A week after news first broke that $1.7 million had been embezzled from Santa Barbara County Public Works funds, county officials are still unclear exactly what went wrong. They ordered a forensic audit by an independent accounting firm. County Executive Officer Mona Miyasato pledged to “get to the bottom of this” and “ensure full accountability” for those responsible.
The scandal surrounds longtime Public Works accountant Lynn Hogan, who for the last nine years allegedly issued at least 235 checks to a complex web of friends and relatives. These individuals, who had no apparent connection to the department, received refund checks ranging from $5,000 to $10,000 in the mail or in person, which they then cashed. Nearly half the refunds, which totaled $670,000, were allegedly laundered through the Tri-Valley Youth Football Conference, where Hogan has served as secretary, according to the report.
Eight individuals have also been charged with conspiring to misappropriate public funds: Wendy Anzivino Puchli, Michele Lavin, Richard Kaplinski, Vincent Anzivino, Michael Elliott, Christina Huffman, Leanna Harada, and Michael Anzivino. Puchli, who previously worked at Vandenberg and relocated to another U.S. Air Force base in Wyoming, received 46 checks and apparently was the nucleus of the group, according to the investigation. Most defendants, though, live in Oxnard, Ventura, and Lompoc. On Monday, Hogan and the eight codefendants appeared one by one in jumpsuits behind the protective glass in Department 8. Judge Clifford Anderson released most of the defendants on their own recognizance.
Prosecutor Brian Cota told the court at least part of the stolen money was used to buy prescription painkillers. He declined to discuss details, citing the ongoing investigation. Public defender Deedrea Edgar, who represents Hogan, also declined to comment.
Exactly how an employee got away with issuing hundreds of false checks to individuals with no apparent connection to Public Works raises questions about the department’s oversight and internal audit process. It is worth noting, however, that Public Works brings in about $100 million annually, significantly more than most county departments, potentially making it easier for these refunds to go unnoticed.
CEO Miyasato said the county would work with its insurer to try to recover the lost funds, adding, “We are aware that a criminal charge is an accusation, and any defendant is presumed innocent until and unless proven guilty.”
As the main accountant for three large trusts, including Flood Control, Public Works Surveyor, and Clean Water Plan, Hogan was authorized to issue refund checks to clients or vendors. She allegedly used false single-payment forms — known as “999s” — multiple times. They are supposed to be used just once.
For certain checks picked up at the Auditor-Controller’s desk, Hogan needed electronic approval from her supervisor, Mark Paul, who retired in March. Hogan could have stolen Paul’s username and password to electronically approve the checks, the report alleged. Employees using the electronic system known as FIN do not have to change their password.
Although he is not implicated for any wrongdoing, Paul is named in the report. Investigators plan to interview him. This case is not the first time Paul has been involved in a public finance scandal. Twenty-two years ago, when he worked as the finance director for the City of Santa Barbara, Paul agreed to resign after city officials stated he failed to disclose he put $37.5 million into a risky investment pool in Orange County, according to media reports at the time. The enormous failure affected many California cities and counties. After working in the private sector for several years, Paul was hired by the county’s Auditor-Controller in 2003 and transferred to Public Works in 2009. He declined to comment for this story.
A county employee since 1988, Hogan had worked for the county since she was 19 years old. County Public Information Officer Gina DePinto declined to comment on any disciplinary records. But according to a review of Hogan’s various management and administering positions held during her tenure, she was reassigned at one point to a lower-level position. She also reportedly worked from home for some time. She currently lives in Santa Barbara with her 85-year-old mother and two teenagers. The case returns to court on September 29 for arraignment.