Anaheim conducting independent review of waste allegations levied by former purchasing agent

An external legal firm is conducting “an independent outside review” into allegations of wastage of taxpayer dollars in a tort claim filed against the city of Anaheim, according to city spokesperson Mike Lyster.

Former purchasing agent Kari Bouffard filed the legal claim against the city in June alleging she was fired for raising concerns that the city’s top finance official, Debbie Moreno, was enabling fraud, wasting millions of taxpayer dollars and lying to the City Council.

Lyster told LAist Friday an outside law firm was conducting the review of the department in general and was not focused on any potential wrongdoing on behalf of Moreno.

“ There is no review of our finance director and none is warranted at this time. She continues to serve as she has for more than 20 years,” he told LAist.

The tort claim, obtained by LAist via a public records request, alleges that Moreno:

• Covered up that the Fire & Rescue Department bought new ambulances and went to the council after to seek approval
• Refused to audit the city’s credit card purchases, which amount to around $800,000 a month
• Does not follow standard best practices for procurement — no member of the purchasing department had ever written a contract — and instead creates additional, unnecessary processes 
• Uses a policy from 1999 to lease computer hardware at inflated prices, bypassing the City Council's approval 

In the tort claim, Bouffard, a long time public servant, said Moreno gave her top marks during her performance evaluation. But Bouffard’s claim argues Moreno fired her in retaliation for pointing out these issues and suggesting more cost effective alternatives. LAist asked for an interview with Moreno before publishing our story on the tort claim and sent Lyster questions about the claim and discrepancies we found in public records.

Lyster did not make Moreno available for an interview or to provide detailed answers to those questions.

After our story was published last week, Lyster called LAist to read a statement rejecting any insinuation of wrongdoing at the city.

 ”We strongly object to the characterization of the claim and media reporting about the claim,” Lyster said. “It is a gross misrepresentation of our city.”

The city takes all claims seriously, Lyster said, but added that claims such as Bouffard’s can include unverified and false information. That’s why Lyster said the city began “a process of investigating and figuring out what is the situation.”

He added that, “ In general, with a claim anyone can put forth whatever they would like, vetted, true, false, or otherwise, that is their right to do so.”

Lyster did not answer any follow up questions over the phone. Instead, he said LAist submitted “a lot of questions.”

“ We disagree with the premise and presupposition of those questions,” he said.

Lyster’s statement did include information about the allegations found in the claim. Here’s what we’ve learned about some of the key allegations in Bouffard’s tort claim.

Did the council know about the ambulances before they approved them?

In the tort claim, Bouffard alleges that Moreno falsified a report to the City Council trying to hide the fact that the city was in possession of three ambulances before the council approved their purchase. The tort claim alleges an offer and purchase agreement was sent to the ambulance company a year before the council voted to approve the purchase.

Lyster told LAist that the city issued a letter of intent to the ambulance company stating the city was interested in purchasing three ambulances.

“Due to a communication gap, the manufacturer delivered the ambulance to us,” Lyster said. “We said, we will conditionally accept these ambulances pending approval from our council.”

LAist has asked the city of Anaheim for a copy of the letter of intent. LAist asked if the council was aware of the conditional acceptance of the ambulances before they voted on it.

On Monday, Lyster emailed LAist stating, “We reject the premise, presupposition and implication of the question. The situation was immaterial to the decision before the Council, which was to approve or reject the purchase of three ambulances for $700,000.”

LAist has reached out to all six council members and the mayor for comment and will update the story if we hear back.

About the credit card spend

In the tort claim, Bouffard alleges there was no oversight over credit card purchases, totaling around $800,000 of public money each month. When Bouffard raised the concerns with the city’s audit team, which then wanted to audit the credit card program, she alleges Moreno told her: “Do not let them in the door.”

Lyster told LAist that credit card spending is “thoroughly overseen and checked for potential misuse, overcharge to the city or any other issue that you would have with a credit card.”

“ There is ample oversight of every credit card used in the city. At a minimum, three people review and sign off on every credit card statement in the city,” Lyster said.

But, he confirmed that the city does spend around $400,000 to $800,000 each month.

LAist requested credit card monthly billing statements and spreadsheet data export for all city-issued credit cards for the past two years via a public records request. We received a 5,000 page document with credit card transactions for the past two years from the city totaling more than $17 million.

LAist asked Lyster if the credit card purchases have been internally audited. He replied, “ No one should have unwarranted or unfounded concerns about the way credit cards are responsibly handled at the city of Anaheim.”

And when asked again if the city had audited credit card purchases, Lyster responded that he “ (did) not agree with the premise of your question.”

Lyster said in an email on Monday that the city's last audit on credit cards was in 2018. Reviews of the credit cards were included in the city’s annual financial report, Lyster said. That review is conducted by Moreno.

About the policy from 1999 for computer purchases

In the tort claim, Bouffard raised concerns with a policy from 1999 used to buy computers for the city.

Bouffard alleges in the tort claim that this “outdated” policy is being used improperly to avoid soliciting competitive bids, pay in excess for hardware, obtain equipment without council approval and abuse evergreen clauses to avoid processes.

She alleges she was asked to renew a lease of around $4.5 million with Hewlett Packard for computer hardware, using the policy referred to as “1999.” Bouffard was concerned with the cost and a conversation with the city’s IT analyst confirmed the per-staff, per-computer cost would amount to $5,000 with the lease, according to her tort claim. If the city did not renew the lease, Bouffard’s claim says the cost would be $1,800 per person.

Lyster said the average annual cost of a computer at the city of Anaheim is $506.

Master agreements for computer purchases the city provided to LAist in response to a records request does not show the unit costs. It also doesn’t include quantities for the bulk sums listed.

“We reject any suggestion otherwise,” Lyster told LAist, adding that the 1999 policy referred to in the tort claim allows the city to make replacement purchases for laptops or “to make everyday purchases of computers.”

 ”Every large technology or computer purchase acquisition contract goes before our City Council,” he said.

But on Monday, Lyster said contracts for Hewlett-Packard Financial Svc, HP INC. and Pricon Inc. — the computer leases at the heart of the tort claim — “have not come before the Council since they were struck and have several safeguards to ensure ongoing benefit and cost effectiveness for the city.”