Southwest Glare, Part Two

Constant Readers,

In my last Southwest Glare post, I gave you the background on the Southwest Border Prosecution Initiative (SWBPI) - a federal reimbursement program that the City is accused of defrauding out of $5.7 million. I will not repeat it all here, but to recap: the SWBPI is a program under which the federal government reimburses local governments at a flat rate for pre-prosecution detention and prosecution of federal cases that are declined by the Department of Justice (DOJ) - usually the cases are drug felonies that are too small for the feds to get excited about.

San Francisco itself was not singled out by the DOJ for an audit. The internal investigatory arm of the DOJ - the Office of Inspector General (OIG) - was auditing the Office of Justice Programs (OJP) which administers the SWBPI. In the course of auditing the OJP's ability to handle the SWBPI, seven localities were examined to see if they were complying with the program guidelines.

According to the OIG Audit Report, the other six were: El Paso Co. Auditor's Office, TX; New Mexico Dept. of Public Safety; Maricopa Co., AZ; Yuma Co., AZ; San Diego District Attorney's Office, CA; and Brooks Co., TX (Audit, p.vi).  Note that all the jurisdictions that were audited failed miserably. Seems like everyone was taking advantage of the OJP's...shall we say..."neighborly" manner of trusting that everyone was telling the truth.

1. What did we do wrong?

In a word: everydamnthing. According to the SWBPI Guidelines, there are three things that qualify a claim for reimbursement and it looks like we messed up on all of them. Let's examine them one at a time:

(a) Claims must be for pre-prosecution detention and/or prosecution of cases that have been declined by the DOJ and referred to the local government for handling.

The City has been unable to present ANY evidence that ANY of the 2,241 cases for which we were reimbursed since 2004 was declined by the feds and referred to the City. Instead, then-Controller (Ed Harrington), the D.A. (Kamala Harris) and the Sheriff (Michael Hennessey) got together and figured that about one-third of all drug prosecutions handled by the City are for felonies. So, we just put in for reimbursement of 30% of the City's drug caseload. When the audit commenced, Harrington wrote that this estimation was a "good faith effort prepare claims in compliance with the...guidelines in effect at the time." (City Docs, p. 6.) Thing is, while the guidelines were revised in July 2007, there was no change with respect to the decline/referral requirements. (Audit, p. 7-8.) The guidelines make it clear that claims must result from "Federally initiated criminal case[s]." Oh, man. We certainly have some 'splaining to do...

(b) Claims must be accompanied by a statement declaring that the amount sought for reimbursement does not exceed 100% of the actual cost of providing the service for which we are being reimbursed.

Fair enough. In order to attest to such a statement, it would stand to reason that you have to at least know how much the pre-prosecution detention and/or prosecution actually costs. The OJP does not require documents demonstrating actual costs when you file the claim, but you are supposed to keep backup documents for three years in case of an audit. Problem is: there is no evidence that SF ever undertook to make these calculations. (Audit, p. 18.) So, we were swearing that the amount reimbursed was not excessive when it looks like we did not know the actual costs. Boooooooo. 

(c) Claims must be accompanied by a statement declaring that the amount sought for reimbursement has been offset by other sources of federal funds.

Again, we apparently made this declaration having never looked at whether it was true. Since 2004, San Francisco has received $1.86 million under the Edward Byrne Memorial Justice Assistance Grant Program (Audit, p. 37) and $7.2 million under the State Criminal Alien Assistance Program (Audit, p. 38). Those funds could have been used for SWBPI purposes. And it may be true that those funds and the SWBPI funds never crossed paths, but the problem is that there is no evidence that we ever even checked. (Audit, p. 38.)

2. What is the real amount that City has to give back?

$5.7 million. Initially the number was $5.4 million but because the audit was being conducted during the fourth quarter of 2007, the totals did not include the fourth quarter funds that the City received in the amount of $300k. So that gets us to $5.7 million. The additional $3.6 million that you may have read about is simply the money that we prolly ain't gonna get this year. So, we don't actually have to pay that back. The City has already repaid $2.7 million of the total. (City Docs, p. 13.) $3 mil to go!

3. Who is responsible?

This is a tough one. So far, the Controller's Office, the District Attorney's Office, the Sheriff's Department, and some consultant named Bradley Burgess who was hired to do the SWPBI filing are all implicated.  The City appears to be in a perpetual state of "investigation" into the matter and no one has been publicly identified as the cause of the fiasco. Although the City did ask the consultant to pay back $145k of the money he earned because the contract stipulates that he only gets paid if the City gets SWBPI funds. (City Docs, p. 80.)

4. Other consequences?

Unless we can show that we had a reasonable basis for the "thirty percent" system, there is a very real possibility that the City will be sued by the federal government. There is a nasty little law called the Federal False Claims Act that makes it unlawful to knowingly file a false claim for $$ from the government. The monetary penalties are severe - triple the amount of damages to the government.   

And I don't think the DOJ would decline that case.

--Melissa

Comments

[Clemens]

Stop, stop, stop telling us all your Fancy Legal Arguments for Important Political and Attorney-esque Stuff. We're all dumbasses around here, and this Complex Legal Argumentary and Cross-Exhumization and Objectificating is making our heads hurt. More dancing early morning traffic reporters, please.

(Also - nice.)

[DJTennessee]

Clemens is right in that it's really difficult for non-legal people to get their heads around this. Here's what's particularly tough for me to grasp -- wouldn't S.W.V., P.I. (heh) have done due diligence on our compliance BEFORE cutting these checks, as opposed to after? If not, aren't they kinda massively at fault on this too? Yo! I'd be interested in getting reimbursed for all of my... ummm... my, uhhhhhh..... "efforts" on behalf of the Federal government!

It's probably a stretch of lay-person logic to somehow lump this in with the Bush administration's inability to handle simple bookkeeping. But that's exactly what I'm going to do! Am I wrong here?

[sfwillie]

Great explanation, Melissa.

I spent five years at UCSF accounting office preparing invoices for government (and some private sector) contracts.

If I, or anyone in my group, had been asked to prepare the invoices described in this case, we would have refused.

We would have explained that to prepare such invoices would make us guilty of fraud.

Any $40k/yr billing clerk would say the same thing.

This sounds like a "units of service" deal. The City tells the Feds what services they performed and the Feds pay the City--not for estimated services performed but actual services performed.

If Ed Harrington calls their 30% solution a "good faith effort at compliance," he is a liar. No, he's a goddamn liar.

Sounds like Kamala, Ed, and Mike committed conspiracy to submit false claims.

And these are some of the supposed good guys.

Shame!

[Sweet Melissa]

DJTennessee: You are certainly right that the OJP is to blame for...well...believing us when we said everything was legit. In the wake of the DOJ audit (which, remember, was directed at the OJP) many changes are going to be instituted at the OJP. All sorts of verification will have to be provided now with any application for funds.

And I won't discount the Bush administration theory. For all I know the OJP is run by the Bush family's former hairdresser.

sfwillie: I agree that one of the problems here is that I have always really liked Kamala, Ed and Michael. I can't bear to think that something so incompetent/underhanded came from their offices. We'll see what the investigation reveals...