Board settled Beck lawsuit : Two workers accused him of trying to cover up alleged misuse of city funds. He was cleared of wrongdoing.

Los Angeles Police chief-designate Charlie Beck is widely admired as a capable manager who has tackled some of the department’s thorniest issues with a steady hand and a disarming personality.

He is credited with cleaning up the Rampart Division, ferreting out disarray in the crime lab and championing greater transparency and accountability in the department.

But a Times review of court records found one incident over his 32-year career in which Beck was accused of mishandling a crisis, stifling reform and covering up the misuse of taxpayer money.

The allegations, which Beck denies, were never proved. They involved Beck’s role as a board member of the Los Angeles Police Relief Assn., a nonprofit that receives millions of dollars a month in city subsidies to manage health benefits for most of the city’s police officers.

Beck was president of the board -- a volunteer position -- nearly a decade ago when two former employees filed whistleblower lawsuits alleging that they were pushed out after uncovering mismanagement and misconduct.

In an interview Friday, Beck acknowledged there were administrative problems at the association. He said he had acted properly, and he pointed out that a city audit and police internal affairs investigation cleared him and others of any wrongdoing.

Police Relief eventually settled the lawsuits out of court for more than $1.2 million, according to sources familiar with the terms, which are covered by nondisclosure agreements.

Asked why the cases were settled, Beck said it was on the advice of the board’s attorneys: “Sometimes it’s in the best interests of the organization.”

Beck joined the unpaid board of the Police Relief Assn. in 1994. His father, LAPD veteran George Beck, had also served on the board of the organization, which was founded in 1919 to provide support and services to the widows and orphans of fallen police officers and later began to administer health, dental and death benefits for most police officers.

Little had changed over the years. Though the association’s membership had swollen to some 15,000 members, recordkeeping was still done mostly by hand and the archaic membership database occasionally listed dead or retired officers as active members, records show.

Those problems and others were exposed shortly after the board learned in 1999 that its executive director falsified her overtime and vacation benefits. As board president, Beck fired her and encouraged his colleagues to hire an old friend, Ramona Voge, as the new executive director. Beck knew Voge from their days working together at LAPD’s Internal Affairs Group, where she was a civilian employee.

At the time, Beck believed she was a “strong supervisor” who could help “straighten out” some of the administrative problems the board had become aware of, he said.

Voge soon discovered the problems were even worse than the board had imagined, according to her lawsuit.

Some officers were not getting the benefits they deserved, she found, while some board members were receiving too much. She figured out that the association had overbilled the city as much as $500,000 a year and that a recent board election had been rigged by staff.

When she urged the board to be more transparent about the organization’s finances, she alleged that Beck told her she had been hired to “stand firm against any attempts by the city” and the police union to delve into the organization’s finances and operations.

The tension between Voge and the board came to a head in October 2000. Voge said she warned the board that the problems with the membership database might be discovered by city auditors. Two days later, Beck and another board member gave Voge a negative performance review and placed her on administrative leave, saying she had lied to board members, court records show.

Beck later attempted to negotiate a severance agreement. When Voge declined the offer, she was terminated by the board, which cited her alleged dishonesty.

The unrest at Police Relief sent ripples through the upper ranks of City Hall and the police administration. The LAPD launched an internal affairs investigation but found no merit in Voge’s allegations, Beck said. The city controller also decided to investigate Voge’s allegations in an audit of the association. The decision was highly sensitive, former city officials recall. An outside firm was hired to conduct the audit, and its work was overseen by a task force that included members from the city’s pension and personnel departments and the controller’s and city attorney’s offices.

As Police Relief prepared for the audit, Voge’s deputy, Irma Perez, alleged that board members were trying to cover up its problems. In her lawsuit, she described an early 2001 board meeting in which she alleged Beck told her to falsify information that was to be provided to city auditors.

She said in her lawsuit that Beck instructed her to create two accounting tables: one that listed what the association billed the city for member benefits, and a second that listed what it actually spent. At the time, the city was not aware that Police Relief often collected more than it spent, keeping the surplus of millions of dollars in a “medical reserve fund,” records show.

Perez’s complaint quotes Beck as saying, “We are not giving the city back the money, we are going to take care of the officers.” Perez refused to complete the task and quit when she faced retaliation, her lawsuit alleged.

Beck on Friday called Perez’s allegation “an outright fabrication.” He said he had no recollection of instructing her to create the documents and “would never tell someone to prepare two sets of documents or lie to the city.”

He also said Voge’s allegations were untrue or overstated. The board discovered the overbilling and voluntarily reimbursed the city, he said, and the benefits received by board members were “allowable.” Voge’s claims about the rigged election were never proved, and the organization’s financial information was readily available to both the city and the union, he said.

Voge would not comment on the case, and Perez was traveling outside the country and could not be reached.

City auditors spent several months combing through the association’s books. Several former city officials said the organization stonewalled the auditors and was unusually secretive, even for a private organization. “It was one of only two times in eight years and close to 170 audit reports that I was forced to resort to using the office’s subpoena power,” said former City Controller Laura Chick.

The audit was released in October 2001 with Chick declaring that the association was “not a well-run business.”

“The management should be ashamed and embarrassed of themselves,” she wrote.

Her audit found that the association had provided excellent benefits but overbilled the city by $1.3 million, an amount the organization had identified and repaid before the audit was complete. The audit also found that the membership database had an error rate of 36%, including technical problems that would not have affected billing.

Beck disputed the figure at the time as “highly misleading” and told reporters that the management problems were due to Voge, a “disgruntled employee” whom he had fired.

The audit also discovered the medical reserve fund, which at the time contained about $20 million. Then-City Atty. Rocky Delgadillo’s office said Police Relief had violated its fiduciary duties to the city by not disclosing the fund.

The money -- and the “illegal, undisclosed profits” it had generated over the years -- belonged to the city, Delgadillo argued.

The association disputed the city attorney’s contention and never returned the money. City officials dropped the matter, concluding that the funds would offset future premium increases, in effect saving the city money, a city official said Friday.

By most accounts, Police Relief is today much better managed. Beck remains on the board but is expected to step down if confirmed as police chief by the City Council on Tuesday.

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jason.felch@latimes.com