Show Me the Money: Government Gone Wild
UPDATE: L.A. City Controller Wendy Greuel was already calling for a broader audit of the housing authority before our segment even aired. Below, see the letter she wrote to HACLA.
TRANSCRIPT: Val Zavala: Good evening. I'm Val Zavala. Tonight a SoCal Connected investigation into a government agency that spent hundreds of thousands of taxpayer dollars on lavish meals, cross country junkets and employee perks. That government agency is the Los Angeles Housing Authority — or HACLA — the very same agency that is in charge of providing housing for the poor. For months, SoCal Connected pored through thousands of expense reports, which left us with a lot of questions. HACLA's explanations... Well, you decide. Correspondent Laurel Erickson has our report.
Laurel Erickson [to Eric Brown]: Has anything changed?
Eric Brown/HACLA Intergovernmental and Media Relations Director: You’re going to have to wait till afterwards.Ken Simmons/HACLA Interim CEO: We're not going to be doing any interviews...
Patrice McConnell/HACLA Human Resources Director: No Comment!
Erickson: For months, we got the cold shoulder from HACLA, the Housing Authority Of Los Angeles, all the way until a special board meeting the day before Thanksgiving. More on that later…
Val Zavala [clip from original report]: Good evening, I’m Val Zavala. A major shake up at L.A.’s Housing Authority…
Erickson: Last March we exposed questionable spending at HACLA. It's a billion-dollar government agency charged with housing L.A.'s poorest residents. Two HACLA commissioners and its CEO, Rudolf Montiel, were ousted after our report.
Some thought the story ended there. It didn't for us. We obtained six years of expense reports from 2005 through March 2011, during the administration of Rudolf Montiel.
What did we find?
The spending went much deeper than we first reported.
&disc; Thousands of dollars in purchases at Bath & Body Works, Target, and Edible Arrangements…
&disc; $4,500 on Lands’ End sweaters…
&disc; And iPods, PSPs and iPads; all part of the $100,000 spent on what HACLA called “employee incentives.”
And executives dropped big bucks at swanky restaurants.
Over two years, HACLA execs ate $7,000 worth of steak and prime rib while having business meetings at Trader Vic’s, The Yard House, and Fleming’s.
But most of their working lunches were at Harold & Belle’s in South L.A. Over $14,000 was spent on meals at the restaurant since 2008.
Human Resources Manager Patrice McConnell spent the most. Look this $2,000 meal, or this $1,800 business lunch.
And current Interim CEO Ken Simmons held pricey power lunches of his own. He and these executives spent $2,200 at a lunch at Drago Centro. Why? Patrice McConnell said it was a "senior staff meeting." Eric Brown labeled the meal "public relations,” and Dave Esparza called it a "holiday luncheon."
And who can resist one of Langer's deli pastrami sandwiches? Not HACLA management. They spent over $12,000 on deli trays for their staff meetings; sometimes two in a day!
And in 2009 Patrice McConnell went to Rock’N Fish restaurant and hosted a staff retreat. The cost? $1,186.00.
And it was at the Cheesecake Factory where Patrice McConnell hosted one of her staff luncheons in 2008. The tab? $631. It’s one of dozens of high-priced working lunches she hosted over the years.
While local governments have been doing some budget belt-tightening, over at HACLA, they loosened their buckles under the weight of all those meals.
Bob Stern/ President of the Center for Governmental Studies: If you are here in Los Angeles you can go home, you can bring your lunch; you don't have to have meetings over meals. You can have meetings during the day. So that's the big question in my mind is, why are they eating so much here in Los Angeles, other than to support the Los Angeles restaurant economy?
Erickson: Intergovernmental and Media Relations Director Eric Brown showed his support, having over 70 business lunches in Los Angeles in 2010. One of them was in April at Fraiche, once called one of the best new restaurants in the nation by the New York Times.
A close look at Brown’s receipts shows he had business meetings on two Saturday nights in October 2010, both at Ruth’s Chris Steakhouse. He had another meeting on a Friday night at Wolfgang Puck’s restaurant, Cut. It ended at 12 a.m. and a two hundred and eighteen dollar tab.
Sometimes he ate out twice in a day, like June 3rd of last year. Truxton’s for lunch, Ruth’s Chris for dinner.
Dennis Zine/Los Angeles City Council: Here is again, Ruth's Chris, again, $76.95. The Yardhouse, $42.57. In all seriousness, this needs to go to the District Attorney’s Office Public Integrity Unit. This is outrageous.
Erickson: Los Angeles City Councilmember Dennis Zine reviewed the records we obtained. He is the chair of the Audits & Governmental Efficiency Committee.
ZINE: How about a limo? How about a Landry’s limo? $640 for a limo? Now how are you justifying a limo? The more I look at this, the more upsetting it gets.
But the big spending was on hundreds of trips to conferences and junkets.
Like this one in 2008. Members of the Jordan Downs Community Advisory Committee, LAPD, LAUSD, the Watts Neighborhood Council, and the Mayor's office — 20 in all — joined a dozen HACLA employees for a trip to Portland, Seattle, and Chicago to look at housing redevelopment.
The tour continued for some of them into 2009, with trips to Philadelphia, Washington DC, and Atlanta.
The cost of all of these trips? Over $100,000.
Wendy Greuel/Los Angeles City Controller: It seems clear from our preliminary review that they didn't have many rules, and too, if they had rules, that they weren't necessarily following them.
Erickson: Los Angeles City Controller Wendy Greuel is about to release audit of HACLA's travel policy, an audit that was prompted in part by our report in March. She couldn't share all of the details but she did tell us this:
Greuel: They spent $300,000 in 2009 and 2010 in travel expenses. A 300 percent increase from 2006. When we look at people who are going without homes, people that are not able to get Section 8 vouchers, to other social services … that is outrageous to me.
Erickson: We also discovered that some employees got cash advances to cover out of town meals, then went ahead and charged lunches and dinners on their HACLA purchasing card.
In August 2010, records show Patrice McConnell received a $319 to pay for meals and incidentals while in Washington DC. Her charge card receipts show she charged three separate dinners to her HACLA purchasing card during that trip.
John King traveled to Nashville in 2008 and got an $855 cash advance to cover meals and some expenses, then used his purchasing card to charge a $400 dinner.
In both cases, records did not show what happened to those cash advances...
Stern: When we are talking about taxpayer money, we want to make sure we get the absolute best bang for our buck. We don’t want lavish spending. But if we have spending, if we have trips, we want to know how are these trips being paid for, what are they doing with the money, and who is getting the benefit.
Erickson: HACLA records show 113 employees have purchasing cards — some with $15,000 limits. They charged:
&disc; $500 on two pink stuffed elephants
&disc; $7,000 on luggage
&disc; And over $8,000 to celebrate “Take Your Daughter and Son to Work Day,” a day topped off with a $500 feast at Benihana's restaurant in Beverly Hills .
Ron Kaye/Blogger: What's astonishing about some of this is that it's day after day after day.
Erickson: Blogger Ron Kaye has been a critic of HACLA's management for years.
Kaye: It’s hard to see anybody participating in that and not realize that it’s uncomfortable. At the least, at the least, I'd like to hear them say, “I went home and I told my husband, ‘You know, this is all so terrible. It's, I don't know why we do this, but I'm afraid to say anything. They’ll fire me.’"
Erickson: Remember, we reviewed expenses under Rudolf Montiel's watch. We wanted to know if anything had changed since Montiel was fired. We also had some questions about all that spending we've just told you about. But Interim CEO Ken Simmons and Media Relations Director Eric Brown refused our request for an interview.
So we came here, to HACLA headquarters to get some answers.
Remember that woman who didn’t' want to talk to us? It's Patrice McConnell.
Erickson [speaking to McConnell]: The expenditures that we showed, that you were responsible for…$8,000 for “Take Your Daughter to Work Day,” and the Cheesecake Factory, is that the kind of thing that is allowed under HACLA?
McConnell: No comment.
Erickson: Well, have a lot of things changed since you spent all that money?
McConnell: No comment
Erickson: And the other question I had is: it seems that you spent around $7,000 dollars at Harold and Belle’s Restaurant. Just curious, is there something about that restaurant that gets government work done faster than doing it in your office?
McConnell: No comment.
Erickson: We also tried to ask Intergovernmental and Media Relations Director Eric Brown about his Saturday night meetings at Ruth’s Chris Steakhouse.
Erickson [to Brown]: Are you going to talk to us about Saturday night dinners?
Brown: Afterwards… after.
Erickson: He didn't want to talk either.
Erickson: Eric. Eric! [He walks away.]
Brown [to Erickson]: You'll have to wait till afterwards. Our chairperson has agreed to speak with you guys.
Erickson: But I want to talk to you.
Brown: I can't. They won't let me.
Erickson: You won't talk about the midnight meetings?
Brown: Nope. Nope.
Erickson: Then we approached Planning and Policy Director John King, Who took 23 people to Washington DC to tour new housing projects.
Erickson [to King]: $37,000 for public housing residents to see projects on the east coast; couldn’t' you have done a virtual tour?
King: I think with these types of projects, our residents haven’t' been exposed, many of our residents haven't even been to the beach. And so it was a great opportunity for them to kind of see, touch, smell, public housing redevelopment.
Erickson: Why is there so much travel on the part of this department when you’re facing huge budget cuts next year from the federal government?
King: Well, I'm not the executive director. I’m just an employee here and so you may want to ask them about those questions.
Erickson: We tried, but he kept walking away...
Ken Simmons/Interim CEO of HACLA: We have a spokesperson.
Erickson [to Ken Simmons]: When will they be coming out?
Simmons: I don’t know ma’am.
Erickson: Simmons didn't want to answer our questions either.
Simmons [to Erickson]: We’re not going to be doing the interview. We’re going to have a spokesperson.
Erickson: But last week all of that changed. HACLA's interim CEO Ken Simmons agreed to sit down with us and explain all that spending.
Simmons: But that was the decision of the past administration. And I’m not going to suggest that it’s wrong.
Erickson: Last week, in response of our story, Simmons explained the spending to the HACLA board. He made no apologies for the hundreds of thousands of taxpayer dollars spent on travel and dinners.
Erickson [to Simmons]: You spent $100,000 on employee incentives under Mr. Montiel. Didn’t you sign off on that?
Simmons: Yes I did. But it was under the direction of Mr. Montiel.
Zine: I find that outrageous, and Rudy had his own problems, but the fact of the matter is, people that are adults have a responsible judgment and they get paid to do a job and these people obviously ripped-off the system, they ripped-off the federal government, they ripped-off everybody.
Erickson [to Simmons]: These expenses that we tracked were over 2007, 8, 9, 10… the country is in the throes of the worst economic situation since the depression, and the housing department is going to the East Coast with residents, it’s going to Trader Vic’s, Fleming’s, Fraiche restaurant, it’s going to midnight dinners at Ruth’s Chris Steakhouse. How could you sign off on that personally since you seem to have some reservations about it?
Simmons: It's not my choice, if that's the direction of the board and that's the direction of the CEO, it’s their call to do it. Now when you say we were in the middle of a depression, at the time they were spending the money, this agency was more flush with cash.
Greuel: I think any entity that is serving the poor, and serving those less fortunate, who have an excuse that they’re “flush with cash,” that is not the response taxpayers want to see because everyone is having to struggle.
Erickson: HACLA is struggling now. It's facing a $9 million budget cut and is talking layoffs. Simmons has ordered a stop spending.
Erickson [to Simmons]: The problem here is I think is in order to look at the future, you have to look at the past. And when you look at the past, you see all of the same players in the front row at the HACLA meetings. Why do they still have jobs?
Simmons: It's unfair to blame any staff member for following the direction of management.
Erickson: So they are actually innocent? [Ken nods]. Mr. Brown spending midnight meetings at a steakhouse or at Wolfgang Puck's restaurant, that wasn’t his fault. Somebody else made him do it?
Simmons: That was clearly with the full knowledge and encouragement of the past administration.
Erickson: An administration of which Ken Simmons was second in command. He personally approved hundreds of thousands of dollars in dinners, travel, perks. But now as the CEO, Simmons says that's history.
Erickson: As the boss right now, how do you explain that kind of expenditures to taxpayers?
Simmons: My explanation is as the head of the agency, that we don’t do any of those things, by my direction.
Zine: I stopped it. Now I’m in charge. I’m the interim general manager. But wait a second! While you were working there, why didn’t you make an issue of it? Why didn't you stop it?
Erickson: Just released documents show since Simmons took over, excessive spending and travel have for the most part, stopped.
But it’s the $2,600 dinners and $37,000 trips of the past that may tarnish HACLA’s future.
Zine: This is what outrages the public. This is when the public says 'dump this department, dump these people. You get a job, you get a pension, you get medical, you get a salary, a check, and you’re taking advantage of this. There’s so many people who would love to have a job where you just get the basics of life and these people don’t really have the basics, they’ve got the extravagant.
For SoCal Connected. I’m Laurel Erickson.
Val Zavala: Right before our broadcast, Controller Greuel sent this letter to HACLA asking to do an expanded audit, a top to bottom review of all financial activities, including credit card transactions.