LAKE COUNTY – The county has paid nearly $1 million back to the federal government after officials say confusion over unclear guidelines for a grant led to the county receiving too much money.
Following a closed session at its Dec. 16 meeting, the Board of Supervisors agreed to a settlement agreement with the US government, acting through the US Attorney's Office for the Northern District of California on behalf of the US Department of Justice's Office of Justice Programs.
As part of the settlement with the government, the county agreed to repay $989,605 in Southwest Border Prosecution Initiative funding that was established in fiscal year 2002, according to the settlement agreement document, obtained by Lake County News.
The document explains that, in 2002, Congress began appropriating funds to reimburse states and local governments for costs associated with prosecuting certain criminal cases declined and referred by the US Attorney's offices.
Between fiscal years 2006 and 2007, Lake County was awarded $1,019,095 for such prosecutions, according to the agreement.
County Counsel Anita Grant said that a number of counties misunderstood the reimbursement claim guidelines, including San Francisco.
“There were more claims for payment than truly were intended to be eligible under the grant purpose,” Grant said of Lake County's case.
An audit of the county's reimbursements, completed by the US Department of Justice's Office of the Attorney General, said Lake County received $989,605 for 264 cases submitted, which weren't allowable because they were not federally initiated.
Jack Gillund, a spokesman for US Attorney Joseph P. Russoniello's office, said six counties had the problems – Lake, Humboldt, San Benito, San Francisco, San Mateo and Siskiyou.
A routine audit conducted by the Office of the Inspector General revealed that San Francisco had not maintained any documentation to support the costs submitted for reimbursement that were associated with the grant, and that its grant submissions were not based on specific cases.
Assistant United States Attorney Ila Deiss, who handled the San Francisco case on behalf of the United States Attorney’s Office, signed the Lake County settlement agreement on behalf of Russoniello.
Grant said the problem came to the county's attention when Chief Administrative Officer Kelly Cox saw a payment come in and realized how out of proportion it was.
Cox said the claims had been filed by the District Attorney's Office.
He said he wasn't aware that the county had even filed for more than $700,000 in reimbursements until he was informed by the sheriff's administrative manager that a check for that amount had been received from the federal government. He said she had been concerned about the entire program and that's when the county began to closely examine the grant and the funds it had received.
“We just knew there was no way we could have been eligible for that much revenue from this program,” he said.
Cox said as soon as the county became aware of the problem, it sent the money back. Most of it had arrived on one large check, which he said was unanticipated revenue. So they sent it back before it was spent, which meant the repayment didn't impact the county's budget.
“We knew that once we sent that check back it would trigger an audit, but so be it – we couldn't keep money that we weren't entitled to receive to begin with,” he said.
The County Administrative Office conducted its own internal audit and determined what needed to be repaid before the federal government arrived to do its audit, said Cox. Once the federal government arrived, Cox said they told his staff the county already had done much of their work for them. That work resulted in the October 2008 audit findings issued by the Office of the Inspector General.
Because the Department of Justice could take the matter to civil court, Grant said it was important to create a settlement agreement.
“This agreement is just essentially memorializing the fact that we've made good,” she said.
Gillund confirmed that it was Lake County that revealed the overpayments. He said the county had paid back more than $700,000 before the agency conducted audits on the grants, and have since paid back the remainder of the overpaid amount.
“We did it all the right way,” Grant said.
District Attorney Jon Hopkins said it rarely happens that the US Attorney's Office comes to local jurisdictions to take over investigations and prosecutions.
“You don't get very many larges cases started by federal agencies here,” he said.
In Lake County's case, it's much more common for his office to prosecute cases brought by the US Forest Service or even the Bureau of Land Management. There also have been cases involving the Federal Bureau of Investigations and the Drug Enforcement Administration.
In those cases, local prosecutors have to check if the US Attorney's Office has declined to prosecute the case or if it's their policy to decline to file in certain situations. “It has to be a case in which someone was incarcerated for a minimal period of time.”
Hopkins said the District Attorney's Office does prosecute a lot of cases involving undocumented aliens who are involved in narcotics trafficking, but in those cases they've usually been caught by local law enforcement.
Hopkins said every county in Northern California is now being audited because of the incorrect interpretations of how to apply for the grant money.
Consultant points to unclear guidelines, government audit of program
In getting to the bottom of the program's apparent problems, the government has pointed the finger at a consultant who helped several counties with the guidelines.
Gillund said all six counties that have been found to have received overpayments had hired Brad Burgess of Public Resource Management Group to handle the grant.
However, Cox and Burgess himself say that the program's guidelines were at the heart of the matter.
Cox confirmed that Burgess and Public Resource Management Group were the first ones that advised the county on the funds' availability and the program.
However, Cox defended Burgess, saying the federal regulations were unclear and could be interpreted different ways – “so I don't think there is really anyone to 'blame' for this.”
He added, “They thought we – and other counties – were eligible for much more of this funding than we actually were.”
In addition, Cox said the District Attorney's Office was no longer contracting with Burgess and Public Resource Management when the main problems with the program occurred, including the claim for $700,000. Burgess has advised them on the first reimbursement claims.
Cox said the County Auditor's Office continues to contract with Burgess and his firm for services. “We're not aware of any problems with any of their other work,” he said.
Burgess now works for MGT of America, which purchased Public Resource Management Group in 2007.
He said when the Southwest Border Prosecution Initiative guidelines came out, they were short and vague, without a lot of specifics. Even the program's manager seemed not to fully understand the program's parameters.
Burgess said he and his employer were contacted by a county interested in the program and asked to learn it along with them. From there, they worked with other counties as well, but he said counties that had problems with the claims included those he worked with as well as many that he didn't.
He said local jurisdictions did their best to interpret the rules and try to adapt them to their own situations.
In Lake County's case, he said he had numerous meetings with county officials including Cox's office, the sheriff, district attorney and various task forces to scrutinize the program, which he said focused primarily on drug-related crimes and prosecutions.
He said the group came to a consensus on what cases they believed would fit, which they would then forward to him to plug into an online application. Burgess explained that the government would send out an e-mail announcing deadlines and he and the county would have to quickly respond or else miss the chance for the funds.
In October, the city and county of San Francisco repaid $5.2 million for funds Russoniello's office said were improperly requested and received through the Department’s Southwest Border Prosecution Initiative from 2004 through 2006.
San Benito County paid back nearly $400,000, according to a Hollister Free Lance report from last month.
Burgess said federal officials have failed to mention that every county they've audited, with or without consultant assistance, has ended up having problems.
In San Francisco's case, Burgess said he was vilified over the grant situation, but decided to hold his tongue, knowing the criticism that comes the way of many consultants.
A San Francisco Chronicle article from October 2008 quoted San Francisco District Attorney Kamala Harris as blaming Burgess for the situation. In the same story, the Chronicle story said that the city and Burgess decided that the city should be reimbursed for 30 percent of all its drug-related prosecutions, which he stated is “absolutely false.”
The shortcomings in the program and its administration were confirmed early in 2008 thanks to an internal audit of the Bureau of Justice Assistance – which administered the grant program – which was completed by the US Department of Justice's Office of the Inspector General.
The audit zeroed in the grant program's flaws – not just poor guidelines but also a lack of oversight and training.
In looking at the audit, Burgess said it offered clearer guidance on the grant reimbursements.
“Once I read it, I was like, where has this been?” he said.
E-mail Elizabeth Larson at
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