The Costa Mesa Sanitary District has launched an investigation into potential overbilling by its consultant engineer that could add up to tens of thousands of dollars, officials said Friday.
However, the district’s finance manager said he believes such overbilling could exceed $200,000 over the past five years and that the district investigation doesn’t go far enough.
At the heart of the inquiry is billing submitted by Rob Hamers — an outside contractor who serves as district engineer — for sewer system inspections in the past three fiscal years.
A recent review showed that a person working for Hamers recorded more than 2,400 billable hours in fiscal 2016-17 and more than 2,100 the year before that, according to district General Manager Scott Carroll. A typical work year is about 2,000 hours, he said.
“We want to know, ‘Is there more going on like that? What was the cause for those hours to be so high?’” Carroll said Friday. “That just seemed a lot of hours for one person.”
The billable hours submitted for 2017-18 were less than 2,000.
The sanitary district has retained Crowe Horwath LLP to do a forensic financial analysis and law firm Best Best & Krieger LLP to interview everyone involved, Carroll said.
The goal, he said, is to “get our ducks in a row. Let’s do an outside investigation, find someone that’s unbiased and let them look at it and come to a conclusion.”
In light of the investigation, the district has hired another firm for inspection services, though Hamers continues to do engineering work, Carroll said.
Hamers, who has been a consultant with the district since 1981, denied any overbilling. The hours in question, he said Friday, were submitted by an independent contractor he retained to perform inspections. He has no reason to believe the information is inaccurate, he said.
A higher-than-expected number of hours, Hamers said, could be explained by night work or time-consuming activities such as responding to a sewer spill.
Had he suspected any overbilling, Hamers said, he “certainly would have stopped” it. He added that the rate he charged the district for inspections — $70 an hour — is well below what other companies would for the same work.
Carroll said the matter originally came to his attention in July after he asked district Finance Manager Steve Hodges to examine billing hours for inspections in light of the district ending its sewer lateral assistance program, which offered financial incentives to encourage residents to maintain their lateral sewer lines.
However, Hodges said Friday that when he raised the overbilling issue, Carroll told him “not to do anything because of Rob’s relationship with the board” and that “a similar message continued over the next month from multiple parties.”
“I am extremely disheartened to see the district go to such extremes to cover up the possible misuse of public funds,” Hodges said in a statement. “I have an obligation and fiduciary responsibility to the ratepayers in our district to see that this matter is investigated properly and transparently.”
Based on his own calculations and investigation, Hodges said he believes such overbilling could exceed $200,000 over the past five years.
Hodges was placed on paid administrative leave this month for what Carroll characterized as a personnel matter unrelated to the investigation.
Hodges alleged “the district has yet to provide me or my attorney any explanation toward any alleged violation” and claimed he has been “illegally retaliated against and had my reputation tarnished with slander.”
Carroll countered that Hodges’ attorney “refuses to contact our investigator.”
Carroll also denied telling Hodges to drop the matter and said the decision to move forward with the investigation was made Aug. 28, before Hodges was placed on leave.
The investigation could wrap up in the next few weeks, Carroll said, though the time frame “all depends on what the forensic analysis finds out.”
Hamers said “we’ll just have to see what happens.”
“Everything is up to the board,” he said. “Whatever the board desires I’m fine with. ... I’ve been here for so long and I’ve kept my rates so low because I like the work and it’s been great.”