SamTrans Accused of Hiding Millions of Public Dollars

SamTrans leaders decline to answer questions after insiders disclose a “second set of books” used to track how millions in public dollars were spent at the transit district.

By Vicky Nguyen, Kevin Nious, and Jeremy Carroll
|  Wednesday, Feb 12, 2014  |  Updated 4:49 PM PDT
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SamTrans leaders decline to answer questions after insiders disclose a “second set of books” used to track how millions in public dollars were spent at the transit district. Vicky Nguyen reports in a story that aired February 11, 2014

SamTrans leaders decline to answer questions after insiders disclose a “second set of books” used to track how millions in public dollars were spent at the transit district. Vicky Nguyen reports in a story that aired February 11, 2014

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A former SamTrans accountant has disclosed a second set of books he said the district used to hide millions of public dollars by logging fake and inflated expenses. The NBC Bay Area Investigative Unit filed a records request to verify these claims, and uncovered more than a million dollars’ worth of expenses that had no back up.

SamTrans handles the budgets for SamTrans buses, Caltrain, and the San Mateo County Transportation Authority. But the agency has gone silent in response to NBC Bay Area’s questions concerning how the transit district is handling public money.

“This is not telling the truth to the public,” former SamTrans accountant David Ramires told NBC Bay Area. Ramires worked for SamTrans from 2001-2012. He said he quit after getting “fed up” with finance managers ordering him to record transactions that he believed were fraudulent.

Ramires detailed how he, alongside finance managers, deliberately created fake and inflated expenses, which allowed Chief Financial Officer Gigi Harrington to hide those dollars in secret buckets.

“A million dollars was Gigi’s goal every year to get in budget money,” he recounted.

Ramires first came forwardin order to expose problems at the district last summer, when insiders provided documents showing SamTrans paid for management coaches and consultants out of an account designated for insurance.

In September, SamTrans CEO Mike Scanlon admitted these were errors, however, denied any fraud, calling them “honest mistakes.”

But as the accountant who logged these transactions, Ramires claims that the improper payments, and now the second set of books, were part of a system that allowed finance leaders to spend money at their discretion and avoid public scrutiny.

To verify his claims, NBC Bay Area filed a records request for asking for invoices, checks, and back-up documents for expenses from 2011. This request reflected a portion of the expenses Ramires revealed as fake.

In their response, SamTrans’ claimed that the request cost the district “$50,000 in public funds and countless staff hours,” to produce. Yet, the district could not provide invoices or checks for expenses that Ramires highlighted as inflated. Those expenses included $118,242.50 for “Maze and Associates,” the auditing firm contracted by SamTrans to audit its accounts and find discrepancies. They also included $1,692,341.41 accrued for Amtrak services, an amount for which SamTrans could only provide $701,196.71 in backup.

 

 

 

Via email, the district was again forced to acknowledge that NBC Bay Area uncovered more errors. However, instead of attributing an honest mistake, this time they blamed Ramires, citing an “action taken unilaterally by a former employee.” The district maintained that these expenses were appropriate and consistent with past practices.  

NBC Bay Area asked Eugene Yano, a forensic auditor with 25 years of experience in government accounting, for his reaction to SamTrans’ reports and responses.

“Well I think the results speak for themselves,” Yano said of the expenses without backup.

Of particular concern to Yano, was SamTrans’ explanation that these erroneous expenses could have been recorded unilaterally, without anyone in management ever noticing. 

“A unilateral action should not be possible in a big organization like this,” Yano said.

Despite weeks of requesting an interview with CFO Gigi Harrington, SamTrans reneged on their assurance to allow NBC Bay Area to speak with her for this report.

When NBC cameras caught up with her before a Caltrain board meeting to ask if she could explain how she was handling public dollars, Harrington said, “No, not today,” and walked into an employee-only office area.

Harrington later emerged flanked by public information officer Mark Simon, and security personnel. Simon wedged himself between Harrington and NBC cameras and tried to drown out questions by repeating, “If you wish to do an interview with anybody at this agency, you need to go through the public affairs office.”

While SamTrans declined to answer our questions concerning the inflated expenses and the second set of books, the agency did provide NBC Bay Area with a supplemental report conducted by Maze and Associates.

The auditor told NBC Bay Area they would not comment on the financials of a current client unless authorized by SamTrans, but in their report, they examined a sample of transactions from the account where we found inflated expenses. In their report, the auditors uncovered more than a million dollars in expenses without backup. However, they ascribed these discrepancies to “estimates” made by staff, and did not view it as a problem the agency should address.

The supplemental report from the auditor goes on to state:

“We were not engaged to, and did not, conduct an audit, the objective of which would be the expression of an opinion on the specified elements, accounts, or internal controls. Accordingly, we do not express such an opinion. Had We performed additional procedures, other matters might have come to our attention that would have been reported to you.”

Meanwhile, San Mateo District Attorney Steve Wagstaffe has opened an inquiry into SamTrans after the first NBC Bay Area report aired. Investigators say their review is ongoing.

Ramires hopes the district attorney’s findings will result in major changes. “[These are] public funds,” he said. “Public money that’s supposed to be helping for the public interest and we know it’s not.”

Have a tip for the Investigative Unit? Email Vicky@NBCBayArea.com. You can also follow her onTwitter or connect on Facebook Call 888-996-TIPS (8477) or email the Unit atTheUnit@nbcbayarea.com.

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