The buck stops here? Oxnard Treasurer says he struggles to be allowed to do his job

Oxnard Treasurer Phil Molina

By George Miller

Oxnard had horrible financial records. This is not just a matter of opinion, but is documented by multiple outside financial and operational auditors, as well as statements by the City Manager and key staff.  Based on a recent audit, things are much better now, but there are still major problems.

The Treasurers’s election race last year was fought over such issues. Phil Molina prevailed in a field of four good candidates because voters perceived that he was most likely to drain the swamp. Not only is he valiantly struggling to do that, but his staff has been a major factor in helping to make progress.

The 2015-16 financial audit, performed by Eadie+Payne, supported by city staff and outside consultants,  identified 26 “findings,” or problems, connected with the Treasurers office, out of 108 total for the City. Molina claims that Treasury has “resolved” 24 of these, a much higher percentage than other city departments. But CFO Jim Throop claims that these must first be tested and approved by the auditor before they can be scratched from the list. When I asked Throop the status, he said he didn’t know and hasn’t gotten back to me on my request. Molina sent us this status: Oxnard Treasury audit findings status last night. take a look at it. It was nearly a quarter of the total audit findings. Three or four findings is considered bad. But, over a hundred, like Oxnard had, may be unprecedented in California. It is the stuff of legend. Thank City Manager Greg Nyhoff  for initiating the actions leading to rigorous operational and financial audits, which in turn led to their discovery and ultimately, aggressively addressing these serious problems.

 

Pushback

But Mr. Molina is encountering a fair amount of resistance in making what he says are needed, even auditor and state-mandated reforms. It took months to get control of diverse bank accounts, some previously unknown to the Treasurer’s office. It was only last month when that was finally resolved. Treasury also discovered funds sent to wrong accounts, millions, actually, which we are told has been corrected. We have previously written about unauthorized wire transfers, lacking proper documentation and approvals. Some of this was discussed at Fiscal Policy Task Force meetings, some released by Molina.

This is still a point of contention. Treasury maintains that they should be making all disbursements, with original source documents and approvals to back that up. Finance and the City Attorney have resisted that, variously claiming that it takes too much time, that it is inconvenient and even that it is a violation of HIPAA and other laws for Treasury employees to view certain confidential and personal data. Molina tells me that he has reviewed all applicable data and some source documents and that there is no violation of the law. City Attorney Fischer seemed to be thinking recently that for Molina to even share information on the dispute was illegal and could subject the city to liability. Meanwhile, Molina has regularly been publishing accounts payable/warrant data, at least the portions he has determined can be legally released.

 

Some recent email correspondence by elected Oxnard Treasurer Phil Molina shows merely a couple of rounds in an ongoing battle with staff and the City Attorney, who are resisting the transparency he is demanding for the Treasury Dept. to perform its legal responsibilities to voters/residents (see below),

 

Our most recent inquiry to Molina regarding the dispute yielded this response (City Manager Greg Nyhoff has ignored our multiple requests for comments):

—–Original Message—–
From: Molina, Phillip <phillip.molina@oxnard.org>
To: George Miller
Sent: Thu, Mar 16, 2017 5:32 pm
Subject: Re: CONFIDENTIAL ATTORNEY-CLIENT COMMUNICATION Re: A VOID OF SOURCE DOCUMENTS

George,
 
Yes.  They are trying to use a vice (S.I.C.) where on the one hand the City Attorney is saying I’m not entitled to review the source documents on the grounds they claim the source documents are “confidential”,  and on the other, the law states that if I disburse city money without verifying that council has approved the funding I have violated State law.​ How can I make a determination about whether Council approved the funding for the invoiced item without looking at the source documents?
 
This would be funny if it weren’t so expensive and destructive to staff moral (S.I.C.).  I have heard from many managers,  and assistant department heads cheering me on because they don’t have job protection.
 
Where is the Hotline and where is the Independent Internal Auditor? We’ve been waiting too long.
 
I also know I  have not released any information that other city attorneys didn’t previously approve for public release, so why would Stephen Fischer not want to side with the elected city treasurer to let that elected position review the data. He hasn’t been able to answer my question of where in the law does it prevent the City Treasurer from reviewing all detailed source documents.
 
Note he didn’t answer my request to have us both look at what is actually on what he calls ‘confidential’ invoices and instead is acting like a legal bully, by threatening me for what I have already reviewed.
 
I’ve heard from other attorneys who know the law and still agree with my position. So it might just come to what does our other elected officials want to do: 1. put their vote where they campaign promises for open transparent government is, or 2. just to roll over and let staff control all aspects of city government never having to disclose how the money is spent.  If they win on this item, you know they will shut me down on disbursing any information to the public.
 
Also notice how the city attorney overlaps what he claims is confidential employee information  with the payroll warrant registers I have routinely sent to the public and other emails, which the preparer did not claim was confidential.
 
We also need to remember that in four months with God’s help and a good staff we have been able to:
1. close down all the ‘extra’ bank  accounts that the city staff previously opened that did not have City Treasurer as the signatory;
2. found the $11,000,000 that was lost in the Successor Agency bank account that no staff person knew existed;
3. have established an internal reward system for staff who identify ways in which to improve customer services;
4. brought the 2010 expired PACC contract to the public awareness resulting in a city council agreement amendment to cover 17-18;
5. identified $398,000 in past due utility bills from one account, which council members didn’t know and now can resolve;
6. distribute the warrant registers to the council and the public to make the city more transparent including the payroll register;
7. activated the panic buttons for the cashiers that were installed but never activated;
8. received a high mark from the independent auditors after they performed a surprise audit of our safe, and cash handling processes;
9. Treasurer’s staff performed a surprise audit of the MRF cash handling and provided guidance on ways to improve and secure cash better;
10. established a training program on United States currency training; and
11. etc.
 
I just wish the City Manager and City Attorney would work with me instead of want to fight every step of the way to good government.
 
 
Respectfully,
 

Phillip S. Molina

Oxnard City Treasurer
___________
 Original Message—–
From: Molina, Phillip <phillip.molina@oxnard.org>
To: Greg Nyhoff <greg.nyhoff@oxnard.org>
Cc: Stephen Fischer <stephen.fischer@oxnard.org>
Sent: Fri, Mar 17, 2017 3:21 pm
Subject: Wire transfers set to today

Greg, Stephen, elected officials et al:    et al:
Emails sent to elected officials are sent using Bcc to avoid violating the Brown Act.
​Attached are ten wire transfers totaling $155,016.99.​
This is approved only because the Oxnard City Attorney has made a legal opinion ordering that I am to wire any amount to any entity for any purpose as long as Jim Throop, Oxnard CFO, who is not a CPA has certified that he conducted an audit of the documents.The CFO’s attached order directing me to wire out $155,016.99 with only Jim’s, reviewing (auditing) his department’s own work product does not provide the Mayor, Council or the public with an independent oversight of that transaction.
ICMA retirement plan      $          10,939.24
Nationwide 457 retirement plan  $          90,137.17
JP Morgan Fire health plan  $             5,321.45
JP Morgan Fire health plan  $                453.57
Western Fed Crdt Un OMMA due  $             1,185.00
Chase Ox pol LTD  $             1,308.00
Mellon Bank 457 Plan  $             3,000.00
M&T Bank ICMA (ee)  $          40,460.85
M&T Bank 401(a)  $             2,211.71
       $        155,016.99
Respectfully,
 

Phillip S. Molina

Oxnard City Treasurer
__________

—–Original Message—–
From: Molina, Phillip <phillip.molina@oxnard.org>
To: Fischer, Stephen <stephen.fischer@oxnard.org>
Cc: Greg Nyhoff <greg.nyhoff@oxnard.org>; Jesús Nava <jesus.nava@oxnard.org>; Throop, Jim <jim.throop@oxnard.org>; Steve Janice <steve.janice@oxnard.org>
Sent: Thu, Mar 16, 2017 1:35 pm
Subject: Re: CONFIDENTIAL ATTORNEY-CLIENT COMMUNICATION Re: A VOID OF SOURCE DOCUMENTS

Stephen,
 
You are WRONG.  The invoices only include the date, name, check # and amount paid. It DOES NOT show any medical information and you attempting to use wrong information is shameful and a miscarriage of law. Any information that includes medical data, which appears on any invoice is itself a violation of HIPPA and the billing company should be sued for violating HIPAA.
 
If I am wrong show me the invoices and the details so the truth can be made known now.
 
Please stop this ridiculous attempt to cover up information that must be made available to me and to the elected City Council members who have a right to see the source documents.
 
Phillip Molina
Elected City Treasurer

On Thu, Mar 16, 2017 at 1:15 PM, Fischer, Stephen <stephen.fischer@oxnard.org> wrote:

Aside from the issue of whether the City Treasurer can access individually identifiable information derived from a health care provider or service plan regarding an employee’s medical history (which is, in fact, in the source documentation), it is the CFO’s role to review the source documentation. Pursuant to OCC 2-184, the CFO’s function is to prepare and audit each demand, “certify as to the accuracy of each demand and the availability of funds for payment thereof”, and deliver the demands to the City Treasurer. The City Treasurer is required to pay written demands delivered. Id.

 

Your insistence on reviewing this confidential employee information coupled with your routine disbursement of internal City communications to recipients outside of City staff and officials exposes (and may already have exposed) the City to claims by its employees for violation of their personal privacy. If you somehow weren’t already on notice of these privacy issues, you are so advised.

 

Stephen M. Fischer
City Attorney
City of Oxnard
305 W. Third St. Suite 100E
Oxnard, CA 93030
805.385.7483
FAX 385.7423
 
NOTICE: This communication contains privileged or other confidential information. If you are not the intended recipient of this communication, or an employee or agent responsible for delivering this communication to the intended recipient, please advise the sender by reply email and immediately delete the message and any attachments without copying or disclosing the contents. Thank you.
From: Molina, Phillip <phillip.molina@oxnard.org>
Date: Thu, Mar 16, 2017 at 10:29 AM
Subject: A VOID OF SOURCE DOCUMENTS
To: Greg Nyhoff <greg.nyhoff@oxnard.org>, Jesús Nava <jesus.nava@oxnard.org>
Cc: Eden Casareno <ecasareno@eadiepaynellp.com>

Greg
 
Emails sent to the elected officials are send using Bcc to avoid violating the Brown Act.
 
I AM NOW BEING ORDERED BY THE CFO, Jim Throop, TO DISBURSE $47,684.56 in a wire transfer on his recognizance alone without being allowed to review any source documentation what ever. This makes no sense to anyone with basic accounting knowledge or familiarity with proper internal controls. As the Elected City Treasurer, elected by the People of Oxnard, I object to this type of behavior exhibited by the highly paid city staff who are supposed to be professionals.
 
How is this good government?
 
How is this transparent government when not even the Elected City Treasurer is allowed to see the actual source documents that would justify the use of $47,684.56 of tax payers’ money?
 
Over the last 3 months I have provided more than enough evidence to prove that HIPAA is not being violated as long as no medical treatment, mediation or modality of treatment is on the invoice. I have explained HIPAA rules to you, the City Chief Finance Director and to the City Human Resource Director, but it seems to go no where.
 
The only conclusion is that this City organization must be dragged into being transparent.



Respectfully,
 

Phillip S. Molina

Oxnard City Treasurer

___________

Re: CalPERS PP 05-2017
From Molina, Phillip phillip.molina@oxnard.orghide details
To Throop, Jim jim.throop@oxnard.org, Greg Nyhoff greg.nyhoff@oxnard.org, Stephen Fischer stephen.fischer@oxnard.org
Cc Christine Williams christine.williams@oxnard.org, Martha Guerra martha.guerra@oxnard.org,Venegas, Carol carol.venegas@oxnard.org, Eden Casareno ecasareno@eadiepaynellp.com
Jim, Stephen, elected officials et al:
 
Emails sent to elected officials are sent using Bcc to avoid violating the Brown Act.
 
This is approved only because the Oxnard City Attorney has made a legal opinion that I am to wire any amount to any entity for any purpose as long as Jim Throop, Oxnard CFO, who is not a CPA has certified that he conducted an audit of the documents.
 

Your attached order directing me to wire out $1,052,367.83 with only you, Jim,  reviewing (auditing)  your department’s own work product does not provide the Mayor, Council or the public with an independent oversight of that transaction. Plus the documents sent to me with that order do not include any details (see the attached), which would allow for an independent review. The problem with this process is clear  when we look at our recent past, Ed Sotelo, Gary Gillig, etc., audited their own work and the city paid dearly for that error.

So, there is a fundamental flaw in Oxnard’s City Code 2-184 in that it assumes an “audit” (review) can be conducted by someone who has a vested interest in the results of the audit. But short of changing the City’s code, which I believe should be corrected, I continue to remain strong in my position that only an independently elected City Treasurer with a degree-of-separation from the organization chain-of-command can come close to performing an independent review  (audit) of the cash disbursement orders. I always welcome a review by someone independent of my supervision because we all make mistakes and I always prefer that it be caught before the transaction is completed.

I do not understand the desire to spend time and money fighting me on this issue and neither do the many people who have responded to me emails. While I am directed by the City Attorney to disburse the cash and issue the wire without any review or source documents I do this under protest.

Respectfully,
 

Phillip S. Molina

Oxnard City Treasurer
———-

 

Officers of the City of Oxnard, friends:

Emails sent to the elected officials are sent using Bcc to avoid violating the Brown Act.

First, to make it clear the details on the invoices in question do not identify the therapy, medication, treatments, or modality of care. The invoices do show the employee’s name, date, and the amount of the charge against the City. There is nothing on the invoices that reflect confidential information because the firm that is handling medical billing on behalf of the medical facility is a Business Associate, i.e. it is bound to follow HIPAA compliance guidelines.

OK, so it is important to note that  the first four statements of Penal Code section 424 (shown below) makes it a crime for a city officer to appropriate public money to another person without authority of law.  Authority of law, in this context, means that the City Council “appropriated funds” to pay for the invoice.

The remaining three statements makes it a crime to refuse to pay money to a person authorized by law to receive it where “public moneys” are involved, which is later defined as the proceeds of bond issuance.

So the priority of the Treasurer is first to determine whether or not the payments are legally authorized. So how does the Elected Treasurer do that? To fulfill the duties of the Treasurer as outlined in that Penal code, it is obligatory that a detailed search of all the source documents must be made available to  the Treasurer. Any attempt to block any portion of the source documents from the Elected Treasurer’s review is an obstruction to this Code section.

There is no law prohibiting the elected City Treasurer from having access to any and all source documents  pertaining to his duties to verify the authority of legal purposes for the disbursement of public moneys.

Finally, to make it clear the details on the invoices do not identify the therapy, medication, treatments, or modality of care. The invoices do show the employee’s name, date, and the amount of the charge against the City. There is nothing on the invoices that reflect confidential information because the firm that is handling medical billing on behalf of the medical facility is a Business Associate, i.e. it is bound to follow HIPAA compliance guidelines.

I hope that calmer minds can see that providing the elected City Treasurer the access to all source documents without change, falsification, or redaction is a mandatory duty of “each officer of this…city….”

Respectfully,

Phillip Molina

​Pe​

nal Code –

PART 1. OF CRIMES AND PUNISHMENTS [25 – 680]

( Part 1 enacted 1872. )

TITLE 12. OF CRIMES AGAINST THE REVENUE AND PROPERTY OF THIS STATE [424 – 440]

( Title 12 enacted 1872. )

424.

 

(a) Each officer of this state, or of any county, city, town, or district of this state, and every other person charged with the receipt, safekeeping, transfer, or disbursement of public moneys, who either:

  1. Without authority of law, appropriates the same, or any portion thereof, to his or her own use, or to the use of another; or,
  2. Loans the same or any portion thereof; makes any profit out of, or uses the same for any purpose not authorized by law; or,
  3. Knowingly keeps any false account, or makes any false entry or erasure in any account of or relating to the same; or,
  4. Fraudulently alters, falsifies, conceals, destroys, or obliterates any account; or,
  5. Willfully refuses or omits to pay over, on demand, any public moneys in his or her hands, upon the presentation of a draft, order, or warrant drawn upon these moneys by competent authority; or,
  6. Willfully omits to transfer the same, when transfer is required by law; or,
  7. Willfully omits or refuses to pay over to any officer or person authorized by law to receive the same, any money received by him or her under any duty imposed by law so to pay over the same;—

Is punishable by imprisonment in the state prison for two, three, or four years, and is disqualified from holding any office in this state.

(b) As used in this section, “public moneys” includes the proceeds derived from the sale of bonds or other evidence or indebtedness authorized by the legislative body of any city, county, district, or public agency.

(c) This section does not apply to the incidental and minimal use of public resources authorized by Section 8314 of the Government Code.

(Amended by Stats. 2003, Ch. 62, Sec. 227. Effective January 1, 2004.)


George Miller is Publisher of CitizensJournal.us and a “retired” operations management consultant residing in Oxnard


Get Citizensjournal.us Headlines free  SUBSCRIPTION. Keep us publishing – DONATE

One Response to The buck stops here? Oxnard Treasurer says he struggles to be allowed to do his job

  1. Dotty Pringle March 18, 2017 at 8:11 am

    There was a person arrested long ago for embezzlement, then she was hired back by City of Oxnard, in the City Treasury Dept.
    Please look back into that, back in the 90’s.

    Why would they rehire someone who was guilty of stealing, worked closely w/Licenses.

    Curious, worth reviewing.

    Reply

Leave a Reply

Your email address will not be published. Required fields are marked *

1 + 9 =