Embezzlement Investigation

The City of Pasadena is providing documentation and information to help keep the public informed about the arrest of a former City employee regarding the theft of public funds, as well as the steps that the City has taken to date to review this issue.

Following the 2014 discovery of a $6.4 million embezzlement from the City’s Underground utility Fund, a four member City Council ad-hoc committee was established, consisting of the following council members: Steve Madison, Chair; Victor Gordo; John Kennedy; and Margaret McAustin. The mission of the ad hoc committee was to:

• Oversee, with assistance from staff and outside counsel, the restitution of funds through civil or criminal litigation, insurance claims, or other means;
• Receive updates on the personnel investigation conducted by staff and the outside investigator; and
• Work collaboratively with the full City Council and the Citizen Task Force.

Additionally, a Task Force on Financial Administration and Internal Controls, composed of seven highly qualified and respected community members, was created. The City also commissioned three different reports after the discovery of the embezzlement, as follows: “The Underground Utility Program Report” was issued by KPMG on November 11, 2014, “The Underground Utility Program Review Report” was issued by Management Partners on July 22, 2015, and “The Task Force on Financial Administration and Internal Controls” was issued by the Task Force on October 3, 2015.

A civil lawsuit was filed by the City of Pasadena in Los Angeles Superior Court seeking recovery of funds. The Los Angeles District Attorney’s Office handled the criminal prosecution arising from this matter. The City also conducted a personnel investigation into issues related to the theft of public funds.