Fraud and abuse. Personal and side-job spending.
These are just a handful of possible cases of pCard misuse found by Maui County’s auditor after an extensive review of charges on government credit cards.
The problem may be even deeper, according to a federal lawsuit.
Both the audit and a federal whistleblower lawsuit come in the wake of pCard misspending that we uncovered back in 2015.
Now even more incidents and allegations are detailed, and the county is promising big changes.
A series of Always Investigating reports starting a couple years back showed how busy some county workers were on the Valley Isle, just not always doing the people’s work.
A commercial kitchen built at a public works baseyard. A stadium area turned into an auto-repair side business. A lucrative tire buy-and-sell scheme back near that illicit kitchen.
All involved taxpayer money on purchase orders and pCards, which are county credit cards many employees get to use with varying levels of oversight. Many were suspended or fired, several were put under police and prosecutor investigation.
But a federal whistleblower lawsuit filed this week says: “In response to the KHON news story (department supervisors) took superficial measures that were simply too little and too late to stem the overwhelming evidence that continued to roll into the county of widespread theft, fraud and corruption.”
- Audit of County Procurements (pCard)
- Lesli Lyn Otani vs. County of Maui, County of Maui Department of Public Works, David Goode, John Does, Doe Entities
Lesli Lyn Otani, a Maui County engineer, says she was demoted after she brought allegations direct to her department heads of misspending at even more county offices, a county ghost-car and auto-selling scheme, even environmental violations after flooding last September.
“It was like a candy store, and there were very few checks and balances,” said Otani’s lawyer, Roman Amaguin. “She wants to see this mess cleaned up, because there’s so much waste going on, and people are covering it up and it needs to stop.”
According to the lawsuit, “(supervisors) were aware or should have been aware of the theft and misappropriation, but did nothing about it.”
“There were some employees that were very creative in avoiding detection, but at the same time, it’s my belief that any kind of cursory investigation after hearing about the rumors would have uncovered that,” Amaguin said.
The lawsuit lists at least a half-dozen people investigated and placed on leave.
A spokesperson says the county can’t comment on pending litigation.
After Always Investigating started digging into misspending, a major county audit followed and the results are just in.
The auditor’s team scoured tens of thousands of pCard transactions. Their findings include suspected fraud, waste or abuse that led auditors to contact county law enforcement.
“When we found transactions that were irregular, we notified the proper persons. We made things available to them that we looked at, and we let them take the lead,” said Maui County auditor Lance Taguchi.
Keith Regan, the county’s managing director, told the auditor county officials are “very concerned about this matter and will fully cooperate and provide any assistance needed to facilitate the investigations.”
The county’s director of finance was flagged for charging his wife and child’s airline tickets on his pCard along with a work-related flight for himself. A spokesperson says they investigated and administrative actions were taken.
He also says the director paid the county back before the fares were booked. It was not seen as an attempt to misuse funds, but it did not follow proper procedures.
The audit also found end runs around competitive bid rules that apply when buying things too pricey to be allowed on pCards.
“It was pretty evident in the instances we saw where the credit card were swiped within minutes of each other multiple times,” Taguchi noted.
The audit pointed to other weaknesses, like few preventions against swipes for personal or even side-job buys, high credit limits, low training, even a warning that hostess bars could masquerade as restaurants on credit card statements, although no actual hostess bar spending was found.
“Nothing can guarantee that fraud waste and abuse will not occur, but we can put in more controls,” said Taguchi, and “generally refocus everything so that everyone knows that they need to be very careful when they use their pCard.”