Calif. Audit Finds Major Problems With Hercules RDA

California Controller John Chiang said recent audits of Hercules found $50 million of questionable charges to its redevelopment agency, weak bookkeeping and misuse of bond money.

“Weak oversight and poor management practices invited self-dealing, nepotism and other public trust abuses that crippled Hercules’ fiscal health,” Chiang said in a statement Wednesday.

Hercules, located northeast of San Francisco Bay with a population of around 26,000, has been battered by self-inflicted financial problems.

The city now has mostly new officials who replaced those who oversaw the alleged abuses, and the new team says it recognizes many of the problems and is trying to right Hercules’ finances.

The controller’s audit of the city’s redevelopment agency, which follows previous audits released earlier in the year, found that the former director of the RDA steered more than $3 million to a consulting company run by his family and awarded loans that appeared to be gifts.

Hercules has filed a lawsuit to recover the money, according to the California controller.

The audit also found that officials illegally used bond funds to purchase property outside of the city, and that the city couldn’t produce the proper legal authorization for many of the transactions.

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