State auditors are in the final laps of their probe into Anaheim’s taxpayer spending on business promotion groups after a scathing corruption probe last year – and after the former mayor pleaded guilty to a series of federal crimes.
California Auditor Grant Parks’ office is looking for any improper city spending on the Chamber of Commerce and Visit Anaheim.
The two groups are heavily detailed in an independent corruption report and sworn affidavits from FBI agents allege the Chamber and Disneyland resort interests wield undue influence over city hall policy making.
Dana Simas, chief spokesperson for the California Auditor’s Office, told Voice of OC last week that Anaheim has a draft audit and the final version is expected to be released by the end of February.
City officials so far have refused to start their own investigation into Visit Anaheim’s alleged illegal diversion of the bailout money.
[Read: Anaheim Officials Refuse To Audit Tourism Bureau’s Alleged Illegal Diversion of COVID Funds]
Anaheim Reviews Draft Findings
Last Tuesday, city council members reviewed a draft audit in secret during their closed session, according to the agenda.
Officials cited an exemption in state transparency law that allows for such a closed door review.
“We typically spend several weeks or months ‘on location’ obtaining data, accessing records, and interviewing staff,” reads the state auditor’s website.
“Once the draft is complete, the agency has a chance to review and respond to our findings and recommendations. We publish the agency’s response at the end of each report.”
In a Wednesday email, Anaheim City Spokesman Mike Lyster said the item was discussed, but couldn’t offer more details.
The only Anaheim elected official to respond to requests for comment about the audit, City Councilman Jose Diaz, said in a Wednesday email that it was illegal for him to “divulge anything discussed at a closed session meeting.”
Independent investigators allege a portion of COVID relief money given to Visit Anaheim in March 2020 was improperly steered to a Chamber of Commerce nonprofit – one of the biggest bombshells in their 353-page corruption report released last year.
It’s something that caught the eye of Assemblyman Avelino Valencia (D-Anaheim), also a former city councilman who sat on the dais when the first scandal broke in 2022.
“On July 31, 2023 the City-commissioned corruption report (July 31 report) was released to the public and detailed that at least $1.5 million of the $6.5 million in relief funds that the City appropriated to Visit Anaheim were improperly diverted to the Anaheim Chamber of Commerce,” Valencia wrote to the chair of the California Legislative Audit Committee.
“Based on the July 31 report’s findings, it is clear that we need more oversight over the City of Anaheim’s disbursement of public funds to the Anaheim Chamber of Commerce and Visit Anaheim, as they may have directly influenced City officials for personal and political gain at the expense of what was best for the city,” the assemblyman wrote.
The California Legislative Audit Committee authorized Valencia’s request in August last year – less than two weeks after the independent investigation was released.
If the city council does discuss the final audit, they will likely have to do it publicly, according to state law.
“After the public release of an audit report by the Bureau of State Audits, if a legislative body of a local agency meets to discuss the audit report, it shall do so in an open session unless exempted from that requirement by some other provision of law,” reads state law.
Yet the Anaheim officials have so far resisted publicly speaking about the independent corruption report commissioned by the city and have yet to bring in the investigators to publicly discuss the findings.
An Alleged Conspiracy Amid a Global Pandemic
The draft state audit of Visit Anaheim comes months after Jay Burress, former CEO and President of the city’s tourism bureau, quietly resigned from his post in November following independent investigators findings at the end of July.
[Read: Visit Anaheim CEO Resigns After Allegations of Rerouting Tax Dollars]
In their report, investigators allege Burress was part of a conspiracy with former Mayor Harry Sidhu and former Chamber of Commerce CEO Todd Ament to divert $1.5 million in taxpayer bailout money to a chamber controlled nonprofit.
Both Sidhu and Ament have already pleaded guilty to multiple federal crimes.
Sidhu spearheaded the $6.5 million bailout to Visit Anaheim at the start of the pandemic in March 2020 to advertise the Disneyland resort area that would remain closed for more than a year.
The money was later backfilled with federal COVID bailout dollars.
Former City Manager Chris Zapata raised objections to the bailout, but he was ignored by Sidhu and the council majority.
Zapata was fired shortly thereafter.
[Read: Anaheim Council Funds $6.5 Million Bailout To Advertise Disneyland Resort Area]
Sidhu and the council majority also gave the Chamber of Commerce a $500,000 contract using COVID bailout funds in August 2020 for a local dining and hiring program.
Anaheim residents – especially in the west side – would go on to see some of Orange County’s highest COVID positivity rates, hospitalizations and deaths.
What Else Could Auditors Be Looking At?
Valencia’s request lists 10 different areas for state auditors to look at, including taxpayer spending on the Angel Stadium negotiations, any no-bid contracts given to Visit Anaheim and the Chamber of Commerce and potential conflicts of interest between the business promotion groups and the city.
He also wants auditors to “identify and report any corruption that took place” if it doesn’t interfere with any court cases or investigations.
The Assemblyman also wants auditors to take a hard look at Anaheim’s COVID bailout spending not just on Visit Anaheim, but also the Chamber of Commerce.
“For any COVID funds allocated to these entities by the City, identify the amount of money given, the parameters of those funds, and how the dollars were ultimately spent,” reads his letter to the Joint Legislative Audit Committee.
“Determine if any public dollars allocated to the Anaheim Chamber or Visit Anaheim by the City of Anaheim were used for increases in staff salaries or compensation for professional services (consultants, lobbyists, contractors, etc.) during the COVID shutdown.”
Last September, Sidhu pleaded guilty to a host of federal charges stemming from the corruption probe – including obstruction of justice.
He admitted lying to federal investigators about attempting to ram the Angel Stadium sale through for $1 million in campaign support from team officials – something FBI agents detailed through a wiretapped conversation in sworn affidavits.
[Read: Ex-Anaheim Mayor Sidhu Agrees to Plead Guilty to Corruption Charges]
Shortly after Sidhu resigned in May 2022, the city council canned the stadium deal.
The Angels are currently looking to get back $5 million they spent during negotiations with the city, which has so far been unwilling to give those funds back. The team has threatened a lawsuit over the issue.
[Read: The Angels Demand $5 Million From Anaheim, Threaten Lawsuit Over Fire Station]
While current city council members have avoided a public discussion about the independent investigation report – with Councilmembers like Natalie Rubalcava and Natalie Meeks publicly criticizing it – Valencia took an interest in it.
Rubalcava was at one time a district director for Valencia, but recently left his office to focus on a recall launched against her.
[Read: Anaheim City Councilwoman Natalie Rubalcava Quietly Out as State Assemblyman’s District Director]
Valencia took a very different tone than Rubalcava with the results of the city’s independent investigation.
“The findings of this report expand on the lack of transparency and abuse of public resources by corrupt individuals in Anaheim. Former Mayor Harry Sidhu, and some of his closest allies, acted for personal and political gain at the expense of what was best for our city. Their behavior was disgraceful and inexcusable,” reads an August news release from Valencia.
“I am hopeful that the City Council will use this report, along with feedback from residents and experts, to bring about needed ethics reforms in Anaheim.”
Since then, the city council has tightened its lobbyist registration rules, committed to publicly posting who they meet with and are expected to soon discuss overhauling campaign finance rules.
Spencer Custodio is the civic editor. You can reach him at scustodio@voiceofoc.org. Follow him on Twitter @SpencerCustodio.
Hosam Elattar is a Voice of OC reporter and corps member with Report for America, a GroundTruth initiative. Contact him at helattar@voiceofoc.org or on Twitter @ElattarHosam.
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