CLEARLAKE OAKS >> In a case of bureaucratic phone tag and just plain mixed messages, the Clearlake Oaks Water District was required to repay substantial disaster relief funds it received from federal and state agencies recently.
The district was required to refund the Federal Emergency Management nearly $1.6 million in a notification mailed to the District by FEMA on Sept. 28. FEMA alleged the District failed to repay federal and state grant funds it received, but was not entitled to keep.
The United States alleges that following the District’s application for disaster relief funds, the District received reimbursements from FEMA and Cal Office of Emergency Services for expenses for which the District had already been reimbursed by its insurer California Joint Powers Insurance Authority (CJPIA), and was notified by mail, according to Nicholas Parker, assistant United States Attorney of the U.S. Attorney’s Office, Northern District of California.
The U. S. alleges further that the district knew the funds it received from FEMA and Cal OES were an overpayment, but instead of returning funds, retained them in violation of the False Claims Act and state law. The U. S. alleges that the district knowingly concealed the funds and made false statements to the United States and Cal OES, material to its obligation to return the funds. These false statements included quarterly reports in which the District stated that it had not received excess funds and project closeout certifications in which the District believed that it was entitled to the full dollar amount approved without deducting the amount it had already received from its insurer
However, Dianna Mann, general manager of Clearlake Oaks County Water District, explained the funds were provided for relief from flooding that had occurred in February 2017. At the time of the floods, the district submitted claims to its insurer and applied for aid from FEMA, Mann clarified in an emailed document.
“At all times, the District kept its insurer apprised of the FEMA application and FEMA apprised of the insurance claims,” she said. “At no time did the district conceal or mislead its insurer or FEMA about the actions it had taken in submitting an insurance claim and FEMA application, and the funds were accounted for and reported in the District’s financial statements at every monthly board meeting.”
Nonetheless, U.S. Attorney Ismail J. Ramsey, said as part of its mailing to the water district, “FEMA disaster relief funds play a critical role in helping communities recover from natural disasters. It is unacceptable for any entity, including a public entity, to divert funds from these programs through fraud and enrich itself at the expense of the American taxpayer.”
The total amount of the settlement to be paid is $1,589,725.50, plus interest. Of that amount, the District will pay $1,192,294.12 to the United States and $397,431.38 to Cal OES.
Dr. Joseph V. Cuffari, Inspector General of the U.S. Department of Homeland Security, added, “DHS OIG is grateful for our collaboration with our partners in the United States Attorney’s Office for the Northern District of California. Together, we ensured that more than $1.1 million are repaid to the United States.”
The document forwarded by Assistant U. S. Assistant Attorney Parker concluded with the clarification that the investigation and resolution of this matter illustrate the government’s emphasis on combating fraud in federal grants. One of the most powerful tools in this effort is the False Claims Act.
Still, Mann’s email went on to further explain, the district believes it informed FEMA of both payments and was waiting for an audit from FEMA to return the funds. The District kept the funds received from FEMA funds in the Local Agency Investment Fund, an investment fund administered by the California State Treasurer’s office. At no time did any District officers or employees receive or benefit from any FEMA funds. Furthermore, Mann’s email maintained the settlement does not present the District form receiving state or federal funding it is otherwise eligible for, and the District continues to apply for and receive grants to better its system and infrastructure.
When the District was contacted by the US Attorney, it fully cooperated in the investigation and provided the documents requested, provided written responses to questions, and participated in interviews with the US Attorney. The District also offered to return the funds a number of times. The District denies that it fraudulently concealed the funds, or that it used the funds in an illegal manner.
Mann’s email also stressed, the District determined it was in the best interests of the District and its customers to settle the matter rather that incurring time and expense of going to trial The District regrets that the situation was resolved in this manner but appreciates and thanks the U. S. Attorney for their professionalism and diligence during the process.
Neither the U.S. Attorney’s Office nor the water district responded to the Record-Bee inquiry of how after all their communications exchanged, how a misunderstanding resulted in the first place.
