San Jose, CA –After the bankruptcy filing, officials will be investigating the allegations of falsified financial reports that were raised by City Attorney James Penman. This is in connection with the city’s diminished reserved funds that were used to cover up the city’s budget.
The anomaly was discovered by the interim city manager, Andrea Travis-Miller. It was discovered that money was diverted by city officials from the general fund to the liability insurance and workers compensation to balance the city’s budget. The officials were borrowing money from the general fund but were unable to repay it. But Travis-Miller is unable to confirm if there was any intentional wrongdoing.
The city is being probed by the San Bernardino sheriff’s office for several months now and is being followed up by the police department and the district attorney’s office. City Mayor Pat Morris is surprised that such allegations arose. It is widely known that City Mayor Pat Morris and City Attorney James Penman have been feuding for quite some time and the law officials are handling the situation with care to make sure that the allegations are based on actual facts and not just an accusation hurled by one politician to another. Penman had run for mayor but was never able to meet Morris during the election.
City Attorney James Penman raised the issue of falsified budget reports during the city hall meeting. According to him that city officials had been doing this for 16 years but refused to name the guilty officials. He claimed that the city has been covering up the true extent of the fiscal problems. On top of that he stated that he had already alerted an “outside governmental agency” and turned over all necessary evidence. But the strange thing is that he refused to name any official and the exact irregularities that he discovered. In his accusation he also claimed that he only discovered the wrongdoing last February. Sour-graping of a bitter rival?
Going back to the discovery of interim city manager Andrea Travis-Miller and new director of finance, Jason Simpson; they unearthed that the city’s reserves has dropped to $127,000 and as a result compromising its June 15 payroll which requires a fund of about $4 million.
A day before the disclosure of the law enforcement probe came out, a spokesperson for Gov. Brown stated they had no comment pertaining to the legality transfers of funds. What further complicated the fiscal problems was the eradication of the Economic Development Agency which removed a source of revenue for the city.
Since the city will not be able to meet payroll for the coming 60 days, San Bernardino will possibly be the first California city to not go through the mandated mediation before filing for bankruptcy. This will be voted upon by the city council. The 60-day neutral evaluation process is a mandate by Governor Jerry Brown for municipalities that are contemplating on filing for bankruptcy. In the mediation process, the city officials have to hold sessions with the creditors and come up with concessions or compromises. It is considered a slowed death. It was a mandate urged by labor unions and creditors after the Vallejo bankruptcy which voided its labor contracts when it sought the protection of bankruptcy.
San Bernardino’s woes just keeps on piling up…