Thursday, January 3, 2008

Court Upholds Corrections’ Finding that Contractor Misused One Million in Taxpayer Dollars

SACRAMENTO – A contractor for the California Department of Corrections and Rehabilitation (CDCR) accused of misusing taxpayer dollars in violation of state protocols must return over $1 million in fees and equipment, according to a December 28, 2007 ruling by the Sacramento Superior Court. The court upheld earlier findings by an Administrative Review Committee (ARC) appointed by CDCR which found that the Amity Foundation must relinquish ownership of a half-million dollars in seized production equipment and pay more than a half-million dollars for unallowable purchases and operating costs.

“The court’s action was a resounding victory for state taxpayers, and should send a clear signal that contractors will be held accountable if they violate state protocols,” said Richard Krupp, CDCR Assistant Secretary Office of Audits and Compliance. “The Department is proactively reviewing our agency’s contracts to ensure that we are getting what we pay for. The Office of Audits and Compliance will be relentless in its efforts to help the department improve operations. The work of our audits staff and of our prosecution team in this case should be commended.”

On November 15, 2006, CDCR’s Office of Audits and Compliance completed an audit of the Amity Foundation sighting over $1,082,517 in un-allowable purchases and operating costs. The audit revealed that the Amity Foundation used CDCR funds to purchase video equipment, pay for executive moving expenses, purchase rugs, purchase air conditioners and add fringe benefits, all outside of the scope of the contract signed with CDCR. Amity appealed the audit findings, and CDCR assigned an Administrative Review Committee to further look into the matter.

The ARC determined that Amity was responsible for the following costs:

  • Amity purchased $441,277 in video equipment; ARC concluded $1,392 of that should be returned.
  • Amity had $288,995 in unallowable operating costs; ARC concluded $288,955 should be returned.
  • Amity charged $97,570 in sub-contractor costs; ARC concluded $97,550 should be returned.
  • Amity had $31,288 in subsequent costs; ARC concluded $31,288 should be returned.
  • Amity had $25,554 in excessive fringe benefits; ARC concluded $25,554 should be returned.
  • Amity had $3,772 in unallowable salaries; ARC concluded that $3,772 should be returned.
  • Amity claimed $194,101 in indirect costs and service fees; ARC concluded that $98,676 should be returned.
Ultimately, the ARC determined that Amity should return $547,207 to CDCR, in addition to the relinquishing any ownership of approximately $500,000 worth of video equipment that was confiscated by CDCR. The Superior Court Judge reduced amount of money to be returned slightly, but upheld that more than $500,000 was owed to CDCR.


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