NBC 7 Investigates

Tickets, Free Golf: SD City Employee Allegedly Received Thousands in Vendor Kickbacks

Four years after alleged wrongdoing, the city of San Diego employee is still working, and the vendors are still eligible for city contracts.

The city of San Diego seal

A city of San Diego employee allegedly accepted thousands of dollars in gifts from two vendors, in exchange for preferential treatment that helped that vendor land government contracts worth millions of dollars. 

Those allegations are coming to light in a city Auditor’s report released this week, more than four years after the alleged illegal acts. 

Investigators said the unnamed employee accepted gifts from two unnamed vendors, including a paid trip to attend a professional sporting event in Oakland, California, free repairs on the employee’s home swimming pool, two tickets to a Cirque du Soleil show in Las Vegas, entry fees for a golf tournament, and tickets to an amusement park for the employee’s family. 

The auditor’s report values those unreported gifts at $3,315. 

In return, the employee allegedly helped the vendors secure city contracts worth millions of dollars, according to the report. The employee also gave the vendors advice on how to increase the value of those contracts after they were awarded, the report reveals. 

The city employee is also accused of failing to disclose the gifts and under-reporting the value of the gifts on required disclosure forms.

A city spokesperson would not release the employee’s name, identify the department he or she works for, or name the vendors. The spokesperson confirmed that the employee still works for the city, but said the continuing internal investigation could lead to the employee’s termination. 

Cirque du soleil
Getty Images
The city of San Diego employee received two tickets to Cirque du Soleil's "O" show in Las Vegas, NV.

According to the report, the investigation started with a tip phoned into the city’s fraud-reporting hotline in September 2015. The case was eventually referred to an unidentified law enforcement agency, which declined to file charges.

But the Auditor’s office reopened the case in March 2019, after city investigators received new information about the alleged bribery from the San Diego County District Attorney’s office.

According to the report, details of the alleged scheme were contained in the emails sent from the employee’s personal email account. Those emails were obtained by law enforcement during its investigation.

“I sent my edited e-mail through my secret account,” the employee reportedly wrote the vendors. “There’s no way I’m taking a chance on you guys somehow including my info on the email to [a City official.]”

According to the audit, the employee received the following gifts from the vendors:

  • Round-trip airfare from San Diego to Oakland, a hotel room, and a ticket for a sporting event. The event and the cost of the ticket were not disclosed in the audit. The gift was not reported on the employee’s “Statement of Economic Interest” form filed at the time.
  • Demolition work performed on the employee’s home pool. In an email, the employee wrote, “The guys did a great job! And, they even removed the weed pile I had to clean up to uncover the pool deck…Thanks!!!!” The value of that work was not disclosed in the audit, which notes that the employee did not publicly disclose the gift, as required by state law.
  • Two tickets to the Cirque du Soleil’s show “O” at the Bellagio in Las Vegas, valued at $341.50. According to the audit report, that gift was also not reported on the required state disclosure form.
  • A “Platinum Golf Package” tournament entry, valued at $450. The gift was also not disclosed as required by state law.
  • Tickets to an unnamed amusement park for the employee’s family. The gift was not disclosed as required by state law.
  • 21 free lunches with one vendor, which were also not reported on the employee’s “Statement of Economic Interest” form.

San Diego’s municipal code limits the value of gifts an employee can receive annually to $440, and those gifts must be publicly disclosed on “Statement of Economic Interest” forms.

According to the audit, the employee, when confronted with the evidence, claimed he/she was not aware of that reporting requirement and had not attended the city’s business ethics training courses.

The audit notes that law enforcement investigators who questioned the employee said he/she was adamant that they never “reciprocated” for the gifts, were not involved in the awarding of contracts, and had no control over payments to the vendors. 

The auditor’s findings contradicted the employee’s statements.

According to the report, the employee did, in fact, have the authority to approve or reject vendor invoices, and also had the discretion to approve increases in the value of those contracts.

One of the vendors was awarded millions of dollars in city contracts.

A spokesperson for the San Diego County District Attorney’s office confirmed it reviewed the law enforcement investigation into this employee’s activities two years ago but decided not to file criminal charges.

“Our investigation did not reveal sufficient evidence to prove any criminal charges within the statute of limitations,” DA’s spokesperson Steve Walker said. “(We) shared our findings with the Auditor in order for the City to be aware of shortfalls in their operations and to allow the Ethics Commission to be notified so they could take action if they deemed (it) warranted.”

The city’s Chief Operating Officer told the Auditor’s office its internal investigation should be finished by July 1. Gustafson, the city spokesperson, said the slow pace of the four-year investigation should not be seen as evidence that the city doesn’t take the case seriously.

“The City of San Diego holds its employees to the highest standards of honesty and integrity, so the results of this investigation are troubling. The City has begun an internal review,” Gustafson said by email. “Once that review is completed, the City will take appropriate action, which may include termination. The City is also evaluating the debarment of the two contractors involved. We thank the City Auditor for bringing this conduct to light.”

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