Friday, Jan. 01, 2010
Theft of $1.7 million from city coffers marred 2009
By Corey Pride / cpride@losbanosenterprise.com
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ReprintAlready reeling from declining property and sales tax revenues that forced a round of layoffs earlier in the year, Los Baños was hit with another blow in 2009 when police started investigating a city employee for embezzling what was ultimately tallied at nearly $2 million.
On May 6 Police Chief Dan Fitchie revealed that a worker at City Hall was being investigated for criminal wrongdoing. At the time, police suspected the person of taking more than $400,000 in cash from the city within a 16-month period.
Also in May, City Manager Steve Rath said the person being investigated was on leave for an unrelated matter when the financial discrepancy was discovered. Rath said officials believe the money was taken from January 2008 to March of 2009.
As the investigation progressed police continued to withhold the suspect's name, and months passed before an arrest was made.
"It is imperative in these types of cases to obtain as much evidence as possible," Fitchie said. "The police department is not focused simply on the quick arrest of the suspect, but rather building a strong case that can be successfully prosecuted. There is nothing to indicate the suspect in the case presents a flight risk."
However, police did remain confident the suspect would be brought to justice.
Fitchie also said, "This individual thought they had discovered a way to steal money from the public and get away with it. They were wrong."
The investigation ended Aug. 27 when an arrest warrant was issued for the suspect, former Los Baños utility billing technician Mary Ann Jones. The then 38-year-old Dos Palos resident was jailed on suspicion of embezzlement-related offenses. Her bail was set at $999,999. Upon her arrest the city announced Jones had stolen more than $1.7 million in public funds from March 2005 to April 2009. The figure was more than four times what Los Baños officials initially thought was taken.
In early September Jones pleaded not guilty to the charges against her. But Deputy District Attorney Hal Nutt requested Jones' bail be raised to $1.7 Million.
"The amount of loss is in the range of one million seven hundred thousand dollars give or take, and we think it appropriate that the bail reflect the amount of actual money that was stolen," Nutt said.
A judge denied Nutt's request, but the case was settled soon afterward before going trial.
On Oct. 20 Jones pleaded no contest to six felonies, five counts of embezzlement and one count of receiving stolen property. Jones was sentenced to eight years in prison with the possibility of parole after four of them are served. She was also ordered to pay the city of Los Baños $1.75 million in restitution.
After hearing about the plea bargain Mayor Tommy Jones expressed doubt as to whether Los Baños will ever recoup all of the funds.
"That's not enough," Jones said of the restitution amount. "The key is how long is it going to take to get that money. She doesn't have anything."
In November Interim Police Chief Mark Knapp gave an update on city efforts to recoup the money. He said the city has possession of Mary Ann Jones' home in Merced, furniture, $14,000 in cash, a utility trailer and several vehicles. Her home in Dos Palos was offered to the city but had not been appraised in early November.
City Attorney William Vaughn said he was searching for other assets Mary Ann Jones may have so the remainder of the debt can be paid.
The fallout from the embezzlement has been widespread at City Hall. City Manager Steve Rath narrowly saw a no-confidence vote go in his favor. Former Chief Financial Officer Melinda Wall resigned as CFO and city treasurer after supervising Jones for years and failing to catch the theft. A new auditing firm was brought in to look through the city's financial records. A separate firm was granted a 15-month contract to fulfill the CFO position, and various procedural changes are scheduled to be implemented at City Hall.
The embezzlement was the second one discovered by the city in two years.
In May of 2007 Planning Department Administrative Assistant Rachel Solano was arrested on suspicion of embezzling $50,000 from the city during a period of several years. Solano died later that year while awaiting trial.
Enterprise staff writer Corey Pride can be reached at 388-6563 or cpride@losbanosenterprise.com