State senators criticize Michelle Steel’s awarding of meal funds to her campaign mail vendor

Following an LAist investigative article, two state senators are raising serious concerns about $1.2 million in taxpayer meal funds Rep. Michelle Steel awarded her campaign mail vendor in 2020. The money was directed back when Steel was an Orange County supervisor first running for Congress.

The concerns are being expressed separately by state Senate Judiciary Chair Tom Umberg (D-Santa Ana) and state Sen. Janet Nguyen, a Republican who represents many of the same communities as Steel, including much of Little Saigon in Orange County.

“Recent revelations by LAist regarding new misuse of federal pandemic relief funds intended for senior citizens is extremely concerning,” Nguyen wrote in a letter to the county supervisors’ chair this month after LAist’s article.

LAist’s reporting found that Steel had her campaign mail vendor charge taxpayers far more than vendors billed in districts led by other supervisors. The meals in Steel’s program cost $24 per meal, three times as much as in two of the other districts.

Nguyen is on track to replace former O.C. Supervisor Andrew Do, outpacing her runoff opponent 62% to 38% in the latest vote count. Do recently resigned and pleaded guilty to bribery in connection with a scheme to steal millions he awarded from the same pandemic meals program.

A call for an ‘immediate’ freeze and audit

In her letter, Nguyen called on the county to “immediately freeze” its active contract with Steel’s campaign mail firm, DTN Tech (DTN), and stop all payments to it.

“The county needs to complete audits of all pandemic relief funds before any additional taxpayer funds are dispersed,” Nguyen wrote.

“The fact that a journalist discovered this latest debacle is inexcusable and now I am wondering what else we’re going to find,” she added, calling for an audit of pandemic relief dollars and all of the county’s contracts with DTN.

It’s unclear whether county officials will take any action regarding DTN or investigate what happened. The supervisors’ chair, Don Wagner, didn’t respond to a request for comment.

[Click here to read Nguyen’s letter.]

‘Misuse of funds’ alleged by another senator

Umberg issued a news release responding to LAist’s article, calling Steel’s actions a “misuse of funds” and “inappropriate.”

“The pervasive misuse of funds by Orange County officials — former Mayor Harry Sidhu, Supervisor Andrew Do, and now Congresswoman (former Supervisor) Steel — are real consequences of a lack of checks and balances and proper oversight in local government,” Umberg wrote.

He also called on county supervisors to take action.

“The Orange County Board of Supervisors must take serious and extensive action to uncover any other wrongdoing and ensure this cannot happen again," he added. "The people of Orange County deserve trustworthy stewards of taxpayer dollars.”

[Click here to read Umberg’s statement.]

The only county supervisor to respond to a request for comment from LAist was Vicente Sarmiento, who called for an investigation.

“Michelle Steel’s misuse of taxpayer dollars to enrich her political allies is outrageous, and confirms my insistence that an external investigation of federal pandemic related funds received by the County must also be conducted,” Sarmiento said in a written statement.

Sarmiento has been calling for the Board of Supervisors to hire an outside auditing firm to investigate pandemic relief and mental health service dollars. Both of those funding sources were awarded by Do to the nonprofit at the center of the bribery scheme he pleaded guilty to.

The response from Steel’s campaign

Asked for a response to the elected officials’ statements about DTN, Steel’s campaign said they’re lies.

“Politicians seeking headlines should quit lying to their constituents — DTN, a logistics and event management company, was given a contract to manage a meals program,” said Lance Trover, a campaign spokesperson for Steel, adding that the contract also helped restaurants.

Trover said an audit of the contract was completed and approved by the county. Steel is currently leading in the vote count for the 45th Congressional District against Derek Tran, a Democrat, by about 1.4 points.

“The Congresswoman stands by the work that was done to feed 50,000 meals during the COVID pandemic — if the county wishes to conduct a further audit she welcomes it,” Trover added.

The audit focused on whether DTN followed the contract’s requirements. Such reviews, known as a “single audit,” do not focus on whether the contract’s cost per meal was appropriate, nor whether the contractor was selected through a fair process.

DTN’s CEO Serena Nguyen has explained the higher meal costs as providing a “gourmet” experience compared to other districts. The company paid 90% of the $1.2 million in taxpayer funds to restaurants, with two-thirds of those payments going to restaurants that have hired DTN as a printing client, according to an LAist review of social media posts and county records.

DTN’s response

In response to the lawmakers’ criticism, Serena Nguyen said DTN succeeded in doing the meals work it was paid for, and doesn't have any active county contracts.

She echoed comments shared by Trover, saying in an emailed response to LAist that the company “has successfully completed all required audits with no irregular findings, and we welcome any further review by the county of this project.”

“We stand by the services provided during the COVID-19 Pandemic,” she added.

“We stand firmly by our record, and unfortunately, politics is driving these false accusations,” Nguyen wrote.