LOS ANGELES — California State Controller John Chiang sent a letter to Cudahy, Calif. officials agreeing to a request from the mayor to audit the eastern Los Angeles County city, in which three city officials were arrested in 2012 on corruption charges.
Cudahy joins a handful of eastern Los Angeles County cities that include Bell and Vernon that have faced state and federal investigations for allegations that city leaders were pilfering from city coffers.
Mayor Jack Guerrero and the vice mayor, Chris Garcia, requested the audit after a federal bribery investigation in June 2012 revealed widespread corruption at City Hall that resulted in the arrest of three city officials on charges of extortion and bribery. The Federal Bureau of Investigation arrested three city officials including two council members on charges of extortion and bribery.
Guerrero could not immediately be reached for comment.
The controller’s decision to audit Cudahy came within days after California Gov. Jerry Brown signed legislation that would allow the controller to conduct audits with the aim of establishing stronger internal control standards for local governments.
Guerrero sent letters to Chiang on Nov. 2, 2012, May 23, 2013 and June 16, 2013 requesting an audit, according to the controller’s office.
Chiang responded to the request on Sept. 3 in a letter saying that he would conduct a forensic audit of city finances.
The investigation will include an analysis of the administrative and financial internal controls of the city including the impact of any findings on selected local, state and federal programs administered by the city, according to the letter. The controller’s officer will also audit transfers by the city’s redevelopment agency to the city.
An independent financial audit conducted for the city by San Diego-based accounting firm Sonnenberg and Company identified several material deficiencies in internal controls including raising concerns about transfers from the city’s former redevelopment agency to the city, according to Chiang’s letter.
The city has $22.7 million in outstanding tax allocation bonds that were issued for redevelopment projects, according to its 2011-12 comprehensive annual financial report.
In his letter, the controller noted that general fund expenditures have exceeded revenues in ever-increasing amounts from fiscal years 2009-10, 2010-11 through 2011-12. The city posted a shortfall of $823,000 in fiscal 2011-12.
