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FBI Investigated San Diego Staffer Accused of Accepting $3K in Gifts for Contracts

A spokesperson for the FBI would neither confirm nor deny an investigation took place

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The Federal Bureau of Investigations investigated a city of San Diego employee for allegedly accepting thousands of dollars in gifts from two vendors in exchange for millions of dollars worth of government contracts, it was revealed Wednesday at an audit committee meeting.

The city's investigation found that the unnamed employee accepted gifts valued at more than $3,000 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. 

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.

When the city's Fraud Investigator Gina Russo was asked why the FBI needed to be involved she responded, "We felt that there could be criminal allegations that needed to be investigated."

A spokesperson for the FBI would neither confirm nor deny an investigation took place.

The employee and both vendors still work with the city, though the employee no longer works for the department where the alleged wrongdoing was first reported -- in the form of a tip made through a city hotline about five years ago.

The city auditor's office, citing state law, did not disclose the employee’s name, identify the department he or she works for, or name the vendors.

The information came to light Wednesday during an Audit Committee Meeting. The committee, at Fraud Investigator Gina Russo's advice, voted to advance the following recommendations to the city council:

  • That classified employees be added to the jurisdiction of the ethics commission -- a change that the auditor's office feels could prevent fraud in the future.
  • That corrective action be taken against the involved employee following an independent investigation
  • That the city considers debarment for two vendors. That could come in the form of action against their contractor's license or preventing them from working with the city for a period of time.

It was noted that the city was likely weeks away from taking action against at least one vendor but it could be much longer until action is taken against the employee due to procedures within the city.

Committee Members Scott Sherman and Vivian Moreno expressed concern at the length of the process and that those involved are still on the city's payroll.

"As it stands right now, these people are still doing work for the city and the employee's still at the city just at a different department," Sherman said. "It's five years after the complaint. In the private sector, things would've happened a lot quicker than that. It just would have. And who knows what kind of damage is being done in the meantime."

"We need to send a message as a city that we’re a good place to work for, we do proper work, we do clean and ethical work and if some of our people don’t then we're not going to tolerate it, were going to move forward, with our contractors and vendors as well," Sherman said.

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.

Details of the alleged scheme were contained in the emails sent from the employee’s personal email account, the report said. 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.

A spokesperson for the San Diego County District Attorney’s office confirmed it reviewed the law enforcement investigation into this employee’s activities 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.”

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