New CalOptima report finds transparency violations but no 'kickbacks' to disgraced ex-Supervisor Andrew Do

An investigation commissioned by CalOptima, Orange County’s health plan for the poor, found serious violations of transparency laws in a lucrative but failed property deal that ultimately cost taxpayers $460,000. The investigation was prompted by the federal bribery investigation into former Orange County Supervisor Andrew Do, who also served on CalOptima’s board of directors. Do pleaded guilty and now is serving five years in federal prison.

An ad hoc committee of CalOptima’s board asked a firm “to investigate reports that former CalOptima Board Chair Andrew Do was to receive a kickback” from the property deal. The investigators ultimately found no evidence of criminal wrongdoing by Do or any other CalOptima executives.

However, they said their findings were limited since they lacked subpoena power. The list of witnesses interviewed for the report, carried out by the firm Bird Marella, is limited almost exclusively to CalOptima staff, board members and advisors. There is no record of investigators attempting to interview or obtain documents from the property seller, a company backed by local businessmen, and brothers, Gary and Larry Nguyen.

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In an email to LAist, Isabel Becerra, CalOptima's board chair, said the report revealed "a troubling lack of compliance with existing CalOptima policies and procedures." She said the investigation findings "presents an opportunity for CalOptima to modify and strengthen compliance with its policies, some of which have already been implemented."

Becerra also said the board could discuss releasing other information about investigations or report findings at a future meeting.

LAist reached out to a lawyer for the Nguyen brothers and Do. We will update this story if and when we hear from them.

Previous LAist investigations into the CalOptima property deal, and the Nguyen brothers, found the businessmen were awarded multiple contracts, with little transparency, during Do’s time in office.

In a statement to LAist, Orange County Supervisor Janet Nguyen wrote "the report doesn't go far enough," since the investigators had no subpoena power and witnesses were not under oath.

Gary Nguyen (left) co-founder of 360 Clinic, along with 360 Clinic Dr. Dung Trinh (center) and 360 Clinic CEO Dr. Venessa Ho attend the opening of the new COVID-19 testing clinic at Anaheim Convention Center in July 2020.

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Here’s the backstory on the property deal:

In April 2022, the county bid $22.5 million on a former rehabilitation hospital in Tustin. The deal ultimately fell apart over funding.

Then, CalOptima stepped up and offered $7 million more — $29.5 million — at a time when there were no other offers on the table. Do signed the letter of intent and the purchase agreement. The significantly higher offer price raised eyebrows and would later lead to suspicions that Do might have been poised for some kind of kickback from the deal.

Ultimately, though, CalOptima’s plans to purchase the property also fell apart over zoning issues. But not before CalOptima paid out $450,000 in forfeited escrow funds.

Although investigators found no criminal wrongdoing, they noted serious problems with the way the property deal was carried out, including that board members didn’t formally vote to purchase the property.

Read the report here.

The board of directors voted by “consensus” to approve the $29.5 million offer for the property, which investigators found violated the state’s open meeting law, known as the Brown Act. That law requires agencies to publicly report the votes of each board member on real estate transactions discussed during the closed session part of meetings.

The board was not asked to ratify the purchase and sale agreement for the property until eight months after it was fully executed. Several board members interviewed for the investigation said they found this “highly unusual.” In addition, the investigators found no record of an actual vote to ratify the purchase agreement, and it was not reported publicly, in another violation of the Brown Act.

Separately, the Orange County Board of Supervisors recently selected a firm to audit some 2,500 contracts approved during Do’s time as a supervisor. Results from the first phase of that audit could come early next year and, per the board’s direction, will be released publicly.