Government Gone Wild: Update

TRANSCRIPT:

Val Zavala: One billion dollars a year. That's the budget for the Los Angeles Housing Authority — money to provide clean, safe housing for the city's less fortunate. But for almost a year, SoCal Connected has been investigating how your tax money is being spent.

Our reporting has exposed lavish spending, disregard for government rules, and little or no oversight. Now people are angry, and L.A. city officials are finally promising action. Correspondent Laurel Erickson continues our exclusive story.

Dennis Zine: It just, it gets the blood boiling to say, "How did someone get away with this?"

Tony Cardenas: They cannot walk away and say "I don't know."

Wendy Greuel: It seem like there was no one in charge.

Laurel Erickson: That's the firestorm Ken Simmons was facing when he suddenly called it quits as HACLA's interim CEO on Thursday.

Simmons' problems really heated up after our story last week on the Housing Authority of the City of Los Angeles, or HACLA.

We confronted executives who spent the public's money on everything from pink elephants to prime rib.

Erickson [to Ken Simmons, who is walking away]: Has anything changed?

Eric Brown [to Erickson]: You'll have to wait till afterwards.

Ken Simmons [to Erickson]: We're not going to be doing the interview.

Patrice McConnell [to Erickson]: No comment.

Erickson: Interim CEO Ken Simmons defended the spending and made it clear it doesn't happen now that he's in charge.

Erickson [interviewing Simmons]: As the boss right now, how do you explain that kind of expenditure to taxpayers?

Simmons: My explanation is, as the head of the agency, that we don't do any of those things by my direction.

Erickson: Simmons took over as executive director of HACLA in March after the former CEO Rudolf Montiel was fired.

Earlier this week the Los Angeles times reported that former CEO Rudolf Montiel received a $1.2 million buyout. The paper also said Mayor Antonio Villaraigosa did not know about details when the deal was done. But SoCal Connected has learned that the mayor was told about the details. The mayor's office says that Antonio Villaraigosa was told it would be costly either now or in the future and he told them to take whatever steps necessary to get this controversy behind them.

And it is Montiel that Simmons now blames for the hundreds of thousands of dollars spent on meals and perks.

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: It's always Rudy made me, Rudy made me, Rudy made me, and Rudy makes off with a million plus dollars. They were working together and that's the problem.

Erickson: Montiel hired Simmons to be second in command. He was handsomely rewarded.

Tax records show Simmons earned $300,000 in salary and benefits in 2009 — more than the Mayor of Los Angeles and more than the Governor of California.

Earlier this week Los Angeles City Councilmember Dennis Zine introduced a motion demanding that Ken Simmons appear before the L.A. City Council next Tuesday. He wants him to answer questions about lavish spending.

Zine: They are going to come before my committee, our controller Wendy Greuel is going to do the expanded audit and we're totally supportive of that. When Mr. Simmons comes before my committee, he's not going to be very pleased.

Erickson: Zine may want to ask Simmons about hundreds of out of town trips we reviewed. We found examples of employees spending much more than allowed under HACLA's travel allowances.

Earlier this year, Eric Brown attended an auto show in Detroit on the public's dime. He was given a limit of $140 for meals. He charged 170 bucks in dinners and lunches.

Zine: Why would you go to Detroit Auto Show when you are dealing with poor people and housing? It has no connection whatsoever. That's again another outrageous expenditure of public funds and no one was watching.

Erickson: In 2010, Policy Director John King went to Washington D.C. He was allotted $460 to cover meals for the trip. But we found he charged $1,117.58 on of food, 600 bucks more than allowed!

Cardenas: That gap is money that belongs to the people. And if that gap is unaccounted for, then the D.A. should definitely be involved in the investigation because that is taking public funds.

Erickson: On that same trip, King charged an $80 seat upgrade so he could have more leg room on the flight to D.C.

There was no evidence Brown or King reimbursed HACLA for the extra costs.

Sources close to HACLA have told SoCal Connected that in 2008 a lot of money — by one account up to $100,000 — went unaccounted for, much of it sources say, involving reimbursements and advance payments for expenses. These same sources say it was hard to track the money because of missing receipts and paperwork. How the accounting was resolved is unclear. We called Ken Simmons to find out. His spokesperson said, "We need more documentation. We're looking into it."

Zine: The government itself, the city of Los Angeles, should be instrumental in making sure these things don't happen.

Erickson: And that's what former L.A. Controller Laura Chick suggested this week. In this open letter to the residents of Los Angeles. She asked where were the city leaders were when Montiel got his million-dollar-plus deal. Where were the city leaders when HACLA executives were buying sweaters at Land's End?

Bob Stern/President, Center for Government Studies: The problem of course is that nobody is really watching this agency. If nobody is watching the agency, the employees and the board think they can get away with anything, and then sometimes they do.

Erickson: Current and former workers tell us they knew of some problems but were too afraid to speak up. This insider says she complained to a manager about excessive catering bills.

Insider: I said why are so many sandwiches being ordered? And he said they're for the meetings. Don't worry about it. It's not coming out of your pocket.

Erickson: She says Ken Simmons approved the $28,000 spent on flower baskets, pastrami sandwiches, and See's candy.

Insider: He saw this happening. He should have stopped it. You know, it was under his nose. It was all happening under him.

Erickson: Simmons personally approved thousands of dollars spent on employee perks, like this purchase at Ralphs. Human Resources Director Patrice McConnell bought $4,600 worth of gift cards in 2010. Records don't show who received those cards.

Cardenas: You don't know where they went. They have a responsibility of answering our questions and telling us where that went. They cannot walk away and say, "I don't know."

Erickson: As the chair of L.A. City Council's Housing Committee, Cardenas told us he has questions about possible double-dips and excessive spending by HACLA staff.

Cardenas: What's the responsibility and the punishment of the department to its workers who actually engage in those kinds of things? What are they going to do about it?

Zine: The District Attorney's Office Public Integrity unit is already investigating this and we're also turning this over to the federal authorities because there is that question of who's in charge.

Erickson: Determining who's the watchdog who's watching over HACLA is difficult. It's a semi-autonomous agency. HACLA gets most of its funding from the federal government. But it also gets a chunk of change from the city of Los Angeles. No one is really in charge, or has power over how HACLA spends its money, how much it spends, or who spends it.

So, when L.A. City Council members demand action, they have very little power.

Earlier this week the mayor's office called our reports on HACLA's excessive spending "old news."

Greuel: Not old news. You know, when anyone is looking at the fact that there was a $1.2 million send off for the Director Rudy Montiel; when there are thousands of dollars that are being spent inappropriately; we need to get to the bottom of it.

Meanwhile, HACLA is going to have to pay another million dollars to yet another former worker. Just two weeks ago, a California court ordered the agency to pay a former whistleblower $1.1 million. She claims she was fired after discovering employees were committing fraud. A judge agreed and ordered HACLA to pay up.

And guess who may be signing that check? You got it. Ken Simmons.

He's going back to his old job as second in command at HACLA. The same job he had when he approved all that spending.

But maybe not for long?

Mitchell Kamin: We're going to bring in an interim CEO who is a change agent. Someone who can effectuate the policy changes we're talking about and if necessary make personnel changes.