The Santa Clara County District Attorney’s Office has launched a formal inquiry into embezzlement charges publicly leveled at Gilroy Unified School District Trustee Francisco Dominguez.
The sole proprietor of DZ Consulting in Gilroy, Dominguez came under fire in May for alleged “systematic overbilling” – approximately $52,600 – related to contract work he was hired to do by a leading nonprofit community services agency, the South County Collaborative.
In September 2008, the Collaborative hired Dominguez to manage a five-year, $125,000-per-year, federal Drug Free Communities grant.
During two years of managing the grant, however, Dominguez systematically overbilled the agency by more than $50,000 according to the agency’s former treasurer, longtime Gilroy accountant John Blaettler.
John Chase, Deputy District Attorney with the Santa Clara County Government Integrity Unit, confirmed that an investigator from the county District Attorney’s Office has been assigned to the case and is conducting tape-recorded interviews in Gilroy.
He would not say whether incriminating evidence had been obtained, but allowed: “I will say generally, we’re not going to assign an investigator until that sort of threshold has been met.” Investigator Terrence Simpson with the DA’s office is actively working on the case, Chase confirmed, so it’s “not just me looking at it anymore.”
Chase said he could not comment on who or how many other people Simpson plans to interview, but according to Blaettler, who has been formally interviewed by the DA’s office, “my understanding is that he had, or was going to, speak to other people.”
Blaettler said he met with Simpson for two hours on Oct. 6. He understood Simpson to be gathering evidence to help determine whether the DA will press charges. He said the pair discussed his former role as treasurer, “and how things unfolded.” Blaettler said he provided Simpson with spreadsheets documenting the history of payments going out from the Collaborative to Dominguez, which covered the two years Dominguez’s services were contracted for.
Monetary issues came to light in September 2010 when Blaettler – a veteran board member of the local philanthropic nonprofit Gilroy Foundation who has also assisted numerous additional community organizations with financial matters – left the Gilroy Foundation board and became the volunteer treasurer for the South County Collaborative.
After repeatedly requesting and eventually obtaining the South County Collaborative’s financial data from Dominguez and analyzing it, however, Blaettler said he noticed “inaccuracies” as billings submitted by Dominguez exceeded what was allocated to his contract.
“He was doing it. It was systematic,” said Blaettler when the story broke. “There’s no question looking at it from a ‘financial guy’ standpoint.”
Blaettler made his case to the South County Collaborative Board, but rather than pursue legal action, the Collaborative, led by Chairwoman Lynn Magruder, reached a civil agreement brokered by Gilroy Attorney Lloyd Lowery with Dominguez to pay back $52,629 to the agency, according to Blaettler and others.
Dominguez has now reportedly missed two scheduled payments totaling $16,000, according to several sources close to events surrounding the case who insisted on anonymity.
Magruder refused to reply directly to whether or not Dominguez had missed two payments, saying “I think that question should be directed to Francisco.” She had no comment when asked how many missed payments it might take before the Collaborative Board would decide to file a complaint with the DA’s office, though she did acknowledge meeting with DA investigator Simpson.
Dominguez also would not answer questions reagarding missed payments. “I’m not going to comment on anything right now,” he said Monday, adding that he was going into a meeting and would call back later. He failed to do so and a follow-up email sent to Dominguez’s Gilroy Unified School District address Wednesday morning also went unanswered.
Local attorney Lloyd Lowery, working on the Collaborative’s behalf, brokered the deal with Dominguez spoke publicly, but sparingly, for the first time on the situation. He acknowledged the Collaborative has a promissory note from Dominguez – a written promise to pay a specified sum of money to a designated party, at a fixed time or on demand – but would not discuss tardy payments, or the amount.
“Frustrating as I know it is, I can’t comment on what’s going on in that process,” Lowery said Wednesday.
In May, Blaettler told the Dispatch Dominguez controlled the South County Collaborative’s only checkbook, and wrote checks to himself paying invoices he generated from his DZ Consulting firm without any other representative of the agency co-signing.
Blaettler presented his original findings to the South County Collaborative Board of Directors in November 2010, but became frustrated with “a lack of accountability,” including the Collaborative’s decision to not pursue legal action.
He submitted a resignation letter dated March 25, stating he did not want to be party to a decision that allowed Dominguez to “get away with criminal behavior by simply” allowing him to return the $52,629.
During an in-person interview in May, Dominguez said he performed duties above and beyond what was called for in his contract with the South County Collaborative. One of those duties outside the contract’s purview, he said, was acting as the agency’s “bookkeeper.”
“They were giving me other things to do, and I was billing them for those other activities,” Dominguez explained. “I was submitting invoices for work I had completed, and at the time I wasn’t aware it was over the contract amount.”
Administratively there were things the South County Collaborative should have been doing, he said, “but they didn’t have anybody to do it, and it fell on me … I don’t think I was overpaying myself. I was billing for work that I was doing.”
Dominguez came to Gilroy from Oxnard, where he served on the school board from 1996 to July 2006. He was elected to the GUSD school board in 2006 and served as its board president for one year beginning Dec. 10, 2009. In 2010, Dominguez ran for the 28th District State Assembly seat and lost in the primary to Luis Alejo.
Dominguez continues to work for his own firm, DZ Consulting, currently as a sub-contracted consultant hired by Parsons Transportation Group Inc. on behalf of Parsons’ $55 million deal with the California High Speed Rail Authority. Dominguez is paid at a rate of $120 per hour to “develop and implement a public outreach effort” for the High Speed Rail Authority in South Santa Clara County, according to his contract with Parsons.
As for the Collaborative’s current board, which includes Lynn Magruder, Lillian Castillo, David Cox, Hugo Mora-Torres, Rocio Reyes, Marilyn Roaf, Sr. Rachela Silvestri, and Lani Yoshimura, members say they’re under strict advice to not discuss the situation.
Erin O’Brien, who is no longer on the Board, said her ex-oficio position was recently eliminated when the Collaborative re-wrote its bylaws and would only say that, “My understanding of it is that everything has been turned over to the DA,” said O’Brien. “I hope things unfold as they should. The Collaborative deserves to be made whole.”
Despite the issue with Dominguez, Magruder said the $125,000-per-year annual Drug Free Communities grant has been renewed through Oct. 29, 2012, though the Collaborative severed its relationship with Dominguez.
Part of the grant enables the Collaborative to continue employing Elena Ruiz-Thomas, the Collaborative’s only employee and acting Strategic Director/CEO.
The Collaborative now rents an office space for $1 a year at Rebekah’s Children Services, located at 290 IOOF Ave.
As for Dominguez’s fellow GUSD school trustees, two remain diplomatic. Trustee Fred Tovar admitted he initially thought it would be difficult for Dominguez to carry on his duties with all “these distractions,” but added “I haven’t seen him give less than 100 percent. For me, that’s the important thing; that it’s not affecting his mindset.”
Were this not the case, Tovar countered, “that would be the time where I would say he needs to step down.”
GUSD trustee Mark Good’s response echoed this sentiment.
“I think he should remain in his position on the school board if he maintains he’s innocent, and that’s what he’s told me,” said Good. “But at the same time, the DA’s office should make allegations against public officials its top priority.”
Generally speaking, Good said, if any public official has been accused of criminal misconduct, “and he’s innocent, he needs to be proven innocent right away.”
If that’s not the case, Good continued, “that person should not be in a position of authority.”
Considering the investigation’s possible time span, Chase said tracking down paper trails and copious records “can take a while.”
“But as far as anticipating when we can decide there’s nothing or something, we wouldn’t expect it to take more than a year,” he said.
Timeline of events
– September 2008: The South County Collaborative, a leading social services agency in Santa Clara County, hired DZ Consulting (owned and operated solely by Francisco Dominguez, also a Gilroy Unified School District Trustee) to manage a five-year, $125,000-per-year, federal Drug Free Communities grant that was renewable annually.
– 2009 through late 2010: DZ Consulting had control of the South County Collaborative’s checkbook.
– September 2010: Issues with funding come to light when John Blaettler, longtime accountant and treasurer for the South County Collaborative, notices “inaccuracies;” billings submitted by Dominguez exceeded what was allocated by his contract.
– November 2010: Blaettler presents his findings to the South County Collaborative Board of Directors.
– February/March 2011: Dominguez agrees to make payments to the Collaborative, according to Blaettler. The Collaborative chooses not to seek legal action.
– March 25: Frustrated over “the lack of accountability,” John Blaettler formally resigns as treasurer from the Collaborative.
– May 31, 2011: The Gilroy Foundation Board, a nonprofit organization serving Gilroy, severs a $70,000 grant it obtained to assist the Collaborative. It also took back from the Collaborative a shared office space.
– June 2011: The Santa Clara County District Attorney’s Office confirms it is looking into the embezzlement charges.
n October 2011: Investigator Terrence Simpson with the DA’s office is now working on the case.
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