dilks, a supervisor in the city’s Public Works Department, was arrested by police at his home in Temecula on suspicion of billing the city for more than $5,000 in overtime that authorities allege he did not work.

Dilks and Robin Walters, a payroll technician, have been put on administrative leave. Ongoing personnel and criminal investigations could lead to disciplinary and criminal charges against other employees, police and city officials said.

In an affidavit attached to a search warrant for Dilks’ residence, the 20-year department veteran was depicted as having exploited weaknesses in the public works purchasing system for his own benefit. City council members requested copies of the affidavit Friday.

The document was prepared by Jeffrey Nelson, a police detective, to secure the search warrant, which was signed by Superior Court Judge Michael S. McCartin. Police seized heavy-duty shelving, tax and business records and other documents from Dilks’ home.

In one scheme described in the search warrant affidavit, Dilks allegedly circumvented the city’s normal purchasing controls to buy a 60-foot steel shed for $49,000 -- double its market value -- from a private firm that then sold Dilks a similar but smaller shed for use at his Temecula property at less than half the cost.

Dilks was also suspected of taking $1,397 in heavy shelving and a $600 portable generator, which he would periodically bring to work for servicing by a city mechanic, the affidavit says.

When confronted by police, Dilks reportedly admitted the thefts, saying he “was experiencing money problems at home,” according to the affidavit.

Police launched their original investigation based on tips from city employees. It was not the first time that Dilks had been under suspicion.

A previous investigation did not result in any disciplinary measures against Dilks, which made some Public Works employees hesitant to complain about him to city officials.

During the current investigation, the affidavit says, Dilks was kept under police surveillance at his Temecula residence, where he was regularly seen on days that he charged the city for up to nine hours of overtime.

When police detectives tried to verify overtime charges Dilks had submitted in the past, they were stymied. The city’s computerized payroll system showed only the total hours he had worked during any two-week pay period.

They learned that Walters, the payroll technician, had been illegally destroying time cards for the department’s 267 employees immediately after their totals were entered into the computer system.

City officials could not immediately explain how a lower-level supervisor such as Dilks could buy such an expensive item as the steel shed -- so large it exceeded compliance with a master plan for the city’s corporate yard -- without going through a competitive bidding process.

By contrast, county government has a policy that allows “sole source” or non-bid contracts only for purchases under $25,000.

Items costing more than that must go through a bidding process and be approved by county supervisors.

City officials said they had a similar policy, but none could recall the dollar limit for “sole source” purchases.

“We have a variety of controls in place that are required when you can go to sole-source process, and you do have to meet criteria,” said Assistant City Administrator Bill Workman.

“But the process, at least in this case, was complicated by a personnel investigation that was going on at the same time.”

Workman said city administrators cooperated with police during the investigation of Dilks, other city employees and the purchasing procedures at the Public Works Department.

Cook insisted that the council will get answers to its questions.

The problems with purchasing and payroll safeguards at City Hall are especially troublesome in view of $7.5 million in budget cuts the city made because of a budget shortfall.