The Brief

A year after he took the top job in 2019, the president of one of California’s largest and most powerful unions said in a newsletter that he wanted to be “the 800 pound gorilla” in Sacramento politics.

Since then, the California Correctional Peace Officers Association, the union known as CCPOA representing 26,000 state prison guards, has spent and spent, in a way it never did before. Its biggest recipient: Gov. Gavin Newsom, who has taken $2.9 million from the union since he was elected governor.

That’s 31% of all political spending by the union since 2001.

The union under President Glen Stailey gave $1.75 million to Newsom’s anti-recall campaign in 2021 – the largest single contribution to that effort – and another $1 million to support Proposition 1, Newsom’s treatment and housing plan for people experiencing serious mental illness, which passed by the narrowest of margins this year.

That’s a noted contrast to the union’s relationship with the three governors who preceded Newsom, especially former Gov. Arnold Schwarzenegger, who fought the union’s proposed raises and was the target of an aborted recall campaign launched by the union.

CCPOA has contributed more than $9.3 million to political campaigns in the last 20 years

Prior to the Newsom administration, the prison union’s biggest political expense came in 2005, when it joined other labor organizations in fighting a package of ballot measures sponsored by Schwarzenegger that would have curbed state spending and weakened public employee unions. The unions won, dealing Schwarzenegger a major defeat.

Campaign finance records show the union largely stayed out of political fights during former Gov. Jerry Brown’s administration. It avoided the ballot measures that lowered criminal sentences for nonviolent crimes and gave inmates more opportunities for parole — propositions that voters passed and that contributed to declining headcounts in state prisons.

Then Newsom took office, and the union’s pocketbook opened wide.

There are two ways to look at that spending, according to interviews with legislators, labor leaders, former prison officials and budget watchdogs.

In one, it’s a naked display of power: one of the richest unions in a labor-friendly state reminding its top politicians that it can spend with them — or against them. That’s primarily the view from outside the Capitol.

In the other view, from inside the Capitol, it’s a reflection of the union’s anxiety in the face of waning influence as California’s future almost certainly includes fewer prisons and fewer union-represented prison guards to staff them. The numbers don’t lie: California is housing 70,000 fewer inmates in state prisons than it did in 2011.

At the outset of his first term, Newsom floated the idea of closing a single state prison. He’s since closed three and canceled a contract on another private prison, collectively saving hundreds of millions of dollars. But facing a budget deficit and 4,000 fewer inmates projected to be in prison by the end of his term in 2026, Newsom demurred this year from shutting down another institution.

In a year of budget scarcity, when each inmate costs about $132,000 to house annually and the Legislative Analyst’s Office has said the state has space to close five more prisons, Newsom has been stubborn about keeping prisons open. He has said he wants to keep some additional capacity in the system, and that he wants to build up rehabilitative programs that can help inmates reintegrate into society.

Izzy Gardon, a spokesperson for Newsom, in a written statement said the governor has tried to balance potential budget savings with public safety needs inside prisons.

“Saving taxpayers billions of dollars without impacting public safety, Gov. Newsom has closed more prisons than any of his predecessors,” he wrote. “The governor’s decisions have been based exclusively on meeting the evolving needs of our criminal justice system, in a manner that maximizes public safety and the judicious use of taxpayer dollars.

Nathan Ballard, an adviser to the union and a longtime Newsom ally, said in written responses to questions from CalMatters that the union and the governor had “respectful and substantive” discussions about potential prison closures this budget cycle.

“Union leaders clearly aired their views and listened very carefully to the administration’s priorities,” Ballard said. “The governor made it known that he valued the union’s input. Ultimately, Gov. Newsom’s process is his own, and it would be irresponsible to speculate about how he arrives at any particular decision.”

The millions of dollars the union shoveled into Newsom’s most significant projects were a reflection of the union’s priorities, he said.

“When the union and the governor are in alignment policy-wise, as they were during Proposition 1, the CCPOA does not hesitate to fight hard for the governor’s initiatives,” he said.

“Even while grappling with policy areas where they are less aligned, there is a strong commitment to finding areas of agreement and progress.”

CCPOA's big contracts in Newsom years

Spending lots of money to support the most powerful executive in the state is perhaps not surprising. So what happens to the politicians who cross the prison guard union?

When the union wanted to get rid of John Moorlach, a Republican state senator who was questioning pension benefits for California public employees, it spent more than $1 million against him in his Orange County race. Then the flyers started popping up, sponsored by the union, tying the Never Trumper senator to the policies and personal predilections of Donald Trump.

“It was cartoonish,” said Lance Christensen, Moorloch’s campaign manager in that 2020 race. “You would think that the public safety unions whose job it is to serve and defend and protect Californians would want a guy like John Moorlach, who was law and order and supportive generally of public safety programs.”

Former Sen. John Moorlach lost his reelection campaign in 2020. The California Correctional Peace Officers Association, or CCPOA, spent heavily against him. The Republican lawmaker had carried legislation that would have allowed public employees to choose 401(k) plans instead pensions.

(

Anne Wernikoff

/

CalMatters

)

The prison guard union has spent $3.8 million across 32 state legislative races in this century – $1.2 million of that was spent to defeat Moorlach. He lost to Democrat Dave Min, 51%-49%.

“They decided that it was time to go hammer and tong after him, and take him out,” Christensen said.

The union, which represents about 10% of all state workers, has undoubtedly gotten good deals for its members, arguably none more so than last year, when it negotiated a $1 billion raise over three years. Correctional officers also got a new state-funded retirement perk out of the deal, in addition to their California Public Employees’ Retirement System pensions. And when the state mandated COVID-19 vaccinations for state employees, prison guards were permitted to skip them.

That spending has consistently come under fire from the Legislative Analyst’s Office, which found in 2019 and 2021 that the Newsom administration offered “no evidence to justify (a) pay increase” in an unusually harsh analysis of proposed prison guard raises.

The analysis found that California prison guards have neither a recruitment nor a retention problem, and that their salaries were already in line with the salaries in the counties where they work – if not more than 5% higher than comparable job classifications.

Last year, the Legislative Analyst’s Office excoriated Newsom’s administration for repeatedly refusing to make public a 2018 compensation study on prison guard salaries and benefits. The administration regularly publishes compensation studies regarding its 18 other employee bargaining units.

Instead, the administration provided a 2022 compensation study, which the Legislative Analyst’s Office called “flawed” for its failure to account for overtime pay and its selection of large, metropolitan counties as pay comparison points rather than the rural areas where most prison guards work.

“The study is flawed to the point that it is not helpful in meeting its stated objective and we recommend policymakers not use it to assess whether the state’s compensation package for correctional officers is appropriate to attract and retain qualified workers,” according to the Legislative Analyst’s Office.

Those raises, said Brian Kaneda, deputy director for Californians United for a Responsible Budget, put the state’s budget crisis in sharper relief.

“The CCPOA has a stranglehold on Sacramento politics,” Kaneda said. “Everyone’s struggling right now, but prison guards are getting a $1 billion raise. Explain how this could possibly be the right move for California as we tussle with this historic budget deficit.”

When asked to gauge the union’s influence in Sacramento and the diverging views on its power, Ballard said union leadership concentrates on its members more than its lobby.

“The union’s leaders are focused on matters of character, not reputation,” he said. “The CCPOA’s leaders are street-smart correctional officers who have worked in very tough conditions for decades, and as a group they are not terribly concerned with perceived status.”

Is CCPOA a factor in Newsom's prison closures?

Newsom began identifying prisons to close in 2020. More followed in 2022. Then, Newsom stopped naming additional prisons to close even though they have thousands of empty beds.

What changed? For one, people’s perception of crime spiked in the pandemic — though the kind of crimes that would merit prison time mostly went down.

For a governor who perhaps has ambitions beyond Sacramento, that’s important, said one Democratic legislator who did not want their name used for fear of retaliation by both the governor’s office and the prison guard union.

“I don’t think the CCPOA is the reason we’ve stalled on prison closures,” said the legislator. “I think it’s the governor himself or someone in the governor’s office protecting (the California Department of Corrections and Rehabilitation).

“My presumption is the governor is moderating his views on public safety because of where he wants to go nationally. And so he’s super careful about any perception of being soft on crime.”

Gov. Gavin Newsom speaks at San Quentin State Prison announcing that the facility will be transformed to focus on training and rehabilitation on March 17, 2023.

(

Martin do Nascimento

/

CalMatters

)

In its heyday during the prison building boom of the 1990s and 2000s, the prison guard union would never have had to account for such calculations, said former Corrections Secretary Matt Cate. Back then, both parties had incentives to make nice with the union.

“At the time, the Democrats were more moderate than they are now and they were doing everything to support labor generally,” said Cate, who was appointed corrections secretary in 2008 by Schwarzenegger and stayed for two years under Brown, leaving the office in 2011. “Meanwhile, Republicans were staunchly in favor of law enforcement and long sentences because they didn’t believe in rehabilitation and re-entry.

“So CCPOA had an open field. It was just a much easier job than what the CCPOA faces today. It’s not as easy today to be an 800-pound gorilla as it would have been 20 years ago.”

Cate doubts the union is the sole reason, or even the main reason, that Newsom stopped designating prisons for closure. Closing a prison is like closing “a small city,” Cate said, with 3,000 inmates and 800-1,000 employees represented by a dozen or more different unions. The prison system’s health care is managed by a federal monitor, and another federal monitor oversees the state’s prison mental health care.

Taking on a Democrat, and losing

One legislator who crossed the prison union and whose career survived was Assemblymember Reggie Jones-Sawyer, a Los Angeles Democrat, who said the sharp-elbowed tactics employed by the union under Stailey, its president, were reflective of the union’s approach in the 1990s, a time when the union’s power was at its height.

“If they sneezed,” he said, “people got a cold.”

In 2020, Jones-Sawyer fell into their crosshairs, literally.

The union ran an online ad against Jones-Sawyer that showed Stailey pointing at a wall of photos of legislators. Over Jones-Sawyer’s photo was a piece of white paper with crosshairs and a red dot. Jones-Sawyer took that as a threat, and the union pledged to pull the ad down and re-edit it.

“It became clear that if they wanted to get back the power, they needed to take somebody out to put the fear into everybody,” said Jones-Sawyer, who won re-election that year. “They thought I was an easy target to take out. They learned that was not the case.”

A finger belonging to California Correctional Peace Officers Association president Glen Stailey points at a bullseye taped over the official portrait of Democratic Assemblyman Reggie Jones-Sawyer in a Facebook video produced by the association.

(

screenshot via Facebook

/

CalMatters

)

Jones-Sawyer notes that the union didn’t spend much under former Gov. Brown – not until the threat of prison closures became a reality after Newsom’s election in 2018.

“Once they started talking about closing prisons, that’s when the fear from the CCPOA came up,” Jones-Sawyer said. “That’s when they started writing double max-out checks.”

Jones-Sawyer said he’s frustrated by what he sees as abuses within the prison system, especially guards with multiple infractions keeping their jobs. The Office of the Inspector General earlier this year found that the corrections department had reclassified a backlog of staff misconduct complaints as “routine grievances,” and allowed the statute of limitations to expire in 127 complaints between 2022 and 2023.

Now, Jones-Sawyer said, he’s considering calling for an audit of the prison system’s facilities and spending.

“When (the corrections department) comes back and says this is the best way to do it, we try to see their logic and a lot of times we don’t,” he said.

Are those hard-charging tactics isolating the prison union? One bill introduced this year may be an indication. The bill would limit the number of empty beds available in the prison system to account for the declining inmate population.

Among the bill’s registered supporters are immigration advocates, the California Public Defenders Association and anti-incarceration lobbies.

There was just one group registered in opposition: the CCPOA.

A news helicopter crashed in a Los Angeles neighborhood on Tuesday and burst into flames, killing at least three people near the scene of where an SUV had slammed into a city bus, officials said.

The helicopter crashed around 7 p.m. near a one-story commercial building in the neighborhood of Chatsworth in the San Fernando Valley, as news crews were covering the bus crash that left at least two people dead and six others injured, according the Los Angeles Fire Department.

An NBC4 Los Angeles anchor at the station confirmed during a live broadcast that its chopper went down just before 7 p.m.

At least one person killed in the helicopter crash was outside in the parking lot next to the commercial building, Capt. Branden Silverman, a spokesperson for the Los Angeles Fire Department, said during a news conference. It was unclear if the other two who were killed were on the ground or inside the aircraft.

The scene of a deadly helicopter crash in Chatsworth broadcast be CBSLA.

(

Courtesy CBSLA

)

One person was taken to the hospital, but their condition was not immediately clear.

“We’re trying to determine how many patients were inside the helicopter,” said Silverman, who described the helicopter as “pretty well destroyed” and adding that officials would be sorting through the rubble to see how many victims were on board.

At least four cars and two storage containers on the ground burned after the helicopter caught fire, which was quickly put out, according to officials. More than 50 firefighters responded to the helicopter crash, according to the fire department.null

Police and LA Metro investigate the scene of a crash between an SUV and a LA Metro Bus that left three people dead on Tuesday in Chatsworth.

(

Ronaldo Bolanos

/

Los Angeles Times via Getty Images

)

About two hours before the crash, an SUV slammed into the middle of a city bus, killing at least two people and injuring six others. Photos and videos online showed half of the SUV lodged into the side of an MTA bus.

The helicopter crashed about a mile and a half from the bus crash.

The National Transportation Safety Board and the Federal Aviation Administration said it will be investigating the cause of the helicopter crash.

This is a developing story.

The Los Angeles region’s lead homelessness agency is effectively forfeiting the federal administrative roles it has held for decades, including applying for millions of dollars in funding for the region and leading the annual homeless count, the agency announced Tuesday.

The decision comes as the Los Angeles Homeless Services Authority faces mounting criticism from both the Trump administration and local leaders who accuse the agency of mismanaging homeless services.

It reverses a monthslong legal battle LAHSA had been waging with the federal government to continue in these duties.

The city of Los Angeles, L.A. County and other entities and organizations are now applying to take them over.

At a county meeting Tuesday, Supervisor Lindsey Horvath called it “a fundamental change that reflects the significant performance, contracting and financial concerns that have plagued LAHSA for too long.”

“ Officials avoiding accountability will no longer have LAHSA to hide behind, and the county and city must be accountable to each other and to our entire Los Angeles region,” Horvath continued.

LAHSA's decision

In June, the U.S. Department of Housing and Urban Development suspended LAHSA from conducting its federal duties, including applying for or receiving grants, putting $241 million in anticipated funding and LAHSA’s future in limbo.

LAHSA sued.

U.S. District Judge David O. Carter paused LAHSA’s suspension on Aug. 13, but also instructed a regional planning body known as the L.A. Continuum of Care Board to solicit applications from other entities to replace LAHSA in those key roles.

The Continuum of Care Board opened its application process online last week, inviting qualified organizations to take on one or more of LAHSA’s current administrative roles.

LAHSA’s governing commission voted unanimously Tuesday to not apply, effectively forfeiting the federal roles that comprise most of its remaining responsibilities.

The city of L.A. and L.A. County are both applying, according to LAHSA.

“With both the City and County preparing their own applications, competing against our founding partners would only fracture regional collaboration during an already complex time,” the LAHSA Commission and the agency's leadership said in a statement.

“This decision reflects the shared judgment of LAHSA’s Commission and executive leadership,” the statement continued.

Federal roles

LAHSA will forfeit the following federal homelessness roles:

1. Coordinating and submitting annual federal homeless assistance funding applications to HUD on behalf of the entire L.A. region — about $240 million in the coming year.

2. Planning, executing and reporting the region’s annual point-in-time homeless count.

3. Operating and administering a HUD-mandated database that tracks who's being served and whether they're moving into housing.

4. Managing and operating a HUD-mandated system to match unhoused people to available housing and services based on need.

How we got here

After Carter paused LAHSA’s suspension, the federal housing agency appealed the decision to the Ninth Circuit Court of Appeals. Last week, the appeals court issued a temporary stay on Carter's order.

LAHSA said that ruling created more uncertainty about whether the agency was eligible to apply for the federal roles it has held for the past three decades.

“Stepping aside now supports alignment with the direction the City and County are heading with their applications, and focuses public resources where they belong: on the people who depend on the rehousing system every day,” the LAHSA statement said.

LAHSA is a joint powers authority between the city and county, created three decades ago to manage the region’s response to homelessness.

City and county officials are collectively responsible for LAHSA, which has administered federal, state, county and city homelessness funding across the region.

Citing LAHSA’s management problems, L.A. County pulled more than $300 million annual homelessness funding from the agency starting this year, choosing instead to administer the funds through a new county homelessness department.

The city of L.A. is considering a similar move away from LAHSA. Mayor Karen Bass and her election rival Councilmember Nithya Raman both say the city needs its own independent homeless system.

In the current budget year, 73% of LAHSA’s nearly $500 million budget comes from the city of L.A., 20% from the federal government and 4% from L.A. County.

What’s next? 

LAHSA said it will continue to fulfill its ongoing federal responsibilities “until those duties transition to a new entity or entities.”

The agency has agreements with the city of L.A. to manage programs and contracts through June 30, 2027.

The county’s Department of Homeless Services and Housing is applying to take over all four of LAHSA’s federal responsibilities, according to county officials. The city of L.A. is currently applying for at least two of those roles, putting the city and county in competition with each other.

“Moving forward, another entity will be leading the [Continuum of Care], which I believe should be the county, given our ability to most effectively administer contracts for our region,” Horvath said Tuesday.

Other organizations have also expressed interest. Better Angels, a homelessness nonprofit led by former L.A. mayoral candidate Adam Miller, contacted the court seeking to apply.

Applicants looking to take over LAHSA’s federal roles have until Sept. 25 to submit applications, but had to communicate their intent to apply by Sept. 15.

The applicants selected by L.A.’s regional Continuum of Care Board will have to be reviewed by HUD and the federal court.

The Los Angeles Unified School District’s falling enrollment and budget challenges are fueling conversations planned for later this year about potential school closures and consolidation.

“Our goal is not simply to have fewer schools; our goal is to have stronger schools, schools that are better resourced, schools that offer more programs for our students,” Superintendent Andrés Chait said during a school board meeting Tuesday. The superintendent shared a similar message in a video sent to families Monday.

LAUSD is spending more money than it brings in and has relied on reserves to fill the gap in recent years. In Tuesday’s meeting, district leaders presented an updated snapshot of LAUSD’s finances that shows steeper enrollment declines and lower state revenue and reserves than projected early this summer.

“That deficit spending is only possible while we have reserves and the very significant challenge that we’re facing as a district is that those reserves are being depleted very quickly,” said Saman Bravo-Karimi, the district's chief financial officer. “They’re eventually going to go negative and we can’t have negative balances as a school district.”

How is enrollment changing? 

Almost 4% fewer students are attending LAUSD schools this academic year compared to last year, according to preliminary data — nearly a percentage point lower than expected.

Bravo-Karimi said that each 1% drop in enrollment is a loss of about $20 million a year for the next three years because California funds schools based on how many students show up to class each day.

Fewer students have attended LAUSD schools over the last two decades, in part because of falling birth rates and the region’s high cost of living, but those declines were steeper than anticipated in recent years.

Board member Kelly Gonez said the schools in East San Fernando Valley communities targeted by federal agents have double the enrollment declines of other campuses.

“That increase in enrollment decline last school year was not a coincidence,” Gonez said. “Something changed … that is the presence of a federal administration that is attacking our immigrant communities.”

How is LAUSD approaching school closures?

The district pulled a scheduled vote Monday night on a $960,000 contract with a school closure consultant.

The district planned to work with Alvarez and Marsal to develop a framework for possible school closures, mergers or reconfigurations.

The firm’s priorities, as described on their website, include “maximizing investment value in education” and reshaping how institutions operate.

Alvarez and Marsal are also associated with several controversial decisions, including closing more than a dozen campuses during an overhaul of St. Louis schools in 2003 and faltering when contracted to restructure New York City schools' bus routes in 2007.

Several members of the public and a leader in the district’s teachers union spoke out against the contract and any similar future consultants.

“It’s hard for us to seriously work with this district to fight for more state funding when you squander limited funds you have on contracts with vultures and privatizers like the Alvarez company,” said Julie Van Winkle, United Teachers Los Angeles vice president.

Chait said the decision to remove the contract from consideration was in response to messages from school, community and district stakeholders over the weekend.

“One of the core leadership principles that I’ve always really tried to live by is to listen to folks, especially when they disagree,” Chait said.

Chait said the district needs external support to convene community meetings and compile and analyze data.

“This is arguably the most complex, the most difficult endeavor we will ever take on,” Chait said of school consolidations. “It will reset the footprint of our district for years to come.”

Chait said the district will begin holding community conversations related to school closures in the next few weeks and will share more details during a Sept. 22 meeting.

How did LAUSD’s budget become so strained?

The district’s current $20.6 billion budget projects a $2 billion deficit.

LAUSD approved raises for teachers, principals and support staff earlier this year at the cost of an additional $1 billion this school year. LAUSD, like other districts in the state, also faces increased costs for employee health care, settlements for decades-old sexual assault claims and services for students with disabilities,

L.A. County education officials approved the district’s most recent budget Tuesday on the condition that LAUSD provide additional information about how it is implementing cuts this school year.

However, L.A. County Superintendent Debra Duardo also called out the district's “unsustainable” use of reserves.

“The district’s fiscal status necessitates continued monitoring for both immediate and future corrective actions,” Duardo wrote in a letter to district leadership, referencing the July appointment of a fiscal expert to advise the district.

LAUSD’s board has approved a series of plans to reduce spending and increase revenue. For example, the district eliminated hundreds of jobs, primarily in its administrative offices, earlier this year.

The district’s most recent fiscal stabilization plan includes furlough days for all employees, the elimination of thousands of jobs and cuts to programs that help high-needs schools pay for counselors, tutors and other student supports.

Most of these cuts aren’t scheduled to go into effect until the 2027-28 and 2028-29 school years.

The leader of a congressional panel warned Tuesday he would use “every tool” to get Los Angeles Mayor Karen Bass to testify after she skipped a hearing that put L.A.’s homeless services system in the hot seat.

It came as multiple audits, reviews and court rulings have found L.A. has failed to ensure proper tracking of large-scale spending on homeless services — particularly through the joint city-county L.A. Homeless Services Authority, known as LAHSA. Much of the money is federal dollars authorized by Congress.

Bass had declined to testify at Tuesday’s hearing, saying she was unavailable and that it would be a “politically motivated” attack. Her public schedule showed she planned to attend a groundbreaking of a shopping and community center in the Pacific Palisades two hours after the hearing was set to start.

Rep. Tim Burchett, the Tennessee Republican who chairs the House Oversight Committee's DOGE subcommittee, said she won't get off that easily.

Bass "seems intent on evading accountability, but she knows we will not let her off the hook," Burchett said at the hearing. He added that he and the Oversight Committee’s chair would "use every tool at our disposal to secure her appearance if she does not cooperate.”

House committees and subcommittees can issue subpoenas to compel witnesses to testify or provide documents.

Just before the hearing got underway, Bass called it "the latest attack on Los Angeles by the Trump Administration and his allies in Congress.”

"I don't run LAHSA," she said, adding that she was the first mayor to sit on its board and that street homelessness has dropped since she took office. The latest official count for the city showed a 8% year to year jump in street homelessness.

Bass stepped off LAHSA’s governing commission last week, after LAist reported she had missed most of its meetings since she appointed herself to it in 2023. The mayor cited “time and all” as her reason for stepping down. She continues to appoint — and has the power to remove — half the commission’s members, including its current chair.

What happened at the hearing

Much of the hour-and-a-half hearing focused on Republican members’ criticism that Democrat-led cities distribute drug paraphernalia and don’t require unhoused people with addictions to get treatment as a condition of living in publicly funded housing.

Some proposals raised Tuesday would change how money reaches Los Angeles.

Burchett said he will introduce the Recovery First Housing Act, to require federally funded housing to offer substance abuse treatment. He has also introduced a bill restricting federal housing dollars to only support U.S. citizens.

LA's fights on a national stage

Burchett noted LAHSA’s audit committee chair, Justin Szlasa — who was proactive in rooting out wasteful spending — was demoted by Stephanie Graves, a Bass appointee who has declined to give her reason for doing so. The move was first reported by LAist.

Burchett also made claims that don’t hold up. He said 50,000 people are homeless in the city with "another 75,000" in the surrounding county. The latest official count found a total of 73,000 unhoused people across L.A. County — a figure that includes the city.

Burchett also said, “ LAHSA recently doled out funds to an L.A.-area nonprofit whose CEO had just been indicted for fraud.” LAist recently investigated LAHSA’s awarding of funds to that nonprofit, Abundant Blessings, and found no indication that LAHSA awarded it any funds after the fraud indictment. However, the review did find that long before the indictment, LAHSA kept awarding millions in contracts to the group even after it was flagged internally as high-risk for failing to do its job.

Burchett, however, was correct in saying “a court-ordered independent assessment of LAHSA's finances found alarming financial control weaknesses that leave the door open to rampant fraud.”