Feds Investigating Corruption in Conservative Bastion of Orange County

Tuesday, July 30, 2013

An Orange County Grand Jury report (pdf) in April, in reviewing the history of local corruption, likened politics in the Southern California conservative Republican stronghold to Tammany Hall, the legendary political machine that ran New York City in the 19th century.

County supervisors vehemently rejected the characterization, but will have ample opportunity to make their case as a law enforcement task force that includes the FBI, the IRS, the U.S. Attorneys office and the Orange County District Attorney’s office investigates allegations of widespread public corruption.

The website Voice of OC was the first media outfit to reveal the investigation was underway—it began in April—but it is still unclear if the probe has a particular focus. Another grand jury report (pdf) in May gave an indication of at least one potential target, CalOptima.

CalOptima is an Orange County-organized health system that administers health insurance programs for low-income families, children, seniors and persons with disabilities. It is the only plan responsible for administering Medi-Cal in Orange County. One-third of the county’s children depend on it.

But over an 18-month period of time, 16 senior-level executives, including the chief executive officer, the chief operations officer, the chief medical officer and the chief financial officer, have left amid internal allegations of misconduct and inappropriate actions. The $1.5 billion entity has been accused of conflicts of interest in its dealings with hospitals, doctors, clinics and other medical groups.

According to the grand jury, “An ordinance change in December 2011 by Orange County’s Board of Supervisors has made it possible for Providers to seize control of CalOptima’s Board of Directors from Member organizations and their representatives.”  One dissenting supervisor is quoted as saying, “It’s like having the foxes watch the chicken coop.”

The grand jury report provided a timeline of CalOptima events that gets rolling with 100 allegations by a CalOptima attorney in January 2011 of misdeeds by senior executives. In March 2011, a registered lobbyist rewrote the county ordinance that changed the CalOptima board configuration to favor providers over members and put the OC supervisor whose district had the most CalOptima members on the CalOptima board. The CalOptima board chairman opposed the changes.

Senior executives began to bail in July 2011 and remaining executives got big bonuses in September. Two more county supervisors were added to the board in December, prompting the chicken coop quote. Two months later, the lobbyist held a $250-a-plate fundraiser for the supervisor sitting on the board.

A separate probe of four of the 5-member OC Board of Supervisors by the state Fair Political Practices Commission (FPPC) was reported last month.

The OC Board has been jousting with the grand jury since its January 2013 report entitled “CalOptima Burns While Majority of Supervisors Fiddle” was released. The board refused the grand jury’s request for supplemental funding and tried to slash their daily stipend from $50 to $15.   

Details of the FPPC investigation are as yet unknown.

–Ken Broder


To Learn More:

FBI Spearheads Task Force to Probe OC Political Corruption (by Tracy Wood and Horberto Santana, Jr., Voice of OC)

Orange County Supervisors and CalOptima under FPPC Investigation (by Horberto Santana, Jr., Tracy Wood and Nick Gerda, Voice of OC

Federal Task Force to Investigate Corruption in Orange County (by Paloma Esquivel, Los Angeles Times)

A Call for Ethical Standards: Corruption in Orange County (Orange County Grand Jury) (pdf)

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