Clarke Howatt, former finance director for the Association of Bay Area Governments, got away for a while with $3.9 million in Bay Area bond proceeds. Mr. Howatt pleaded guilty to wire fraud in federal court and was sentenced to a year in prison.
Sen. Hertzberg’s legislation, Senate Bill 1029, would require an existing state commission to track and report on all state and local government debt until it is fully repaid.
The bill is sponsored by state Treasurer John Chiang, who appointed a task force on bond accountability in response to the San Francisco criminal case. The task force’s recommendations on best practices for fiduciary care of bond proceeds are incorporated in the bill by Sen. Hertzberg, D-San Fernando, chair of the Senate Governance and Finance Committee.
SB1029 requires the issuer of any state or local government debt to furnish the California Debt and Investment Advisory Commission with an annual debt accountability report, and to certify that the issuer has adopted debt policies with which the debt issuance is consistent.
No one was watching Mr. Howatt until after his thefts. A trusted, 20-year employee, he admitted he had embezzled $1.3 million in funds for public improvements in San Francisco and another $2.6 million intended for the same purpose in San Ramon.
According to prosecutors, he provided false information to the trustees of bond accounts to get them to wire funds to bank accounts that he controlled.
Mr. Howatt used the funds to commission a $24,000 sculpture and to buy a $1.5 million mansion on the Oregon coast. Being a bit too clever, he advertised the mansion as a vacation rental called Rincon Hill – after he had posed as the developer behind the One Rincon Hill luxury highrises in San Francisco in order to be “reimbursed” $1.3 million for streetscape improvements that had not been made.
Let’s get that door closed before another horse gets out. The Legislature should pass SB1029 and send it to Gov. Jerry Brown for his signature.
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