San Diego

Former Utilities Department Director Says City Fired Her For Blowing The Whistle On Illegal Ratepayer Expenditures

Susan LaNier filed a wrongful termination suit after she claims she was retaliated against for reporting illegal money transfers.

A former deputy director and internal auditor for San Diego’s Public Utilities Department says the city of San Diego fired her after she uncovered a massive misuse of taxpayer money.

In an Oct. 11 lawsuit, Susan LaNier, the former Deputy Director for the Employee Services and Quality Assurance, claims she was fired on February 20, 2019, after discovering city departments had allegedly diverted more than $1 million from protected water and wastewater funds to pay for general services, a violation of the state constitution.

The city “engaged in the unlawful practice of subsidizing the General Fund with Enterprise Funds through the use of Service Level Agreements, thereby creating a hidden, illegal tax on San Diego water and wastewater ratepayers,” reads the lawsuit.

Service Level Agreements, in this case, means contracts between the Public Utilities Department and other city departments for work meant specifically for the benefit of the Public Utilities Department and paid for by water and wastewater users.

However, the city said LaNier allegedly took funds from the water and wastewater account and used them for a number of unrelated projects, including more than $700,000 in expenditures to the Streets Division, more than $500,000 to pay for new Human Resource staffers, and to pay for extra staff working in the Purchasing and Contracting Department.

San Diego’s practice of using Service Level Agreements to redirect so-called enterprise funds for general services is not new. In 2006, the County Grand Jury found the city had used a “backdoor” channel to redirect money from one account for what were unauthorized and restricted uses.

LaNier first reported misuse of ratepayer funds as far back as 2014, according to the lawsuit. She again raised the issue in 2017. It was then that department directors said the lawsuit, “chided her for raising her concerns in an ‘inappropriate forum.’”

In 2019, LaNier was told, reads the lawsuit, that “city management had ‘lost confidence in her ability to perform the essential functions of her job.’”

She was told to collect her belongings and leave the building.

“Ms. LaNier was scapegoated,” said attorney Bob Gans with the Gilleon Law Firm. “She was a top internal auditor who made noise and the next thing she knows she was fired.”

Gans believes the city attempted to time her termination along with the termination of four Public Utilities Department employees who were involved in the troubled water meter program.

“It couldn’t be further from the truth,” said Gans. “She was shocked and still is, frankly. There was no warning. Ms. LaNier is approaching retirement age, yet she was terminated only 6 months before her pension would have vested. Through its actions, the City has not only deprived her of her livelihood, but also of a secure retirement.”

NBC 7 reached out to the city attorney’s office. In a statement, a spokesperson said the “office will seek direction from our client and respond through the courts.”

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