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California’s fraudulent audit claiming CSAC misappropriation of $120k

By Zach Arnold | December 11, 2012

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The state Athletic Commission overpaid 18 athletic inspectors nearly $119,000 over two years. They were inappropriately paid overtime rates rather than straight-time rates.

That’s the headline coming out of tonight’s report from California’s Bureau of State Audits. The inspectors in question were not named specifically, but you don’t have to be a rocket scientist to figure out who the inspectors in question are. How can I say this with such confidence?

Just look at the list of inspector salaries we compiled. When we released that salary list, it spooked everyone in Sacramento.

KCRA, the NBC affiliate in Sacramento, led their 6 PM newscast with the story about the BSA report and CSAC.

Nearly $119,000 in improper overtime paid to inspectors from the California State Athletic Commission

Those overpayments to 18 different inspectors included amounts ranging from $666 to $25,257. KCRA 3 asked state officials how they could miss such massive overpayments.

“The understanding that we had was because these individuals are state employees, that we required to pay them premium time, which is time and a half,” said Russ Heimerich, a spokesman with the California Department of Consumer Affairs, which oversees the State Athletic Commission.

Heimerich said his department asked the auditor to look into the suspicious payments. He told KCRA 3 the inspectors are now required to reimburse the state for the overpayments.

So, reading this summary, you would think that the audit was proper and that the conclusions raised from it actually have merit. As the case with all California politics, you would be wrong in assuming that the opinions & conclusions raised by the audit are accurate and with merit. They’re not.

We’re about to explain to you why the legal opinions stated in the BSA report on CSAC fraud charges are… fraudulent.

The BSA report, which can be read here in PDF form, covers the time period of April 2011 to June 2012. From page 17 of the report:

Twenty-four of the athletic inspectors the commission employed also held full-time positions with the State either at the commission or at other state agencies.

Although the commission paid these athletic inspectors overtime because of advice it obtained from the Department of Personnel Administration (Personnel Administration), Personnel Administration based its advice on inaccurate information provided by Consumer Affairs.

In addition, we found that the commission’s hiring process often led it to hire athletic inspectors who had other full-time state jobs. As a result, the State’s costs increased because the commission paid $29,051 more in overtime than it would have if it hired individuals not employed full-time by the State.

Let’s put this into perspective here. You have 24 athletic inspectors who are full-time state employees. The audit report claims that 18 of them were over-paid time-and-a-half (overtime) as state intermittent employees during their work as AIs.

The 18 intermittent athletic inspectors are full-time employees at the commission and other state agencies. These individuals voluntarily applied for the intermittent athletic inspector position: Their other full-time positions with the State did not require them to apply to be athletic inspectors.

OK, so notice that they are going only after inspectors who are full-time state employees as opposed to going after AIs like non-full-time state employee Sid Segovia, who claimed over $40,000 for salary last year. Got it. The fact that the focus is strictly on full-time state employees is a red flag here.

The reason Sacramento is so paranoid about full-time state employees working as athletic inspectors is because state law explicitly states that these inspectors should be paid time-and-a-half as intermittent state employees. The Department of Consumer Affairs and the Bureau of State Audits has no way to refute this legally in a courtroom on the merits. However, this has not stopped DCA & now the Bureau of State Audits from intentionally muddying the waters with garbage legal opinions about what full-time state employees who work as athletic inspectors should be getting paid.

On October 4th, we wrote an extensive article about Sacramento’s new scam called Legal policy changes at the California State Athletic Commission ignite an internal uproar. Read the article if you haven’t already done so. In the article, we destroyed the phony legal opinion that DCA is now relying on to not pay full-time state employees (working as athletic inspectors) time-and-a-half.

In short – DCA has been paying full-time state employees time-and-a-half because it’s the law. They managed to weasel a faulty legal opinion from a state agency claiming that the 1938 FLSA (Fair Labor Standards Act) is the ceiling, not the floor as to what salary rights a full-time state employee has as an athletic inspector. The phony legal opinion claims that since working as an athletic inspector is voluntary and/or sporadic work, the AIs shouldn’t get paid time-and-a-half. What the fraudulent legal opinion never stated was actual California law code or case law to back up their assertions. Why? The FLSA rules & regulations are a FLOOR and not a CEILING when it comes to state labor law. If California state law on the books offers better pay & benefits for state employees, then state law takes precedent over FLSA rules & regulations. Even legal opinions from various state agencies in California reviewing FLSA and its application to California business practices back up this assertion by citing… case law.

Why does this matter? Because today’s Bureau of State Audit report pushes the notion that the October legal opinion about not paying full-time state employees (who work as athletic inspectors) is one that must be followed by the California State Athletic Commission. Newsflash to BSA & DCA: your phony legal opinion that you’re basing your actions on would not hold up in a court of law, period. You’re violating state labor laws here.

The fact that such powerful Sacramento agencies are basing their audits on fraudulent legal opinions absolutely shreds their credibility here.

In an attempt to justify the charges of fraud by 18 athletic inspectors, BSA’s audit report shows us the blame game.

In 2010 Consumer Affairs requested an opinion from Personnel Administration about whether the commission was required to pay overtime to athletic inspectors it employed on an intermittent basis who were also full-time state employees. Personnel Administration advised Consumer Affairs in March 2010 that the commission should pay overtime to these athletic inspectors. However, Personnel Administration based its advice in part on inaccurate information that Consumer Affairs provided to it. Specifically, Consumer Affairs stated that athletic inspectors regularly worked at two to four events each month. As discussed previously, the athletic inspector time sheets we reviewed during a two-year period did not support this statement. When we interviewed the Personnel Administration attorney who advised Consumer Affairs, the attorney stated that she relied upon the facts provided by Consumer Affairs when she formed her advice and did not conduct any additional work to determine the accuracy of the information. Thus, Personnel Administration’s advice was based on inaccurate information and did not support the commission’s payment of overtime to the athletic inspectors.

The BSA report ends by claiming that none of the athletic inspectors working for CSAC should get paid overtime in the future. This assertion is without any legal merit whatsoever and is a recipe for legal disaster down the road. It’s completely dishonest hackery by state officials. They only care about the public relations aspect of what is happening at the commission as opposed to actually tackling the real problems that CSAC is facing. When Andy Foster took over as Executive Officer, I was very bearish on his ability to fully clean up the mess in Sacramento because of the behavior & actions of the politicians & bureaucrats in charge. This audit report by the BSA only strengthens my assertion even more.

Shameful. There’s so much to investigate with CSAC and instead Sacramento has decided to break state labor law in an attempt to cover their asses so that they don’t have to address the actual problems that the commission is facing right now.

One other point that should be made – the state’s investigators focused heavily on the inspector timesheets. Who is in charge of booking the athletic inspectors for events? Che Guevara. Who is responsible for the timesheets? Che Guevara. The BSA is claiming that 18 athletic inspectors were fraudulently paid overtime. If you are making claims of this nature, then you better terminate Che Guevara immediately. If you don’t fire him, then you’re backing up his actions as the chief athletic inspector for CSAC. You can’t have it both ways, Sacramento.

Topics: CSAC, Media, MMA, Zach Arnold | 2 Comments » | Permalink | Trackback |

2 Responses to “California’s fraudulent audit claiming CSAC misappropriation of $120k”

  1. Clent says:

    What about 2011???? Why did investigators stop at December 2010 it is obvious Che continues the same practice now?

    The California State Athletic Commission overpaid a total of nearly $118,700 to 18 of its athletic inspectors from January 2009 through December 2010 because it inappropriately paid them an hourly overtime rate rather than an hourly straight-time rate for work they performed

  2. Clent says:

    They inappropriately over paid the same inspectors in 2011, 2012, why did they stop at 2010?


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