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Auditor-Controller Karen Paz Dominguez took to the steps of the Humboldt County Courthouse this afternoon to call out alleged rampant fiscal mismanagement, misappropriation of funds and fraud throughout various county departments. Paz Dominguez also seized the opportunity to formally announce her campaign for reelection.

Speaking to a crowd of roughly 40 residents, reporters, county staff and department heads with her husband, Fernando Paz, at her side, Paz Dominguez cited consistent conflicts between the Office of the Auditor-Controller and the Board of Supervisors, asserting that the “weight of power [at the county] has shifted significantly in favor of a quarreling board” whose priorities do not have the public’s best interest in mind.

“Only when all elected agencies abide by their roles and adhere to an equitable balance of power do we have a harmonious and functional government,” she said. “…However, when the balance of power shifts too far to one side and stays there for a sustained period of time, we see what we are seeing today within our county government: confusion, discontent, conflict and dysfunction.”

These conflicts, she said, “have empowered non-elected leadership staff [working] on behalf of the board” to undermine her authority as auditor-controller, “while simultaneously piling on additional work, mischaracteriz[ing] the purpose of the work of that office and mislead[ing] the public with a false narrative to distract from the fact that they have obstructed improvements while shifting resources towards those [individuals] with personal axes to grind and favors to fulfill.”

Paz Dominguez went on to say that sensational news stories “about the auditor-controller being too busy working to attend another meeting” have overshadowed illegal taxation of cannabis growers and the county’s failure to complete critical functions for its most vulnerable citizens.

“The public will forget the neglect of Native [American] children on the county’s watch if we tell them that the auditor-controller didn’t pay invoices for the homeless in Arcata, and we’ll just skip the part where we didn’t give the auditor-controller those invoices to pay until six months later,” she said. “The public will stop caring about the dead people’s assets being sold to county employees at an unfair discount if we keep shoving in their face a misinformed letter about the auditor-controller signed by anonymous people.”

The aforementioned letter, which was signed by five anonymous county department and division heads and an unknown number of county staff, underscored the “severe and critical nature of the growing and looming fiscal crisis” that threaten county staff and taxpayers.

The board discussed the letter during closed session this afternoon but did not report out or disclose any additional information to the public.

Paz Dominguez’s turned back to the board’s March 1 meeting in which she “laid out some hard truths” about the county’s alleged mismanagement of public funds, including a series of allegations regarding “confirmed cases of errors and fraud” in several county departments. 

“Two weeks ago, I made a reference to how some information can be difficult to hear, much like medicine can be difficult to swallow, but that it is also necessary if we want to heal,” she said. “Continuing that train of thought, the county’s central accounting function is sick and the illness is caused by the continuing decentralization of accounting functions. …There is no centralization of cash, capital assets, investments, inventory, leases, contracts, invoices, payroll, grants, loans, or even the financial software used to record these transactions and the auditor-controller cannot certify accuracy under penalty of perjury for even the most basic of financial reports because it does not have the information.”

When asked during the meeting whether she had documentation to substantiate her claims, Paz Dominguez said yes and agreed to return to the board on March 15 with proof. However, she failed to get the necessary documentation together before the item was put on the board’s agenda. Instead, she said the information is available electronically on the county’s public records platform. (The documents can be found here.)

How does the county fix this fiscal mess? “We clean up the funds,” Paz Dominguez said.

“My intention is to bring the power back to the people by implementing full transparency and allowing for electronic access of all revenues and all expenditures that flow through the Auditor-Controller’s Office,” she said. “…Humboldt is special, but it doesn’t have to be so special that it does accounting differently from everyone else in the state. …I have continued to work hard despite the political aggression of childish members of the board or the petty, anonymous and cowardly attacks of their staff. These attacks, without merit or substantial evidence, do nothing but impede the ability of this office to do what you elected it to do. …That is why I am announcing my candidacy for reelection.”

She underscored her commitment to the taxpayers of Humboldt County and vowed to make the county “take its medicine, as bitter as it may be to those with delicate palates because we want to heal.”

The office of the state attorney general has set a deadline of tomorrow for Paz Dominguez to file the county’s financial transaction reports from fiscal year 2019-20, which are more than a year past due. The office has threatened Paz Dominguez with a $5,000 fine if they are not posted by tomorrow.

After her speech, Paz Dominguez told a clutch of reporters that she would meet the AG’s deadline.

“It will be done,” said Paz Dominguez. “I don’t mess around when it comes to the Attorney General. I just wanted to be very clear with them that I’m submitting it because you are demanding it. Not because I’m certifying its accuracy and not because I believe everything in here, but because you have asked that it be submitted.”

First District Supervisor Rex Bohn and Second District Supervisor Michelle Bushnell stood on the sidelines during Paz Dominguez’s public address. “She made a lot of accusations today but she didn’t answer any questions or why any reports aren’t being done,” Bohn told the Outpost.

“She’s exactly right, it is the people’s money,” he said. “It’s theirs, no doubt, and that’s the way we operate, but we also have to meet state deadlines and we have another big one tomorrow.”

Bohn criticized Paz Dominguez for failing to provide proof of the assertions made during the board’s meeting earlier this month. “On March 1, she said all this was written out, all the claims, and she made six or eight criminal complaints against me as an elected official – criminal complaints – and she said that she had all those findings…well nothing’s there.”

Regarding her decision to run for reelection, Bohn said he had hoped she would be successful during her first go, “but it hasn’t shown yet.”

“Maybe in another four years she will be successful,” he said. “I just don’t know if we can afford it another four years.”

County Administrative Officer Elishia Hayes offered the following statement in response to the auditor-controller’s allegations:

Today the Auditor-Controller as part of her re-election campaign made numerous unsubstantiated criticisms of county employees. For reasons known only to herself, Karen has chosen not to follow due process with her allegations, opting instead to politicize potential problems rather than solve them.

The AC talks a lot about transparency. Spending her time holding court with the media instead of doing the job she gets paid for is transparently political.

What we need from the AC is to fulfill the mandated functions of her office, which involves completing audits and filing financial documents correctly and on time. She has a Financial Transaction Report due tomorrow. This is a form that federal grant recipients are required to fill out to maintain funding, and the Attorney General threatened legal action against the AC personally for her failure to file the form since 2019. If she has time for news conferences, hopefully she has time to get her job done as well.