Neighborhood Councils Accused of Misspending Public Money

By EGP News Service

Local neighborhood councils came under fire this week after the city controller released an audit on Tuesday that called into question the oversight of local spending of taxpayer dollars. Neighborhood councils may be allowing the misuse of public funds through “a systematic failure of accounting and fiscal oversight,” according to the audit released Jan 12.

An audit of 89 neighborhood councils found at least $880,000 in purchases in the previous fiscal year that did not have proper paperwork and authorization, City Controller Wendy Greuel said. Also, six neighborhood councils have been or are currently under police investigation for about $276,000 in questionable purchases.

“Until we get the actual backup (documents) for that, we don’t have appropriate information how those funds were spent,” Greuel said.

The audit also found the Department of Neighborhood Empowerment (DONE) has:

— failed to enforce a requirement that neighborhood councils submit financial reports;
— failed to review neighborhood councils’ budgets;
— failed to make sure that neighborhood councils stay within their credit card limits; and
— failed to provide oversight of neighborhood councils’ cash advances.

The department’s general manager, BongHwan Kim, who requested the audit, said his office, charged with oversight of the vast citywide neighborhood council system, was severely understaffed but would make the necessary changes.

Neighborhood councils are made up of volunteers charged with promoting public participation in city governance and decision-making.

According to the DONE Web site,, neighborhood councils are authorized to use public funds for administrative costs, activities, as well as community and outreach events that foster public participation.

The city controller called for overhauling DONE’s system of monitoring of neighborhood council spending practices.

Under last year’s budget, each council received $50,000; this year each council received $45,000.

“A neighborhood council can purchase almost anything as long as the expenditure is approved by its board,” according to the audit. “Other than the cost of leasing office space, operational supplies, equipment and temporary staffing, we noted that the majority of neighborhood councils’ expenses are for food and donations.”

In the previous fiscal year, neighborhood councils made $175,000 in credit card purchases from restaurants, fast food establishments and grocery stores, according to the audit.

Robert Cherno of Los Angeles for Fair Government, a group of former neighborhood council members, told EGP he is very pleased with Greuel’s audit.

He also sent out a scathing press release on Jan 12 to coincide with the audit citing examples of alleged criminal misconduct throughout the Neighborhood Council system. Cherno said the Historic Highland Park Neighborhood Council should be criminally prosecuted for misspending money. Highland Park storeowner Rana Redfield is also concerned, and provided EGP with a copy of a Notice of Exhaustive Efforts sent by DONE to the Neighborhood Council on Sept 17, 2009. The notice, amongst other issues, highlighted several questionable expenditures reported for the council.

Almost $12,000 in restaurant bills, cash withdrawls close to $8,000, and unusual expenditures such as $300 on laundry were included in the notice.

Former HHPNC treasurer, Jesse Rosas said $270.63 listed as a laundry expense was a mistake by DONE. He said the money was used to repair a water pressure system for future use in community clean-up events.

Current HHPNC treasurer, Heinrich Keifer, said although the $12,000 spent on restaurants appears high; the amount is not entirely unreasonable. Keifer said it was common practice for the eight individual council committees to meet at restaurants as well as for the council to cater general meetings. According to the DONE Web site, these actions are permitted. DONE permits food purchases for council meetings and activities so long as they promote public participation. There is no maximum amount listed per individual or group setting.

Keifer did acknowledge to EGP that in retrospect there was perhaps a lapse in guidance on how much individual board members should spend ordering food at restaurants, but that overall the funds were used appropriately. He said several years ago a proposal was made to adopt a cap on how much an individual could order but it was never adopted.

Keifer also responded to several other claims of examples of misconduct alleged by Cherno including: $1,800.00 for Sacramento trip and $4,300.00 backpack giveaway. Keifer said the council voted to spend $1,800 to take 10 Franklin High School students to Sacramento to observe state governance. The $4,300 spent on backpack giveaway represents the combined total of a joint effort including several other local neighborhood councils, which also included outreach for the popular community event.

Keifer told EGP that he personally would prefer that the council steer its budget away from “social functions” and focus on “promoting public participation.”

“That’s not our charge to go out and make people feel good,” Keifer said. “We should focus on how to pack a room, pack City hall, get people involved.”

Keifer said he would like to promote the use of funds to focus on getting local youth involved in community beautification projects. He said he would also steer the council to invest more in emergency preparedness equipment.

“Our job should be to help the city do its job,” he said.

Gracey Liu, DONE Senior Project Coordinator, told EGP that five of the 13 grievances listed on the September notice have been resolved. The eight unresolved grievances are complaints amongst board members. DONE is working with the council to resolve those issues, Liu told EGP.

This spring, most Neighborhood Councils will hold elections. The HHPNC will hold elections on April 29. In preparation of the upcoming elections, DONE has scheduled a regional series of dialogues and sessions forums to educate residents on the council system. One will be at the Wilshire United Methodist Church-Assembly Room, from 6:30 to 8:30 p.m. The church is located at 4350 Wilshire Blvd., Los Angeles. For more information, call (213) 485-1360 or visit To review the City Controller’s audit of neighborhood council expenditures visit,

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January 14, 2010  Copyright © 2012 Eastern Group Publications, Inc.


2 Responses to “Neighborhood Councils Accused of Misspending Public Money”

  1. Leonard Lark on January 23rd, 2010 8:39 pm

    I cannot speak for this Neighborhood Council but I am from South LA and I see some shakey stuff going on with DONE
    Where is the outrage About this 5.6 Million missing
    We should be screaming for DONE managment and whoever has been over the fiscal procedures be fired ASAP(now) and charges pressed.

    Finally, don’t trust the controller they are not telling the whole truth

  2. DAVID on February 15th, 2010 6:57 am


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