SamTransr.doc by BayAreaNewsGroup


									                                Stephen M. Wagstaffe, District Attorney

                          COUNTY OF SAN MATEO
                           KAREN GUIDOTTI                  ASSISTANT DISTRICT ATTORNEYS
                           CHIEF CRIMINAL DEPUTY           MORLEY PITT
                                                           AL SERRATO

                   400 COUNTY CENTER, 3RD FLOOR  REDWOOD CITY  CALIFORNIA 94063  (650) 363-4636

August 12, 2014

David J. Miller, Esq.
Hanson Bridgett LLP
425 Market Street, 26th Floor
San Francisco, CA 94105

RE: San Mateo County Transit District Investigation

Dear Mr. Miller,

I am writing to inform you that we have concluded our investigation into allegations of improprieties in
accounting practices at the San Mateo County Transit District and are closing this inquiry, having found
no indication of criminal activity. I would like to take this opportunity to thank you for the cooperation
and responsiveness which characterized our interaction with the District throughout this investigation.

As you know, this investigation began when former employees of SamTrans (David Ramires and Ling
La) brought to light what they felt was a pattern of improper accounting practices occurring at
SamTrans. In essence, the former employees alleged that funds were improperly funneled into accounts
from which unauthorized projects or expenses could be concealed from the Board of Directors.

In the course of the investigation, a review of agency accounting records was conducted by two separate
accounting firms. The first was Maze and Associates, the accounting firm currently utilized by the
District. The Maze inquiry evaluated the liability accrual procedures in use by the agency. Specifically,
Maze assessed the allegation that expenses and liabilities were intentionally overstated in order to make
the financials appear worse that they were so that management could ask for more taxpayer money.
Their analysis found no indication of improper or criminal behavior. While their analysis was limited in
scope, due to the refusal of Ramires and La to speak with their auditor, their findings were limited to
mistaken accounting entries which fell below the threshold for materiality.

Because the complaining parties refused to cooperate with Maze, we engaged the services of MGO
Certified Public Accountants, an independent firm with expertise in county government. Mr. David
Bullock, a partner at the firm, spoke with the complaining parties and subsequently reviewed and
analyzed both the information they provided as well as relevant accounting records from the agency. He
also conducted site visits at the District’s offices to inspect accounting records. Bullock noted that the
vague and unsupported nature of some of Ramires’ contentions made substantiation of the claims
impossible. However, while he did not observe the occurrence of any criminal violations, his
investigation did reveal instances of inappropriate accounting entries. For example, for the period 2009
to 2013, Bullock noted accruals that were not supported by any documentation, nor followed by
payments that would suggest monies were owed to vendors as of the end of the fiscal year. He
concluded that accounts payable was not being properly reversed at year end, causing an aggregation of
unliquidated balances to accumulate over the years. While this balance was subsequently reversed by
the District in 2013 via a journal entry in the amount of $2.5 million, it was indicative of the failure to
follow generally accepted accounting principles. In this respect, Bullock’s findings were consistent with
the claims of accounting irregularities made by the former employees. Of particular interest to our
inquiry, there was no indication that any of this money was embezzled, lost or otherwise unaccounted

In sum, the investigation revealed no evidence of theft, embezzlement, or other criminal conduct. For
these reasons, we deem this investigation closed. If you have any questions, please feel free to contact
me either by email or by phone.

Very truly yours,


By        Albert A. Serrato
     Assistant District Attorney

To top