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Los Angeles Times
26-03-2025
- Business
- Los Angeles Times
Funds shrouded from an O.C. community college district board — is it illegal use of taxpayers' money?
Good morning. It's Wednesday, March 26. I'm Carol Cormaci, bringing you this week's TimesOC newsletter with a look at some of the latest local news and events. Rancho Santiago Community College District, which oversees Santa Ana and Santiago Canyon colleges, has been at the center of recent reporting by my colleague Sara Cardine, who for just over two years has been unraveling some eyebrow-raising actions — and relationships— between a vendor and a couple of former district administrators. When I say two years, it's a bit misleading. It is true she started digging into this complex story in January 2023, but, given the modest size of our staff, we could not spare her more than one day a week to devote to it. So she's plugged away quietly every Monday, interviewing stakeholders and availing herself of the California Public Records Act to request internal documents from host of a entities so she could put all the pieces of the puzzle together. What she has reported so far is roughly a third of that jigsaw; more pieces are awaiting at the side, tantalizingly so, until the time is right to put them into place. Readers might remember the first stories that materialized from Cardine's findings and were published in September, 'How one Orange County community college district found $8M of its own money,' and '2 retired Rancho Santiago CCD employees have deep moorings in ASCIP risk pool,' both of which (we heard through the grapevine) were sniffed at by at least one embarrassed (or perhaps nervous) insider as not worth worrying about because the Daily Pilot is 'just an insert' in the Los Angeles Times. The online readership stats for those stories belie that sentiment. Sometimes it's a true pleasure to be underestimated. Around the time those stories broke, a member of the district's board of trustees, Phil Yarbrough, pressed for an audit to get to the bottom of how it could be possible that $8 million had been essentially (maybe even intentionally?) hidden from the board. Those dollars might have been used to meet urgent needs over the years, yet they remained the knowledge of just a few people who, for whatever reasons, kept the info to themselves. On a recent Monday, the forensic audit was presented to the district's board. It confirmed every detail Cardine had discovered during her own investigation into the problematic relationship between RSCCD and the entity that held funds belonging to it without clear accounting for them, the Alliance of Schools for Cooperative Insurance Programs, or ASCIP, the unaccredited joint powers authority that provides districts with various types of insurance. Which led to our most recent articles, published in Sunday's paper: 'Community college district's audit of secret $8M insurance rebate fund exposes violations' in which Cardine reported, 'Accountants found that current and former district employees violated California's education code, state budgetary guidelines and the board's own policies by failing to publicly disclose the fund's balance, including in annual district audits.' The sidebar to that story was a not entirely unexpected reaction to that audit's findings, inasmuch as breaking ed code is unlawful: 'Rancho Santiago stakeholders take forensic audit findings to O.C., L.A. investigators.' Yes, the matter was sent to the district attorneys of both counties. Not only were there violations at the district level, but there still remain, as Cardine reports, 'the wider implications of ASCIP's practices involving the 140 public school district members it serves, from San Francisco to San Diego counties.' How many of those districts remain unaware ASCIP is holding funds back from them at a time when they could use the funds, wonders Barry Resnick, a source for Cardine's reporting. 'This is not the way taxpayer funds should be handled,' he said. • As had been predicted by many, celebrity chef Andrew Gruel was appointed from among three earlier mentioned candidates and immediately sworn in as the newest member of the Huntington Beach City Council last week. It also might not come as a surprise that the audience — representing both sides of the political divide — would became so loud in their bipartisan disagreement over the appointment that the police would be forced to clear the chambers of everyone except the council. Note the sign on the dais indicating Gruel's appointment to replace Tony Strickland (recently elected to the state Senate) had apparently been decided ahead of the meeting. • On a 4-1 vote last week and over the objections of some residents, the La Habra City Council gave the green light to the Diocese of Orange to build 21 market-rate apartments on a 1.6-acre grassy field at Our Lady of Guadalupe Catholic Church. According to TimesOC, a consultant for the Diocese told the council, 'It's just like any other apartment complex, it just happens to be owned by the Diocese.' Here's a lukewarm endorsement from one of the council members, Daren Nigsarian: 'I favor the project because I don't think we have a choice,' he said. • The three adult daughters of undocumented immigrants Nelson and Gladys Gonzalez, longtime residents of Laguna Niguel, were stunned to learn that when their parents showed up Feb. 21 for a routine annual check-in with Immigration and Customs Enforcement as part of an agreement to remain in the country, they were detained and sent back to Colombia. The L.A Times reports that, according to a statement from ICE, the married couple entered the country illegally in 1989 near San Ysidro. Their daughters, who are all U.S. citizens, wrote on a fundraising website, 'They have never broken the law, never missed an appointment [with ICE] and this sudden occurrence has left us in shock.' • College Hospital Costa Mesa announced earlier this month it had discovered that more patient information had been exposed during a data breach last year than had earlier been reported. Those impacted were notified that a 'threat actor' had accessed certain files within the hospital sometime between Aug. 14 and Sept. 17, 2024. • Orange County Dist. Atty. Todd Spitzer announced Friday his office is charging 48-year-old Irvine resident Saritha Ramaraju with one felony count of murder and one felony enhancement of personal use of a weapon. Ramaraju was arrested for allegedly slitting her 11-year-old son's throat with a kitchen knife after after they spent three days exploring Disneyland. • California Highway Patrol is investigating a multi-car crash involving a Huntington Beach police officer that sent six people to the hospital Sunday night. The crash occurred at about 10:15 p.m. near where Beach Boulevard meets Yorktown Avenue. • A round-up of some of the local public safety briefs reported by City News Service over the past several days: — A 35-year-old man was charged Friday with stabbing an O.C. Sheriff's Department deputy in San Clemente on March 18. Moses Paulisin was charged with attempted murder, willful resisting a peace office resulting in injury, assault with a weapon on a peace officer and obstructing an officer, all felonies. The deputy was treated for a neck wound and released from a hospital — Michael Carl Hallgreen, 70, was sentenced Friday to 16 years to life in prison for fatally stabbing a fellow resident in a care home in Anaheim on Nov. 20, 2018. — The man who was charged with molesting two girls over a seven-year period while living in a crowded Cosa Mesa home with their mother was found guilty Monday. Nelson Anibal Saavedra is scheduled to be sentenced May 9. · The Angels acquired right-handed starter Ian Anderson from the Atlanta Braves on Sunday in a trade for left-hander José Suárez, according to this Associated Press story in the Los Angeles Times. Bill Shaikin's lasted column on their team, also for the The Times, will no doubt resonate with die-hard Angels fans. Shaikin wonders out loud what, exactly, the plan is for this season, inasmuch as the team has the longest playoff drought in Major League Baseball. • Golfing legend Jack Nicklaus was the featured guest last week when the Hoag Classic, the annual tournament for pro golfers 50 years old and up, held its pre-tournament Breakfast with a Champion at the Balboa Bay Resort. The three-day tournament got underway Friday, with Brendan Jones leading at the end of the day, Fred Couples tying for lead with Spain's Miguel Angel Jiménez at 11 under par on Saturday and Jiménez finishing the tournament at 15 under par to win by a stroke. • One of the senior players on Newport Harbor's baseball team was crushed in February to learn that his 47-year-old father had died unexpectedly while on vacation in Cabo San Lucas. This story by Daily Pilot writer Matt Szabo about the way the team and coach have been rallying behind him is inspirational. 'It's definitely one of the coolest brotherhoods I've ever witnessed,' the player's mother said of her son's teammates, some of whom had been coached by her late husband when they were younger. • In honor of Holi — the Hindu festival of colors — the Ritz-Carlton, Laguna Niguel is hosting an afternoon tea service reimagined for the holiday. This special service, which is being offered on Saturdays, is dubbed Chit, Chat, Chai. Priced at $138 per person, it is being served up in the resort's restaurant Kahani, helmed by New Delhi native chef Sanjay Rawat. Reservations for Kahani are available on OpenTable. • In partnership with Charitable Ventures and UCI, the Samueli Foundation and Orange County Community Foundation recently surveyed more than 600 county nonprofit leaders for a needs assessment report, which revealed obstacles they typically encounter in their field. The main challenges uncovered included investing in staff and leadership, infrastructure and financial sustainability, collaboration and restrictive funding models. It was announced last week the Corona del Mar-based Samueli Foundation has committed $15 million to three initiatives to help meet that those needs. Segerstrom Center for the Arts presents American Ballet Theatre's premiere of 'The Winter's Tale,' inspired by Shakespeare's play, from Thursday, April 3 through Sunday, April 6. Tickets start at $44.07. Visit for more information. • WonderCon returns to the Anaheim Convention Center this Friday through Sunday and will feature more than 900 exhibitors, cosplay, panels and entertainment. The San Diego Comic Convention (Comic-Con International), which also organizes Comic-Con in July at the San Diego Convention Center, puts on the Anaheim event. • The OC Japan Fair is set for Friday, April 4 through Sunday, April 6 at the Orange County Fair & Event Center. General admission is $15 if purchased in advance and increases to $18 beginning April 4. Free admission for ages 6 and younger or 66 and older. Parking is $12. Hours Friday are 4 to 10 p.m., Saturday, noon to 10 p.m. and Sunday, 11 a.m. to 7 p.m. For more details visit OC Japan Fair. • Green thumb alert: The San Clemente Garden Club is hosting its 2025 GardenFest on Saturday, April 12, from 8 a.m. to 2 p.m. The club's website touts it as the city's 'Biggest, Best Plant Sale and Garden/Household Goods Flea Market.' From free garden tool sharpening to children's activities,it looks like there will be a lot going on during the event in addition to the plant sale and flea market. San Clemente Community Center, 100 N Calle Seville. Until next week,Carol I appreciate your help in making this the best newsletter it can be. Please send news tips, your memory of life in O.C. (photos welcome!) or comments to
Los Angeles Times
22-03-2025
- Business
- Los Angeles Times
Rancho Santiago stakeholders take forensic audit findings to O.C., L.A. investigators
As Rancho Santiago Community College District officials determine their response to a forensic audit showing conflicts and state education code violations regarding the maintenance of an off-books insurance rebate fund, some are seeking the involvement of a higher authority. Two individuals with ties to the district, one of them a member of its board of trustees, have reached out to district attorney's offices in Orange and Los Angeles counties with the audit's findings and complaints about the Cerritos-based risk pool operator that held the funds, Alliance of Schools for Cooperative Insurance Programs (ASCIP). Findings from the audit were delivered during a March 10 regular board meeting by Travis Casner, a certified fraud examiner with Houston-based firm Weaver. Casner found current and former Rancho Santiago administrators violated sections of California education code and state budget accounting guidelines when they withheld the risk management fund balances and statements from elected officials as well as their own external auditors. The report also described conflicts of interest surrounding two now-retired vice chancellors, John Didion and Peter Hardash, who did not fully disclose they served on the board for ASCIP, a joint powers authority, and a subsidiary created by the agency to handle bond construction insurance, even as they recommended policies to the district through the two entities. ASCIP's practices were also examined by auditors and called into question during Casner's presentation. He showed what appeared to be a practice of intentionally obscuring the amount of excess premiums, or rebates, returned to individual member school districts as officials with the agency reported only one grand total on annual audits. RSCCD Board President Daisy Tong assured constituents at the meeting the board would discuss the ramifications of the audit. But her one of her board colleagues, Phil Yarbrough, is taking things one step further. The trustee Tuesday forwarded the report to the Orange County district attorney's major fraud unit, in hopes investigators might follow up on possible violations of law identified in the forensic audit. 'It's not handled by us. We don't call the Santa Ana Police Department,' Yarbrough said in an interview Thursday. '[But] I have a responsibility as an elected official to make sure this is being looked at seriously.' Yarbrough said there are two avenues for prosecutors at multiple levels to explore — violations at the district level and the wider implications of ASCIP's practices involving the 140 public school district members it serves, from San Francisco to San Diego counties. While he and fellow board members were primarily focused on the former, investigators may want to look into the joint powers authority that provided a context for RSCCD administrators' actions, Yarbrough said. 'All of this is pointing to financial fraud, and that's at the state level. There needs to be an investigation for there to be complete transparency and accountability,' he added. A similar complaint has been brought to the attention of prosecutors in Los Angeles County, where ASCIP is headquartered, by Barry Resnick, a retired RSCCD professor and former faculty union president from 2012 to 2016. Resnick on Tuesday forwarded the recent audit report to the L.A. County district attorney's public integrity division, which reviews complaints alleging criminal misconduct, prosecutes crimes committed by public officials in the course of their official duties, according to its website. In January 2023, the retiree reached out to the Daily Pilot with concerns about Didion and Hardash's ties to ASCIP and a Hawaii-based subsidiary it created in 2005 to handle bond-construction related insurance—Captive Insurance for Public Agencies, Ltd. (CIPA). When he discovered last year ASCIP was holding tens of millions of dollars in public school funds, Resnick worked with others to uncover the $8.1 million being held on behalf of Rancho Santiago. Using records obtained from the organization that were also reviewed by the Pilot, he learned other public school and community college districts reportedly had insurance rebates banked by the agency and contacted them to see what their administrators knew. 'I wanted to know, is what occurred within the Rancho Santiago District an anomaly, or is this a pattern involving other districts?' Resnick said Friday. 'And I found out there are other districts that are unaware they have funds being held by ASCIP.' Resnick is hopeful that, armed with the Rancho Santiago audit and his own findings, prosecutors might take up the case. 'This is not the way taxpayer funds should be handled,' he said.
Los Angeles Times
20-03-2025
- Business
- Los Angeles Times
Community college district's audit of secret $8M insurance rebate fund exposes violations
A forensic audit summoned by a Santa Ana community college district that last year chanced upon $8.1 million in insurance rebates secreted away in a fund held by a third-party vendor returned troubling findings about administrators' actions across decades. Accountants contracted by the Rancho Santiago Community College District Board of Trustees reported current and former district employees violated California's education code, state budgetary guidelines and the board's own policies by failing to publicly disclose the fund's balance, including in annual district audits. (The district oversees Santa Ana and Santiago Canyon colleges, along with two educational centers). Meanwhile, district administrators made $3.6 million in withdrawals from a member risk management fund (RMDF) — paying off budgetary shortfalls and at least one legal settlement — without disclosing the source to board members or advising them the money was being held outside the district, according to the auditors. Released during a March 10 board meeting, the audit's findings call into question not only the motives of the public school employees who recommended and managed $287 million in insurance premiums, but the practices of the Cerritos-based joint powers authority that held the banked dividends, the nonprofit Alliance of Schools for Cooperative Insurance Programs (ASCIP). Travis Casner, a certified fraud examiner and partner overseeing forensics and litigation for Houston-based firm Weaver, said the nonprofit agency failed to provide statements to school districts enumerating their individual holdings within the risk management deposit fund, reporting only the total, non-delineated fund balance in its own audits. ASCIP further enshrined two now-retired Rancho Santiago cabinet members — John Didion, former vice chancellor of human resources, and former Vice Chancellor of Fiscal Services Peter Hardash — along with current Assistant Vice Chancellor of Fiscal Services Adam O' Connor, in governance roles with the organization from 1998 through 2021. In a joint powers authority like ASCIP, representatives from members served by the entity make up an agency's board. But the two RSCCD administrators' executive positions at ASCIP granted them the authority to decide when rebates, or excess premiums, were returned to more than 100 public school members statewide in the self-funded insurance risk pool and how much each district, including their own, received. Under their leadership, Rancho Santiago took in more than $12 million in rebates — at one point receiving up to one-third of all the dividends paid out by ASCIP that year, even though the district's premiums amounted to just 10% to 12% of the money paid into the pool. 'When the fund balance for the district was $7.2 million at the end of December 2023, that represented 33% of ASCIP's entire [RMDF] balance across all participants, which is disproportionately high,' Casner told Rancho Santiago trustees. 'The district was leaving more funds in that fund, compared to other districts.' Casner tracked activity in and out of the account from 1997, interviewed multiple officials, read emails between district administrators and leaders of ASCIP and waded through governance committee meeting minutes to glean how and when the agency authorized rebates among its 140-district membership. Hardash and Didion did not reply to the auditors' requests for interviews, he noted. The auditor found modest rebates, amounting to less than $300,000 per year, were returned to Rancho Santiago between 1997 and 2018, when premiums paid for workers' compensation and property and liability coverage exceeded the amount of claims paid out. That changed, however, after Rancho Santiago switched its employee medical and health coverage to ASCIP in 2015, a move proposed by Didion, the district's former vice chancellor, whose ties to the JPA date back to at least 1994 and continue to this day. The district annually put from $23.8 million up to $30 million into the healthcare risk pool and, in the nine years that followed, spent more than $241 million to retain health coverage. 'When the district became a member of the health benefits program in 2015, at that point the premiums paid by the district represented about 10% of ASCIP's total membership — all the other 20 community college districts and school districts, all 140 of those collectively ' Casner told trustees. 'That changed the dynamic of the rebates, as far as the dollars.' Rancho Santiago's rebates, or returned excess premiums, climbed from the less than $300,000 collected from workers' compensation and liability each year to as high as $2.2 million in 2021, according to a table included in Weaver's 46-page report. Yet under Didion and Hardash, and the administrators who succeeded them, the unreported funds continued to grow. In multiple emails obtained by Weaver, O'Connor and Rancho Santiago's risk manager, Don Maus, made references to rolling over rebate after rebate, as 'Peter' had done. 'This fund kind of started as a rainy day fund for small, unbudgeted purchases, then evolved into an emergency fund that was not on the district's financial record,' Casner said. Conflicting loyalties Many of the withdrawals were made by Didion, who served on various ASCIP governance committees dating back to 1994, according to records obtained by the Daily Pilot from the agency, including the executive committee, from 1998 to 2016, when he was an officer for eight years. Upon retiring from Rancho Santiago in 2016, Didion accepted a paid contracting position earning $96,000 per year as the managing director of Captive Insurance for Public Agencies (CIPA), a Hawaii-based wholly owned subsidiary he personally helped ASCIP form in 2005 to handle bond construction-related insurance and on which he served as a board member until his retirement from the district. When Didion retired, Hardash took over, serving as a member or alternate member on ASCIP's board until his retirement in 2021. The following year, O'Connor joined as an alternate with potential voting power. Hardash also assumed Didion's seat on the Hawaii-based CIPA in 2017, after being nominated by his former Rancho Santiago colleague, email records obtained by Weaver indicate. Didion transitioned back to serving on the captive's board in 2024, and the pair of retirees continue to broker in public school insurance business through the agency today. '[Didion] and Mr. Hardash were both making decisions about whether to defer rebates or have them paid back to the district while, at the same time, being more involved in ASCIP's executive committee, including as president, vice president and treasurer, which creates the inherent conflict of interest,' Casner determined. Kept in the dark The auditor also shared bylaws created by the joint powers authority to govern the holding and return of insurance dividends to individual member districts. Those rules stipulate ASCIP is to provide quarterly statements to member districts, including balances and interest accrued, and report those individualized amounts annually to its executive committee. 'At no point did the ASCIP financial statements ever include individual member balances,' Casner said. Keeping districts in the dark appeared to be intentional, according to the auditor, who shared a Nov. 22, 2016 email from ASCIP's then-Chief Financial Officer Lynn Truong to Hardash and other board members, following a meeting of the agency's finance committee. 'Since some concerns were raised after the meeting regarding the disclosure of the individual member balance this year, we have decided to hold off on including the list of districts with their balance until next year,' Truong wrote. 'By then the members would have had a couple of years to reduce their balance, which is consistent with what we communicated to the Board.' One exhibit included in Weaver's final report is an email correspondence between Rancho Santiago's risk manager, Don Maus, and Truong about channeling rebates into the off-books fund. 'We would like to deposit our rebate into our RMDF, but the instructions say that we must have Board approval. I don't believe we've needed that before. Is this something new?' Maus asked. 'Actually, you can just have Peter Hardash sign the form and send it to us,' Truong replied. 'My apologies. There was an error on that instruction. It should have said 'ASCIP's Board approval required' not District's.' Auditors are seeking more information from the agency about those correspondences. Casner also said the auditors' questions regarding the agency's creation of CIPA and Didion and Hardash's service on that board were shut down by ASCIP's legal team, which stated the captive was an entity separate from the joint powers authority. ASCIP attorney Robert J. Feldhake, who also sits on CIPA's board of directors, did not respond to a request for comment. Violations and 'next steps' The forensic audit determined the district's failure to disclose risk management fund balances in financial statements and audits, and keeping the account's existence a secret from board members, conflicted with portions of California's education code describing how community college districts are to audit and report assets held outside their budgets. State and Rancho Santiago's own administrative regulations regarding public inspection of a district's receipts and balances, and how and where such assets should be held and invested, also appear to have been violated, Casner maintained. Rancho Santiago Trustee Phil Yarbrough heads the board's fiscal and audit review committee. Last June, upon learning of the $8 million that had been kept secret from the board, he immediately demanded the funds be remitted to the district and placed in reserves, in accordance with administrative procedures. The veteran board member, following the March 10 meeting, said he and his colleagues were shocked to learn of the breadth and extent of the violations of law. To his way of thinking, 'The next step is a lot of next steps.' 'I remain committed to the discipline and accountability of those responsible,' he said at the meeting. 'And I want to assure the public and the Rancho community that all necessary steps will be taken to rectify the situation and prevent this from ever happening again.' Board President Daisy Tong echoed Yarbrough's assertions. 'This was a lot of information to process in a quick timeframe,' she said after Casner's presentation. 'I'm sure we're going to have discussions on this item again — this is not a one time and we're done [situation].'
