FLASHREPORT

I received info from Secretary of State McPherson's office that the final report of the United States Election Assistance Commission (EAC) on disgraced former Secretary of State Kevin Shelley's abuse of power and misuse of funds has been delivered.  The report marks the end of two years of state and federal audits to uncover the extent of Shelley's transgressions.  (The audits began with an investigation by the California Bureau of State Audits (BSA), which was conducted at the direction of the Joint Legislative Audit Committee (JLAC).  Based on the results of the BSA audit, the U.S. Election Assistance Commission began its own federal audit in the summer of 2005.)

The EAC has ruled that California must repay $2,917,583 from the state's General Fund to replace the funds that were misspent by the Shelley Administration.  Of that amount, $536,122.00 will be repaid to the U.S. Treasury and  $2,381,461.00 will be repaid to California's Help America Vote Act (HAVA) election fund.  

Among other things, Secretary of State McPherson has outlined some examples of Shelley's abuses of power revealed in the BSA audit findings.  They include:

- The Kevin Shelley Administration "failed to document the time spent by its staff members on HAVA activities, as required when salaries and wages are charged to a federal fund source."  A review of supporting documentation and interviews with employees showed that HAVA funds were inappropriately used to compensate employees for attending events that were "partisan in nature" and "unrelated to HAVA."  As the BSA Audit report noted, "both federal and state law generally prohibit the use of public funds for partisan political activities for the purpose of affecting the outcome of a campaign." 

- The Kevin Shelley Adminstration failed to properly and adequately account for the activities of some of its consultants who were being paid with HAVA funds.  For example, some consultants attended events such as candidate fundraisers and a state delegation meeting for the Democratic National Convention, where they were representing then Secretary of State, Kevin Shelley. 

- The Kevin Shelley Administration's insufficient planning and poor management practices hampered its efforts to promptly implement HAVA. 

- The Kevin Shelley Administration's disregard for proper controls and its poor oversight of staff and consultants led to questionable uses of HAVA funds. 

- The Kevin Shelley Administration avoided competitive bidding for many contracts paid with HAVA funds by improperly using an alleged exemption from competitive bidding requirements and by not following the State's procurement policies. 

- The Kevin Shelley Administration bypassed the Legislature's spending authority and improperly charged consultant contract costs to its HAVA administration account. 

- The Kevin Shelley Administration overrode and, in many cases, lacked controls in its administration of the HAVA funds.  For example, the office failed to document time spent by employees on HAVA related activities, as required by federal cost principles, and as needed to appropriately charge and pay the costs with HAVA funds. 

- The Kevin Shelley Administration split purchase orders to avoid CMAS procurement limits and competitive bidding requirements. 

Today, McPherson requested Lockyer take immediate legal action on behalf of California taxpayers to recover the funds misused by Shelley.  Along with his request, McPherson said, "This flagrant abuse of public trust and public money demands personal accountability of the official who committed the abuse.  When public officials are not held to account for their actions and the taxpayers' hard earned dollars are not protected, we are neglecting our responsibility as leaders, entrusted by the people to stand up for what is right and to conduct business in an ethical and non-partisan way."