DA will look into embezzlement charges in Gilroy, California

FROM THE GILROY DISPATCH

The Santa Clara County District Attorney's Office will take a close look at embezzlement charges leveled at Gilroy Unified School Board trustee Francisco Dominguez.

John Chase, Deputy District Attorney with the Public Integrity Unit, said Wednesday the district attorney's office will be "finding out what the details are."
"I read the story (in The Dispatch) and knew immediately that we were at least going to figure out what's going on," he said.
On Tuesday, the Gilroy Foundation Board sent a strongly worded letter to the South County Collaborative Board, severing a $70,000 grant it obtained to assist the Collaborative and kicking the agency out of shared office space. Those actions followed an unanimous no-confidence vote taken by the 12-member Gilroy Foundation Board that was directed at the South County Collaborative Board.
"The Gilroy Foundation has positioned itself as an example of community wellness and integrity. The lack of legal reporting of the missing money shows a lack of judgment by an agency that was a victim but now appears to be covering up a misdeed. The Gilroy Foundation believes in transparency among our partners, and unfortunately this trust has been violated," wrote John Perales, Gilroy Foundation president and principal of Christopher High School, in a formal letter that was emailed Tuesday morning to the Collaborative.
The Foundation Board very strongly believes, Perales said, that the South County Collaborative Board should have turned to law enforcement after well-known local accountant John Blaettler - who was serving as treasurer for the South County Collaborative at the time - laid out what he called a "systematic" embezzlement by Dominguez.
Blaettler said the evidence showed Dominguez, through his firm DZ Consulting, "stole" $52,629 while managing federal grant money for the South County Collaborative.
This figure transposes a South County Collaborative balance sheet obtained by The Dispatch dated April 5, 2011. A line item lists "total accounts receivable" as $52,629.
As of June 15, the Gilroy Foundation will ax the $70,000 grant. Currently the money funds two-thirds of the Collaborative's Strategic Director/CEO position, including a laptop computer and office space at Gilroy Foundation's headquarters at 60 Fourth St., according to Perales.
"We feel that we can't support their board if they will not take the appropriate actions, given the situation they're in with the contractor possibly embezzling money," Perales said over the phone Tuesday. "At this point we don't feel that we can continue, given their actions - or, inaction, I guess."
All of this follows what Dominguez described as a "billing dispute," which arose after he was hired by the South County Collaborative in September 2008 to manage a five-year, $125,000-per-year federal Drug Free Communities grant that was renewable annually.
During this time, Blaettler, who resigned as South County Collaborative's treasurer March 25, said Dominguez systematically overbilled the agency by $52,629.
During an hourlong interview last week, South County Collaborative Chairwoman Lynn Magruder, who is employed as a grants administrator for the human services agency Community Solutions, repeatedly declined to name Francisco Dominguez or DZ Consulting as the contractor. Nor would she acknowledge the $52,629 figure, referring to it instead as "the disputed amount."
However, on a South County Collaborative balance sheet obtained by The Dispatch dated April 5, 2011, a line item lists "total accounts receivable" as $52,629. Furthermore, in minutes obtained by The Dispatch from a Nov. 4 2010 South County Collaborative Board of Directors meeting held at the Gilroy Library, under board action it states, "The Board voted not to renew the contract with DZ Consulting for year three of the Drug Free Communities project." Magruder is listed as present and the action to not renew with DZ Consulting passed 9-0 with three board members absent.
Blaettler said he resigned as treasurer after the South County Collaborative, led by Magruder, declined to bring the matter to the attention of law enforcement agencies and, alternately, reached a civil agreement with Dominguez to pay back more than $52,000 to the agency.
The Gilroy Foundation has publicly backed Blaettler's calls for transparency and a thorough investigation.
On May 24, Perales said the Foundation's 12-member board discussed terminating the $70,000 grant. The money came from the Silicon Valley Community Foundation - a philanthropic organization in San Mateo and Santa Clara counties - and was specifically applied for by the Gilroy Foundation with the intention of administering the money to the Collaborative, according to Donna Pray, the Foundation's executive director.
The decision to cut off monetary support was unanimously solidified in the past few days, according to Perales.
"We are saddened that our support of the Collaborative has been compromised by the decisions made by the SCC's Board regarding the missing funds taken by their former independent contractor," he wrote.
When asked Wednesday how she felt about the Foundation Board's decision, Magruder replied "I think anyone would be sad and disappointed."
Magruder said the South County Collaborative has left the door open on the question of whether it would seek law enforcement's involvement, saying "we haven't made that decision yet," but acknowledged the topic is not on the meeting agenda for South County Collaborative's Thursday board meeting.
Magruder did say "we've discussed the situation with our Drug Free Communities grant makers, and they're investigating it and will issue a finding."
Magruder explained the DFC grant makers are a part of the federal government substance abuse and mental health services agency.
During an interview last week, Blaettler - a former Gilroy Foundation board member - described the relationship between the Gilroy Foundation and South County Collaborative prior to this issue as "great." Because of this, he wanted to act as a liaison between the two by sitting on the Collaborative's board which led to him becoming the South County Collaborative's volunteer treasurer.
After repeatedly requesting and eventually obtaining the South County Collaborative's financial data from Dominguez and analyzing it, however, Blaettler said he noticed "inaccuracies" as billings submitted by Dominguez exceeded what was allocated to his contract.
Blaettler presented these findings to the South County Collaborative Board of Directors in November 2010, but became frustrated with "a lack of accountability." He submitted a resignation letter dated March 25, writing he did not want to be party to a decision that allowed Dominguez to "get away with criminal behavior by simply allowing him to return the $52,269 he stole."
Perales reiterated this viewpoint Tuesday, saying the Gilroy Foundation would "love to continue" its relationship with the Collaborative and work on rebuilding trust, but "most importantly, we feel as a board we can't support an organization where their board, we feel, is not taking the appropriate action."
On Wednesday, Deputy District Attorney Chase said he has been in contact with Blaettler, who is on vacation. He said he will speak to Blaettler when he returns. Chase said regardless of whether the South County Collaborative files a complaint, the district attorney's office has the authority to file a case.
GUSD school board members Jaime Rosso and Tom Bundros said they expect to see Dominguez at the June 2 school board meeting at 7810 Arroyo Circle. Neither commented extensively on the embezzlement accusations, but said their colleague was an "outstanding board member" and "great public servant for the schools."
"He's a personal friend, and it seems it would be completely out of character in my mind, so it's really hard for me to accept the accusations," Rosso said.
As for the Collaborative Strategic Director/CEO - the agency's only paid position - Pray said Elena Ruiz-Thomas holds this position but is not sure if Ruiz-Thomas's job will be eliminated entirely.
The $70,000 grant covers 75 percent of Ruiz-Thomas's salary, while "the SCC has other funds to pay the rest," Pray said.
"I don't know anything about (the Collaborative's) financial situation and they may have the money to continue to employ her," Pray said, noting the Gilroy Foundation is just pulling monetary backing on their end.
South County Collaborative Chairwoman Magruder said the Board will "do everything in their power" to sustain the position.