Show me the money 

What do you call it when thousands of dollars go missing from the coffers of a local government? Embezzlement? A crime? Simply a case of sloppy bookkeeping? Magic?

In the case of Oceano, a small, unincorporated town south of Grover Beach and Arroyo Grande, it’s a question that will likely never be answered. In what might be a surprise to those unfamiliar with the kooky world of Oceano politics, both the district’s leadership and the San Luis Obispo County District Attorney’s Office aren’t expressing any interest in the mystery of what happened to thousands of dollars of taxpayer money.

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• PHOTO BY STEVE E. MILLER
• MONEY MYSTERY : The Oceano Board of Directors want to put its troubled financial past behind them.

Oceano doesn’t have a town hall or a city council; the county Board of Supervisors is responsible for governing the little seaside hamlet. It does, however, have a water and sewer district, and the Oceano Services District is the closest thing the area has to local representation. A five-member Board of Directors runs the district that handles water, sewer, fire protection, and street lighting services for 7,000 residents.

Bi-monthly CSD meetings are … lively.

Some of the directors constantly snipe at each other, while one steadily whispers into the microphone when another speaks. One director persistently accuses some of the directors of plotting against her.

There is one thing all the directors seem to agree on: The district’s finances are deeply troubled, and no one knows exactly what’s going on with the money. The Oceano Community Services District has been trying to deal with the mystery of its finances for years, and its books are an accountant’s worst nightmare.

The books haven’t had a complete audit for the last three years, and district insiders say it’s unlikely anyone will be able to figure out what was going on financially during that time.

Only recently has the money situation begun to be ironed out; a rough overview of the district’s recent finances—the first in years—happened in February.

Considering the district’s loose hold on the millions of dollars it has rustling around, the December 2009 discovery that someone may have been writing district checks without the board of directors realizing it didn’t surprise many locals.

In August 2010, officials discovered $368,000 in district funds tucked away in previously unknown accounts. The directors ordered a forensic audit—a specialized inventory of financial information to be used in legal proceedings—to examine a three-month period of 2008.

Results of the sample were revealed in August 2010, and they were dramatic: The partial audit found that, of 438 financial transactions examined, 134 were deemed “questionable.” This intrigued the District Attorney’s Office, which, according to Oceano leaders, wanted to see more financial information.

Then, something odd happened. For six months, the board did little. Members repeatedly turned down proposals for another, more thorough audit. And if you listen to the recordings of meetings from that period, you’ll hear that the board members don’t seem too excited about spending more money on further examinations.

“Our past accounting practices are odd, at best,” Jim Hill said at a board meeting in March of this year. (Hill was board president until his resignation on March 28, citing separate financial issues. See page 6.) “I don’t want to spend a lot of money to have the auditors come back and tell us our accounting practices two years ago were questionable. We already know that.”

In February, the board told General Manager Raffaele F. Montemurro—who was hired after the suspicious accounting happened—to give all the information he could gather about the years in question to the District Attorney’s Office.

Oceano officials discovered the money coming into the district through fees in those three months didn’t equal the money being deposited. At any one time in that period,  $10,000 to $60,000 seemed to be missing from the district’s coffers, said the officials.

Montemurro gave the requested figures to the District Attorney’s Office in early March 2011, but Debra L. Vallely, the head of the office’s Economic Crime unit, sent the information back to Oceano. Vallely referred Montemurro to the county Sheriff’s Department, writing in a letter to the district that the matter had to be sent to the “proper investigative agency” before her office could deal with it.

This confused the Oceano directors, some of whom said the information confused the investigators and should have been summarized to make facts more obvious. Others saw another explanation.

“They’re not interested in this kind of stuff,” Mary Lucey, an Oceano board member, said at the board’s March 23 meeting. “They want sexy cases, and in economic crimes you’re not going to find dazzling cases.”

Lucey also told the board she doesn’t believe a “large theft of dollars” happened.

The District Attorney’s office didn’t respond to multiple phone calls from New Times inquiring about this subject.

Former Board President Hill said the financial records are so screwed up, it’s hard to know what exactly happened.

Could someone have embezzled money from the district?

“That’s entirely possible,” said Hill, a six-year veteran of the board. “But who was it? Let’s say there was money taken. There were too many hands in the drawer. How do you prove it?”

The directors don’t seem to know where to go with their awkward financial situation. They admit they’d like to put it behind them—and in some ways they have. The district seems to be slowly getting its financial house in order, and employees who were in charge when the books went haywire are long gone.

Still, the financial issues seem to stick in the craw of many residents.

“Someone got away with something,” said Christy Proctor, an Oceano resident. “The sheriff doesn’t care. The district attorney doesn’t care. Somebody stole our money, and no one gives a damn.”

Staff Writer Robert A. McDonald can be reached at [email protected].