BY MAIRE O’NEILL
Pursuant to legal advice from its contracted attorney Nancy Long, the Regional Coalition of LANL Communities has decided to have Long send a letter to Andrea Romero Consulting, LLC, owned by District 46 Rep. Andrea Romero requesting $8,000 for repayment of reimbursements Romero received during her contract which ended in 2018.
During Friday’s Zoom meeting of the board, Long said she was asked to review RCLC “agreed upon procedure” audits from 2013 to 2018 which were released in December. She said the RCLC had previously believed it was not subject to the New Mexico Audit Act and its requirements, so they had not been done.
“Those audits contained repeat findings that are carried forward year after year and so each individual audit is not necessarily as important but they all seem to have the same sort or repeat findings. Those findings have much to do with getting your audits done, with board and fiscal oversight, and of course with certain issues regarding reimbursements and previous travel policy,” Long said.
She said she took the review to also mean that she would look at three other reports that were done: an internal audit report prepared by Los Alamos County in February 2018 to look at reimbursements to ARC; an independent investigation performed by the Albuquerque law firm of Adams + Crow also arising out of reimbursements to ARC that was initiated by Los Alamos County that focused on County employees and officers and their role in how the reimbursements got approved; and a report by the Office of the State Auditor that looked at all reimbursements to ARC and its predecessor.
“Those special reports and audits had as their focus the reimbursements made for travel, meals and entertainment for your former executive director. The special reports like the yearly audit looked for the root causes as well of these improper reimbursements and that led to a number of suggested remedial measures that you all have implemented,” Long said. “For instance, of the 18 findings of the special audit report, I focused on reimbursements mostly, with the rest of those findings going to oversight and accounting reporting issues of the RCLC and the fiscal agent.”
She said the way she looks at it, the OSA special audit report is certainly the most comprehensive in time and recites that it looked at all documentation that was provided and does not make any claim that it did not have sufficient documentation or was missing anything, having apparently received documents from the RCLC, Los Alamos County and third parties.
“Going back to the report that was prepared by the County called an internal audit that was presented to you at your February 2018 meeting, some of you, I would assume were on the board at that time. For that period in question which was a little over a year, almost a year and a half, $29,000 in total reimbursements were made. Of that amount, the audit that was done by Los Alamos found that there were impermissible expenses of about $5,000 and that that was the amount that should not have been paid to your executive director,” Long said. “But that amount was then offset by what would be a maximum per diem rate for those days assuming that Andrea Romero was then traveling on those days, that they were able to verify that, or was entitled to receive per diem. It took away the $5,000 but gave back approximately half of it in a per diem rate after the fact. That resulted in about $2,200 that was recommended that the executive director reimburse and I understand that did happen.”
Long said when Adams + Crow looked at that six months later in their report, they disapproved of that method and disagreed with the $5,000 amount. She said the OSA audit looked at RCLC‘s expenditures and revenues and obtained additional documentation and that the OSA audit seems to be the best view of the total amount of what were impermissible reimbursements.
“When I add up the five categories of what were impermissible reimbursements in that report, it equals $10,606.32,” she said.
There are some 42 different entries in the OSA report, Long said, including alcoholic beverages that were purchased and entertainment and personal expenses that were incurred. With the OSA audit, the RCLC was allowed to respond to the 18 findings including five findings on the reimbursement issue. She said the RCLC agreed with most of the findings.
“We needed to fix them and that’s what you all did in terms of your policy, oversight and separate bank accounts and that sort of thing. But for these the response at least on three of them (so I’m excluding your responses for duplicate mileage and gross receipts tax on reimbursements) – that for the others, the RCLC responded that it disagreed with the OSA because it found that some guests had not charged back or had paid for their meal. It’s not a very lengthy response but the RCLC said it disagreed with those findings. I’m not really sure what that was based on but I assume it was based on documentation that was probably held by your fiscal agent. The responses that were made to the special auditor as I understand it were approved by the board,” Long said.
Long said the yearly audits as well as the special audit have issued findings regarding the RCLC’s travel policy and board and fiscal agent oversight vis-à-vis pooled funds of the County of Los Alamos for RCLC funds, and that the RCLC has addressed those by implementing a travel policy that is compliant with state law and the implementing regulations.
“I understand now that travel is paid by the respective government bodies for the officials and not by the RCLC. Approvals for reimbursements must be done through multiple tiers of review to ensure adequacy and that they comply with your policies. You are now conducting yearly audits, your funds have been separated from Los Alamos County and reimbursements for your executive director I understand are contained within his contract. So you have addressed those oversight issues that have been recommended,” she said.
“The question I think arises as to whether you’re done, that you’ve reviewed this, you’ve instituted appropriate safeguards and policy or whether there’s anything else that needs to be done. I suppose that based on the special audit that you could decide to seek further reimbursement. It looks to be an amount of about $8,000 is all that the State Auditor came up with, again saying that they had all documents that they needed. So I don’t think that you need to repeat another audit or a special audit,” Long said.
She said the board had to have considered the practical economic issues as to how far it would want to take it to seek reimbursement of the $8,000 in terms of any consultants or attorneys’ fees that would be incurred.
“You also have the issue of a counter argument that I believe could be made that you previously resolved this. But that reimbursement that was sought from the executive director came before the special audit was done. That was at your February meeting where you came up with that reimbursement amount for the executive director and the special audit was done in August of that same year. That is my report,” Long concluded.
Roybal asked if the board had any comments or questions.
Izraelevitz asked Long what is the fiduciary responsibility of the board.
“That’s what I was looking to get some resolution of – pursuing this reimbursement. You mentioned two things, one is the maximum amount identified by the auditor was about $10,000 but as you said there is some question as to whether some of those charges were made or not and so presumably that’s the maximum but it could very well be less than that,” Izraelevitz said. “Then you said there was $2,000 that was paid back by Ms Romero so that’s the net of $8,000 that would be the upper limit, is my understanding of what we could seek reimbursement for.”
He said he wanted Long’s legal opinion on the appropriate path forward because the board “wants to do what is its prudent legal responsibility”.
“I think if this was $50 after all this we would say, sure, somebody owes $50 but it’s going to cost you several thousand dollars to collect on those $50. Your fiduciary responsibility is not to waste thousands of dollars to collect $50. My question to you is, what is your advice? Is this an amount that prudently we should look for reimbursement for? ….. That is what we want to come to resolution and whatever is the right approach we will follow, but at this time we’re kind of stuck not knowing what the prudent response is and that is what I was looking to see from this report,” Izraelevitz said.
Long replied that Izraelevitz summed it up very well in terms of countervailing issues that the board must consider.
“This appears to be a problem that was mostly born out of negligence. I don’t think even the Adams + Crow report found any form of behavior where there was an attempt to mislead or conspiracy or any criminal activity and I think that makes a difference as well,” she said. “I think there were obviously expenses that were incurred by this consultant that were legitimate expenses that were not made up. I think all of those factors as well as the expense in pursuing it and the safeguards that you put in place to make sure it doesn’t happen again meet that fiduciary obligation that you all have to the board as well as not throwing money away when you know you’re not going to get any money back. With all these factors considered, including how you’ve addressed it previously, I would say that I would not necessarily spend much more time on this. Maybe perhaps one more attempt without too much effort could certainly be made but I think at some point you just say we’ve done all that we can and that any prudent board member would.”
Izraelevitz asked if the board could send a letter on Long’s letterhead so that it seems “more official or let’s just say intimidating”. He asked how many individuals were involved in the $8,000 amount and how long it would take to write the letters.
Long said she perceived that the board did not want to expend board resources in any inordinate amount to address the issue.
“In terms of the letters that would go out, I see that there would only be one letter to the former executive director because that is where the reimbursements were made. There are some responses in the special audit that indicate that third parties perhaps board members or guests were reached about reimbursements made for them, that they said they had paid on their own so I think it would be worth one letter and I don’t know that we will get a response at all, but that is something I can put together that would not be terribly expensive,” Long said.
Mayor Sanchez said he thought the question was placed very delicately and the answer responded to it very delicately.
“What I understand is it would behoove this board to send out one final letter for that money and put this to bed,” he said.
“I think that sums up where we are very well for what I would recommend,” Long replied.
Chair Roybal said as long as the board came to a consensus he could give direction to Long to write the letter.
In conclusion, Roybal said the board members had been tasked with doing their due diligence to at least take the extra step of the letter to recover funds that have been inappropriately distributed.
Board members concurred that the letter would be the best way forward given the amount of money and what it could cost to go to court.