The Governing Community College Board of Trustees unanimously voted to hire a forensic accounting firm to investigate “egregious conduct” pertaining to facility contracts made under former College of the Canyons (COC) chancellor Dianne Van Hook for nearly 20 years.

Legal counsel for the college discovered that over a 19-year period, millions of dollars were “misused and misappropriated” via various contractual facades, said Jessica Ehrlich from F3 Law in a special board meeting Monday. The presentation was also contributed to by Sherman Wong of Public Agency Law Group and Eileen O’Hare-Anderson with Liebert Cassidy Whitmore.

“I think I speak on behalf of Sherman, Eileen and myself, when I say, in the many, many years that we have been representing districts, we have never seen anything like this. The level of conduct here, I think, is nothing short of egregious,” Ehrlich said.

Specifically, legal council identified issues of bid splitting, simultaneous contracts awarded to the same person under different companies, excess costs and “phantom projects,” improper licensing and bonding practices, projects that overlapped with duties of classified staff, inconsistent contract terms, and misuse and misappropriation of college funds.

The financial impact of these actions amounted to over  700 projects for almost $8 million for the simultaneous contracts issue alone.

“What we found in the small sampling of projects that we looked at is potential violations of these district policies, of administrative policies and procedures, governing bidding and procurement practices, governing public works construction projects. We also found violations across the board of public contract code, which governs the public procurement process for all public works contracts. We found violations of the government code, the education code and overall district best practices that you’d see in any community college district or any public education institution, and we found this with respect to specific district contractors and specific district consultants and also specific district personnel,” Ehrlich said.

The findings show that multiple contracts were signed and paid to remove gum and pine needles, hang banners and relocate benches.  However, Ehrlich noted all these tasks are duties of paid college staff, and no contracts should have been needed to complete these jobs.

The lawyers also found that 10s of thousands of dollars were spent on projects that were never completed.

Ehrlich pointed out that contracts were made to “paint the floors” of approximately 42 custodial closets.

“I would say I can speak firsthand; most districts do not invest a significant amount of resources in renovating their custodial closets (…). We don’t really know what that means, but what we do know is we vetted whether or not these projects were actually performed, and they were never performed,” Ehrlich said.

Additional issues in terms of paying contracts in consultant positions were also found in the amount of millions of dollars, with one individual who was paid over $4 million for work that the legal team cannot prove was ever done.

“When you look at all this together, there is the implication or appearance here that there was an explicit intent behind this because for an individual or group of individuals to come up and creatively think about this list of projects that someone would just skim right over or would never be done,” Ehrlich said. .”To do it over the course of such a long period of time, I think, leaves the legal team feeling nothing short of shock and awe and really creates the appearance of explicit intent.”

These were just a small sample of phantom projects the lawyers uncovered. Ehrlich estimated that between 2002 and 2022, approximately 800 phantom projects in excess of $12 million were contracted out.

“This is clearly a misuse and a misappropriation of district funds. We’ve found that district funds, through a variety of sources, have been misused, misappropriated and potentially used for personal benefit,” Ehrlich said. “And as I mentioned before, this is just a tiny fraction of the district’s contracting. We’ve looked at a very finite sampling from the facilities department, and we’re able to account for what’s almost $12 million and hundreds and hundreds of contracts.”

After the presentation, the board voted unanimously to hire a forensic accounting firm to further and fully investigate the phantom projects made over the nearly two-decade period.

“This investigation is ongoing, and from what we can tell, looking at a very small sampling, we’ve only scratched the surface of the projects and contracts that require further review and investigation,” Ehrlich said.

ORIGINAL STORY:

The ongoing investigation into College of the Canyons (COC) facilities contracts from 2000 to 2019 has uncovered significant concerns through the examination of specific projects, according to COC Governing Board documents. 

These findings reveal a range of potential issues, including mismanagement, policy violations, and gaps in oversight, underscoring the urgent need for comprehensive reforms in the district’s contracting practices to ensure transparency, accountability, and adherence to legal and ethical standards, according to COC Governing Board documents.

This investigation was initiated after Interim Superintendent/President David C. Andrus directed Ms. Erin Tague, Assistant Superintendent/Vice President of Facilities, to begin investigating and evaluating previous college facilities contracts following the release of former chancellor Dr. Dianne Van Hook, who had held the position for 36 years.

Van Hook was released shortly after a climate survey conducted among the college’s staff and faculty revealed that while there is a strong sense of community and support among colleagues, there were significant concerns about the current leadership and decision-making processes at the administrative level. Many employees expressed a need for greater transparency and accountability from the college’s top officials. More recently, Van Hook filed a claim for wrongful termination.

“This directive resulted from the nature and circumstances associated with the September 25, 2024, Board-approved property and sales agreement for purchase of the real property located at 26650 Valley Center Drive, Santa Clarita, for use as the Advanced Technology Center (“ATC”),” stated the COC Governing Board documents.

The documents add that this agreement terminated a prior May 10, 2023, Purchase and Sales Agreement (PSA) for a build-to-suit Advanced Technology Center on the same property. 

Interim Superintendent/President Andrus, who assumed the CEO role on July 15, 2024, continued negotiations initiated under the previous CEO to terminate the May 2023 PSA. 

Tague, who had been appointed Interim Assistant Superintendent/Vice President of Facilities in February 2024 and made permanent in May 2024, was not the primary district representative at the time of the May 2023 agreement. 

However, as the district began terminating the agreement, Tague began familiarizing herself with the specific aspects of the contract. She and the district council determined that the May 2023 PSA was unique in its terms and structure, “falling outside of customary public procurement practices,” according to COC documents.

“During her investigation, Tague uncovered evidence of violations of contractual standards and practices, as well as negligent internal controls that appeared to subvert district policies and procedures,” read the COC documents.

This discovery prompted further investigation into the matter, as it became clear that these irregularities raised “significant concerns” regarding ethical duties to the community and taxpayers, according to an email from Andrus.

One of the key projects under scrutiny is the Cafeteria Project, which appears to have violated competitive bidding standards and raised serious concerns about ethical contracting practices. Preliminary findings suggest that former district personnel and contractors may have circumvented established bidding protocols, “likely leading to an unfair selection process.” 

In addition, evidence indicates possible bid splitting, where contracts were intentionally divided to avoid meeting competitive bidding thresholds, thus compromising the integrity of the procurement process. Further investigation suggests duplicate awards were made, with similar scopes of work granted to the same companies, which limited competition and may have inflated costs.

Other projects, such as gum removal, sandbox debris removal, pine needle removal, banner hanging, and bench relocations, raise significant questions about fiscal responsibility and compliance with district policies. 

The costs for these projects appear to have exceeded the scope of work originally outlined, which suggests inefficiencies or inflated expenditures. Additionally, many of these, which have traditionally been handled by in-house classified staff, were outsourced. This not only raises concerns about unnecessary external contracting but also points to potential encroachment on the duties of classified staff, violating established agreements and responsibilities.

The renovation and painting of custodial closets further illustrate systemic issues within the district’s facilities management. 

The project, which involved the renovation of 42 custodial closets and the renovating floors, appears to have painting essays and is outside of industry standards. Payments were made for work that, based on unbiased initial findings, payment dings may not have been of proper oversight and accountability in contract execution.

Inspector of Record (IOR) contracts also contribute to the growing body of concerns. These contracts seem to have been awarded without following proper competitive processes, undermining transparency and fairness. 

Additionally, the administration of these contracts was inconsistent, with significant variations in terms and inadequate standardization. Notably, payments were made without sufficient invoicing or proof of work performed, further highlighting procedural lapses and weak oversight.

“Upon receiving the directive from Mr. Andrus, Ms. Tague immediately determined that her investigation required the diligent assistance of legal counsel,” stated the documents.

With their support, she conducted a detailed analysis of the relevant projects. The findings from this investigation, which were forwarded to the CEO, highlighted a narrow but concerning scope of facility projects that were found to violate district policies and California law.

Based on these initial findings, an evidentiary threshold has been reached that justifies recommending to the board the authorization to engage a third-party auditing firm, specifically a forensic accounting firm, to continue the investigation in a more expert and thorough manner.

These projects expose various risks, including potential legal liability, financial losses, and a significant erosion of trust in the district’s facilities management. 

Violations of competitive bidding laws could expose the district to regulatory penalties and legal challenges, while inflated costs and unperformed work suggest a failure to safeguard public funds. The apparent misuse of funds and procedural irregularities call into question the district’s ability to manage resources responsibly and uphold its ethical obligations to the community.

The investigation will continue to delve deeper into these projects and others, focusing on verifying documentation, identifying gaps, and formulating actionable recommendations to address these deficiencies. 

The ultimate goal is to ensure compliance with all legal requirements, improve governance practices, and restore public confidence in the district’s operations. 

While the examples presented represent only a portion of the irregularities under review, they highlight the need for urgent reforms to prevent similar issues in the future and ensure that taxpayer resources are used effectively and responsibly.

The current allegations will be discussed further in a COC Governing Board meeting on Monday, with open seasons beginning at 4 p.m.

COC was contacted for a statement but could not comment before the publication time.

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