Los Angeles Just Had a Record-Setting Year for City Fraud Complaints

A City Controller report details looking into 543 cases of payroll transgressions, suspected kickbacks, ineffective management, and more

There are many ways to read the new report, “On the Lookout: Fraud, Waste and Abuse,” issued by City Controller Ron Galperin. You might be surprised by the number of people seeking to nab stuff that they didn’t earn, you might think that expanded outreach is leading to greater protection of city resources, or you might reason that local employees are narcing on each other at an all-time level.

Whichever path you follow, you come to the same conclusion: if there’s a chance to take a shortcut or get away with something, some people will try.

The annual report, which Galperin released last week, reveals that the Controller’s office fielded a whopping 543 new fraud, waste, and abuse (or FWA) complaints last year, 200 more than were received in 2018. His office has been tallying these incidents since 2009, and the previous high was the 448 recorded in 2011. The 2019 figure is more than three times the level in 2016, when there were 173 complaints.

Why the big jump? Outreach and information could be part of it, as according to Galerpin’s office, the city has launched an enhanced fraud-awareness training program for municipal workers, and 33,670 employees received the instruction last year.

Another factor may be ease of reporting combined with the ability to hide behind a figurative mask when telling on co-workers. According to Galperin’s office, 66 percent of the complaints last year came in anonymously, thanks to a City Ethics ordinance that guarantees protection for whistleblowers reporting potential violations.

City workers and members of the public who suspect nefarious activity can call a hotline at (866-428-1514) or file reports online. On that page visitors can pick a transgression, including “Bribes/Kickbacks,” “Ineffective Management,” or “Payroll Fraud.”

This is familiar territory for Galperin, whose position makes him the city’s fiscal watchdog. Last November he released a report detailing huge overtime spending in city departments, including a firefighter who somehow earned more than $360,000 in OT in a single year. The Controller also maintains a database, dubbed “Payroll Explorer,” full of stunning city salary nuggets, including the revelation that in the most recent fiscal year, 48 LAFD employees earned more than what Fire Chief Ralph Terrazas takes home (the chief doesn’t get OT).

Galperin’s new report doesn’t name names and can be light on specifics, but it does state that 21 percent of the complaints alleged time theft, and another 15 percent detailed a suspected waste of city resources. Ten percent concerned the misuse of authority.

Complaints targeted a retinue of city departments, with 77 involving the Department of Water & Power. A distant second was Los Angeles World Airports, with 29 complaints, followed by the 21 suspected incidents involving the Department of Recreation and Parks.

It is difficult to gauge the full impact of the complaints. According to Galperin’s office, when a case comes in, his team does an initial review, then decides whether to dig further, send the matter to a city department, or take a different step. The report states that just 23 complaints were substantiated by his office last year, though another 155 were referred to other departments for action. Indeed, the report hints at the inability to do more in house, with the line, “Due to current resource constraints, the FWA Unit has referred the majority of investigative cases to city departments to conduct the investigation.”

Still, the report offers glimpses into some shady behavior, and the consequences that activity engenders. It details one city employee falsifying documents to cover absences from work; the investigation led to the individual resigning, and the matter was referred to the City Ethics Commission.

There were complaints concerning the manipulation of timecards, which resulted in at least one resignation and other forms of discipline, and another city employee stepped down when investigators began looking into unauthorized discounts the person gave to others; although the discounted items were not specified, the ability to get something on the cheap resulted in an estimated loss of more than $11,000, according to the report.

The incidents ranged from the banal to the mysterious. One city employee was suspended after someone complained about a city work truck being parked in front of a residence (“unauthorized usage of a City vehicle,” according to the report). Then there was the simultaneously juicy but watery description, following a complaint from a state law enforcement official, that “a City employee was obtaining sensitive information while carrying out their job duties for personal use.”

Said info remains unexplained, but the report notes that the employee resigned rather than be fired, and the case was moved to the LAPD for investigation.

For better or worse, the trend may continue. The report notes that, currently, 72 FWA cases are still open.

RELATED: A Look at Which City Employees Are Reeling in Big Bucks

Stay up to date with everything you need to know about L.A. by following us on Facebook and Instagram.