"Why isn't there any oversight..."

Thats a good question and it comes from a teachers union president no less! The point is that we as taxpayers expect government to be the "overseers" yet the government is the one that needs the oversight. Remember this is not private corporate money its your tax dollars they are stealing and misusing. Someday taxpayers will learn to stand up and ask for some accountability from government leaders at all levels of government. The fraud is just as bad if not worse at the local level as no one watches it like at the state and national level. Yes the dollars involved in the fraud are a little smaller but so are the local budgets. Oh and dont expect "oversight" from local elected politicians. They are pals with the govt bureaucrats doing the cheating. Politicians only pander to votes and getting re-elected (esp. in cities where there are no term limits). You dont vote they could care less what you say. Now if you have a lot of votes, well then maybe they will say "you make a good point".


Oct 5, 2007 12:00 am US/Pacific
Follow-Up: LAUSD Credit Card Paper Trail

David Goldstein
Reporting

(CBS) LOS ANGELES This report is a follow-up to David Goldstein's riveting report from last week in which he exposed a myriad of abuses of procurement cards being used by LAUSD officials...including a $500 coffee maker.

"Did you have any idea they were spending upwards of $5 million a month on procurement cards?"

No, no!

Teachers Union President A.J. Duffy had no idea.

NAT SOT: Of Papers

We uncovered millions of dollars in charges on credit card statements from LAUSD administrators.

"My question is, why isn't there any oversight in the district?"

In our investigation we combed through seven months of statements from more than 1700 administrator's credit cards.

Most of the administrators word at schools. The cards are supposed to be used for low-level items like paper, toner and emergency supplies.

But we found a lot more.

$995 for a mattress. Another $995 for a company that produces video games. $995 for flowers. We found charges for fishing tackle...stuffed animals...purchases at Bed, Bath and Beyond.

Smart & Final and Trader Joes...Linens and Things. Millions and millions of dollars in charges.

"So your reaction to the money being spent? So let me get this straight...they don't pay their teachers enough money, they don't pay them on time. And we have administrators who are involved in fraud. My question is -- why isn't there any oversight in this district?"

The district's inspector general DID conduct an audit earlier this year -- and estimated $4-5 million in fraud and misuse.

He says, "Often we couldn't find the merchandise when we went to look for it." It wasn't in the schools, I asked.

"No," he said, "It wasn't in the schools."

Which leads you to believe what? "That the person bought these things for their own personal use."

The audit specifically states that prohibited purchases are food and beverage -- and conference, workshop or seminar registration fees.

But we found a $221 charge for the Restaurant Depot -- a restaurant in Torrance. $330 for Gen Con, LLC...they held a "Star Wars" convention in LA earlier this year.

(Stand up) Since we first aired this investigation last week, we've been flooded with E mails from people expressing outrage. And it's become a hot topic for LA Talk Radio. But, the district still stands behind its practices.

Every item we questions, they defended. Or stated the charges are being disputed because the credit card was stolen. And they claim expenses are reviewed.

"Is it foolproof? No. And that's what the review mechanisms help us take a look at."

But the Union Chief says it may be time for a hard look.

"I dar say if they started combing through those records going back 3, 4, 5, 7 years they would find millions of dollars in fraud."

So far, two people have been charged and convicted. Another dozen are being investigated. And the inspector general says there are hundreds of other credit card charges that need better explanations.


Sep 28, 2007 10:17 am US/Pacific
EXCLUSIVE: LAUSD Money Spent On Shopping Sprees?
ARCHIVE: Live Chat With David Goldstein
Image

David Goldstein
Reporting

LAUSD credit card statements are raising questions about what taxpayers' money is being used for. David Goldstein has the story.

While your children go to school, we got an education in math by going through their administrators' LAUSD credit card statements. We found they were spending money. Lots and lots of money. Sometimes, $5 million a month, raising some serious questions.

''Does that raise a red flag?''

''Well, of course it does.''

Just think of your one- or two-page credit card statement at home, then multiply that by 1,700! That’s how many credit cards there are at LAUSD. Administrators spend it on computers, coffee, flowers, just about anything. We went through all these reports and found some interesting items.

$451 at the Sharper Image. $796 in yoga classes. $320 at this day spa in Valley Village. Over $1,600 on a company that sells U.S. Postal Service clothes and accessories. All taxpayers money. All questionable charges, according to the district’s inspector general.

''All of those would be violations of the procurement card use, some of them fraudulent.''

Administrators in almost every school have at least one of the procurement cards. They’re supposed to be used for low-valued items like office supplies. But the inspector general's conducted an audit earlier this year and estimated $4 to 5 million dollars in fraud of misuse, including charges for electronics and computers that couldn’t be justified.

Often we couldn't find the merchandise when we went to look for it.

''It wasn’t in the schools?''

''It wasn’t in the schools.''

''Which leads you to believe what?''

''That the person bought that for their own use.''

But we found even more!

$500 for a company that sells coffee makers. There were charges to collection agencies. Money transfers to Mexico. Even a cruise to San Francisco. Plus thousands of dollars in movie tickets and sporting events. Even if it was used for students, it's misuse of the card.

''That's the first I've heard about the movie tickets. Even my staff hasn’t told me about that. No, that would absolutely raise a red flag.''

And parents we talked to were also upset.

''That’s sad. Disgustingly so.''

''I'm shocked and saddened.''

''Isn't it just a blank check for people to charge anything they want?''

But the district’s business manager defends the program.

“There is abuse in any system and we take a look at where we can find abuses and we correct policy as it needs to be corrected.”

He says they're already had to block hundreds of merchants – like Nordstroms – because charges appeared on the statements. But he admits they can't stop everything.

''We always sample audit. Do we catch everyone? No, I can’t say we do.''

Federal Workers Accused
Of Abusing Business Class
Aversion to Coach
Cost $146 Million
In 12-Month Period
By CHRISTOPHER CONKEY
WALL STREET JOURNAL
October 3, 2007; Page A10

WASHINGTON -- Most business-class and first-class travel by federal bureaucrats is improper and unwarranted, costing taxpayers an extra $146 million in a recent 12-month period, congressional investigators said.


The most common abuse by federal employees is the overuse of business-class fares, which receive less scrutiny than first-class tickets but cost several times more than coach prices. Even though business-class travel accounts for 96% of all premium-class travel at federal agencies, many departments don't monitor it, according to a Government Accountability Office study being released today.

In the 12 months that ended June 30, the GAO found, at least $146 million, or 67%, of the money federal agencies spent on premium-class travel was not properly authorized or justified, the report said. Senior executives and presidential appointees, who comprise less than 0.5% of the federal work force, accounted for 15% of the tab, it said.

"The abuse of business-class travel is particularly troubling, as it usually costs more than five times the price of coach-class travel," Republican Sen. Norm Coleman of Minnesota, ranking member on the Permanent Subcommittee on Investigations, said in a statement. He has introduced legislation that would require agencies to track and report their use of business-class travel, as they do for first-class travel.

The report lists several instances in which "breakdowns" and a "weak control environment" permitted needless or unauthorized premium travel.

A senior executive at the Foreign Agricultural Service, a division of the Agriculture Department focused on foreign markets, took 10 premium-class trips to Europe from Washington, D.C., with a subordinate approving the trips, which the GAO said was tantamount to self-approval. An Agriculture Department spokesperson said Acting Agriculture Secretary Chuck Conner yesterday sent a memo to employees saying any exceptions to coach travel must be approved by the office of the chief financial officer.

A Defense Department official took 15 premium flights between July 2005 and September 2006 because of a "medical condition," but the claim was backed by a letter from another department employee citing a nonlife-changing surgery that occurred in 2001. The Defense Department declined to comment but was singled out elsewhere in the report for improving its travel oversight since a 2003 GAO audit.

The study also showed wide disparities among agencies in deciding in which cases their employees are allowed to fly premium, such as when a nonstop international flight exceeds 14 hours.

Department of Homeland Security employees took 6,600 such flights to Europe, Africa or the Middle East during the 12-month period examined. About 3% bought first-class or business-class tickets. By contrast, 83% of the 540 such trips taken by representatives from the Millennium Challenge Corp., a public corporation that channels development aid, paid premium fares.

An MCC spokesman called the spending legal and justified. It said the corporation "tightened controls on travel" in 2005 and "earlier this year put in place additional procedures to monitor and reduce costs."

Most agencies are guided by uniform regulations, but some federal entities, including Congress, the Federal Reserve and the U.S. Postal Service, have their own rules. A spokesperson for President Bush said she hadn't seen the GAO report and couldn't comment on it, but noted that White House employees other than the president follow the general travel regulations adhered to by other federal agencies.

A spokesman for Sen. Coleman said Senate rules prohibit senators and staffers from flying first class. A spokesman for the House's chief administrative officer said members can choose which class to fly, but the amount is taken out of their office's annual operation budgets.

The Postal Service allows the 11 members on its Board of Governors to travel first class to any destination. A spokesman said the perk is intended to offset the fact that 9 of the 11 members are paid an annual salary of $30,000 and hold other jobs.

The Federal Reserve allows its seven governors to travel business class for all international flights and on domestic flights exceeding five hours. Fed Chairman Ben Bernanke and his security detail can travel first class.

In December 2005, then-Fed Chairman Alan Greenspan and his guards flew from Washington to London for a conference at a round-trip cost of $25,000, according to a Fed spokesperson. The GAO said the total cost for coach tickets would have been $1,500.

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