Costa Mesa council puts off vote on anniversary party audit

The Costa Mesa City Council did not vote on a forensic audit into the troubled 60th anniversary party Tuesday night as expected, but council members say the matter will come up again for review.

Councilwoman Katrina Foley asked during an April council meeting for information about the scope and cost of a forensic audit into the three-day celebration, which cost thousands more than originally budgeted. Foley said she made the request on behalf of several residents.

The original city staff report for Tuesday’s meeting, published last week, asked the council to vote on whether to launch a forensic audit to further investigate the “60 & Fabulous” party.

On Monday, Foley asked that staff pull the item off the agenda because she felt the letter from accounting firm Lance, Soll & Lunghard detailing the cost of an audit wasn’t specific to the city’s situation.

“It didn’t answer my questions,” she said.

A forensic audit is an investigation and collection of information involving fraud that will be used for legal action. It is usually requested after fraud has been identified or suspected, according to a letter from Lance, Soll & Lunghard that was attached to the staff report.

The letter noted that an audit’s cost would typically start at $15,000 to $25,000 and increase based on the extent of work performed.

Foley said when she requested the report she was trying to get information to the public so the city could move forward. She indicated she does not support a forensic audit into the party.

“I have tried really hard to work to have resolution and closure on things that I think have hurt and impacted our city,” she said.

City staff will ask the accounting firm again for a more detailed analysis, which will be presented at a future council meeting.

Mayor Pro Tem Jim Righeimer said he believes an audit will likely confirm what city officials and residents already know about the party — that city processes weren’t followed which led to uncontrolled spending.

The June 2013 celebration cost about $518,000, of which the Costa Mesa Conference and Visitor Bureau — funded by hotel tax revenue — paid $232,000. The amount was nearly 10 times what the bureau originally agreed to.

The city paid $209,000 of the bill, $84,000 more than the council’s original pledge of $125,000. The cost of the city’s investigation into the event added an additional $45,000, according to city estimates.

“I want us to have it in front of us and then be able to vote on it,” Righeimer said of pursuing an audit. “The public has the right to know where we sit on the issue.”

The party, attended by roughly 16,000 people, caused more than just financial controversy for City Hall.

Two city employees considered “principally responsible” for organizing the event were put on paid administrative leave in the months following the party. One employee was reinstated, but Public Affairs Manager Dan Joyce was let go after 10 months of leave. He received a $170,225 settlement from the city.

In the city’s investigation, officials said the party’s problems were brought on by unbudgeted growth, escalating costs, violation of city purchasing policies and poor cash control.

The city forwarded investigative reports from the Costa Mesa Police Department and the independent financial analysis to the district attorney’s office in 2014 for review. Last week, a county prosecutor announced he would not file charges.

“After reviewing all the information, we have concluded that there is insufficient evidence to prove any criminal activity, beyond a reasonable doubt, on the part of anyone connected with the planning and/or implementation of the event,” Senior Deputy District Attorney Raymond Armstrong wrote in a letter to the city’s Police Department.

A few residents who spoke during Tuesday’s meeting remain unconvinced that no criminal activity occurred in planning the celebration.

“No one has really been held accountable,” said resident Robin Lefler. “It’s not some little dust you can sweep under the carpet. It seems like the city is letting it fester… .”