CUDAHY (CBSLA.com) — Officials in the city of Cudahy had virtually no oversight in place to prevent the misuse of taxpayer dollars when it spent nearly $23 million in redevelopment funds, according to state audits released Tuesday.
The assessment from California Controller John Chiang was outlined in several audits examining the city’s internal controls and fiscal management practices, as well as its compliance with state laws governing the use of transportation and redevelopment funds.
During the period between July 2010 and June 2012, auditors found questionable leave pay, violations of the city’s contract code, uncontrolled credit card spending and mismanaged state grant funds. Chiang also reviewed redevelopment asset transfers and ordered $22.7 million in redevelopment assets to be returned to the agency.
“They used their credit cards improperly, they misspent, they wasted good state tax dollars that had to be returned back to the state,” Chiang told KNX 1070 NEWSRADIO.
The audit’s findings come just over a year after former Cudahy mayor David Silva was sentenced to one year in prison in January 2013 for his role in taking cash bribes from a businessman who wanted to open a medical marijuana dispensary. Another former Cudahy city official, Angel Perales, was sentenced to five years of probation for his part in the scheme.
The audit – which was initiated late last year at the request of the Cudahy’s new management – found that of the 79 basic standards of internal controls, only eight were used in the city. Internal controls are management practices that ensure the appropriate use of public funds as well as sufficient accounting to show the use and tracking of the city’s expenditures.
Chiang praised current Cudahy officials for their cooperation in uncovering the problems identified in the audits and for their commitment to implementing the recommendations.
“Sweeping problems under the rug is not a solution for fiscal mismanagement,” said Chiang. “Cudahy leaders deserve credit for wanting an independent review of their internal controls and for moving quickly to address the major gaps in the prior administration’s accounting and management practices.”
Cudahy, which is located in southeastern Los Angeles County, is considered one of the poorest cities in Los Angeles County, with an average household income of about $39,263 in 2012, according to state data.