Screenshot from Tuesday’s Board of Supervisors meeting.

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Is the risk of fraud in Humboldt County government high? This year’s Civil Grand Jury thought so. It said as much in one of the five reports it issued this summer, citing “poor cash handling policies and procedures, improper accounting, and lack of accountability.”

Auditor-Controller Karen Paz Dominguez thinks so, too. She sounded the alarm almost two years ago, when she was still the second-in-command at that office, and she has shown up at the last two Board of Supervisors meetings to say it’s still the case. 

But at today’s supe’s meeting, as the board continued to tinker with the official county responses to the grand jury reports, there was some persistent disagreement about just how significant that fraud risk is. 

County staff initially recommended disagreeing with the grand jury about the alleged high risk of fraud, noting in its draft response that the county has many safeguards in place. Plus, this draft response said, none of the various consultants and outside auditors who’ve been brought in to assess county financial management practices have found any instances of fraud.

But Paz Dominguez and Humboldt County Treasurer-Tax Collector John Bartholomew wrote their own responses to the grand jury report, and they both agreed that the risk of fraud remains high. Last week, following Paz Dominguez’s testimony, the board agreed to reconsider a number of the responses to the grand jury. 

The supervisors, in this case, were considering responses to be submitted on behalf of themselves as well as the Department of Health & Human Services (DHHS), and Department of Public Works.

The main pushback to the “high risk” hypothesis — both this week and last — came from Board Chair and First District Supervisor Rex Bohn, who didn’t dispute the existence of risk but questioned the efficacy of calling it out in such stark terms. 

“Maybe I live in a fairyland that I’ve always thought we do a good job, and now I’m finding out we have, maybe, thieves among all of us,” he said. He suggested that lobbing such an inflammatory allegation — “high risk of fraud” — may generate better headlines than, say, “We’re doing a pretty good job and need to make some changes.” But the latter characterization would generate “less animosity” and provide “a better chance of working together,” he suggested.

Bohn said he has great faith in the staff of the Planning and Building Department, for example, and he argued that since no investigative reporters have uncovered fraud, things can’t be too bad.

He appreciates “the wham-bang effect” of throwing out the allegation but said, “I will stand by the employees as a whole.”

Third District Supervisor Mike Wilson said the county will continue to work on improving its fiscal management practices, regardless of its response to the grand jury. “We’re in an iterative process,” he said more than once, and he suggested that the different positions among county personnel may boil down to semantics. 

But Paz Dominguez again addressed the board directly, and she said it’s about more than just word choices. She said the reason she’s been pushing so hard to convince the county to agree with the grand jury finding on this point is because the risk is very real. Since she took office in January, she said, she’s seen 16 situations that she would consider high-risk.

Paz Dominguez proceeded to rattle off some examples: Petty cash in some departments has been lost, stolen or accidentally destroyed; hundreds of dollars’ worth of gift cards have gone missing; various debts have been written off without proper documentation; money has been transferred between separate funds improperly, etc. Perhaps the most alarming allegation was that a former employee suspected of stealing cash somehow managed to steal two vehicles from the county’s motor pool.

“I’m not purposely trying to throw someone under the bus,” Paz Dominguez said. “I’m trying to communicate, to be clear. There is a high risk of fraud, even with safeguards in place.”

While Paz Dominguez’s challenges to the status quo over the past two years have often been seen as adversarial, several supervisors today commended her for improving conditions in her department. 

“I’m very glad that you take your job so seriously,” said Second District Supervisor Estelle Fennell. While Fennell didn’t mention former Auditor-Controller Joe Mellett by name, she said she’s aware that prior management had been questionable. “I know of incidents that happened with your predecessor that were concerning,” Fennell said.

Wilson agreed. “You started from kind of a disaster,” he told Paz Dominguez, and he urged her to “keep coming back [and] keep pushing. You’re doing what your job is.”

Bartholomew also addressed the board today, and he explained why, in his department’s own response, he agreed with the grand jury about the high risk of fraud. It’s not that he doubts that the county has great, honest people, but certain systems need to be improved. “We do not have a uniform control procedure for cash handling across departments,” he said. “There’s no uniform system of checks and balances. That’s what we need to address.”

During the public comment period, Catherine Dellabalma said she’s served on three civil grand juries in recent years, including the most recent one, and she defended the finding in question. “I believe it is high risk of fraud,” she said, adding that as a citizen and a taxpayer, she would be concerned.

Ultimately, the board opted to change its response on this matter to say the county “partially” agrees that there’s a high risk of fraud. 

Before the vote, Wilson said the specific responses to each of the grand jury’s findings won’t change the underlying commitment among staff and officials to move things forward, improving the systems that need improving and addressing staffing shortages whenever possible.