Rancho Santiago Community College District trustees were trying to investigate how a third-party vendor secretly held $8 million in insurance rebates accrued in off-balance-sheet accounts. He was removed from the Audit Committee, which he had chaired for 20 years.
Phil Yarbrough, who served on the board for 28 years and is also chairman of the Finance and Audit Review Committee tasked with examining the district’s financial accounts, said he was stripped of his chairmanship earlier this month.
“My efforts to investigate the misappropriation of public funds within the district and to hold staff to account have been consistently thwarted, leading to retaliation against me,” he said of the move at an Oct. 14 board meeting. “There is,” he said.
Yarbrough said in an interview Wednesday that he called a closed committee meeting to inform the district audit team about the reasons cited for his termination, including an $8 million risk management fund held by the risk management department. He refuted the contention that he violated the Brown Act. The pool operator is the Alliance of Schools for Cooperative Insurance Programs (ASCIP).
The Cooperative Insurance Program School Alliance office in Cerritos, photographed in 2023.
(James Carbone)
Board members learned in June of the funds ASCIP had held from before 2009 and immediately requested that the entire amount be transferred by check. Administrators disbursed at least $3.6 million from the fund in at least 13 transactions between 2012 and 2020, according to district records.
Yarbrough said auditors preparing the upcoming annual audit of Rancho Santiago CCD need to know about the $8 million and its source.
“I’m just doing my due diligence and doing what I’ve been doing for decades on that committee,” he said. “A “slush fund” is something that is kept off the books, out of people’s consciousness, and whose expenditures are unknown. That is, the board has no knowledge of it, and (managers) spend money from it. Therefore, this falls under the definition of a slush fund.”
Trustee Zeke Hernandez joined Yarbrough in calling for an independent audit of the risk management fund. That means tracking deposits by ASCIP and withdrawals by its administrators, including John Didion and Peter Hardash, retired cabinet ministers who still have deep ties to the insurance agency.
“If we don’t fix this mess, people are going to come back to the board and say, ‘You’re responsible because you’ve had this problem before and you haven’t done anything about it.’ I would say,” Hernandez said. mentioned the audit at the October 14th meeting.
Rancho Santiago Community College District President Marvin Martinez.
(Courtesy of Rancho Santiago CCD)
But despite requests to expedite discussions, Board President Sal Tinajero took no action until this week. On Monday, the trustees will vote on whether to submit a request for proposals for a forensic audit of the fund.
It is unclear how an investigation into funds held by ASCIP, a Cerritos-based public joint powers agency, would be conducted by one of its 134 member districts. But Tinajero said he was open to investigating the matter.
“I’m going to ask ASCIP for an independent audit,” he said Thursday. “Personally, I don’t think there’s anything there. (But) I think everyone on the board wants to make sure everything is done correctly.”
Mr. Tinajero denies Mr. Yarbrough’s claims that he was retaliated against for speaking out against the fund or its administrators, who may have been aware of its existence, saying that the trustees convened illegal meetings and failed to deliver on their promises. He said he was removed from the audit committee because he failed to apologize.
“I have been working with this man since July, and he refuses to say he has violated the Brown Act,” he said, adding that a special committee has been established to determine further sanctions against the trustees. He said that
Like his colleagues, Tinajero learned about the Risk Management Fund this summer. It’s unclear exactly who within the district knew about this and authorized the $3.6 million withdrawal from the account.
Former Rancho Santiago Community College District Vice Presidents Peter Hardash (left) and John Didion have a relationship with ASCIP dating back more than 30 years.
(Courtesy of Rancho Santiago Community College District)
Finance Minister Marvin Martinez said at a meeting last week that the fund was established in 2012 or 2013 and has been around for a long time.
“We continue to get audited year after year after year,” he said. “And throughout that time, Director Yarbrough was the chair of that committee.”
However, unlike other funds that are audited annually and reviewed by the Board of Auditors, this account is held off the district’s books by ASCIP and audited together with insurance rebates pooled by multiple other school districts.
Barry Resnick, a local resident and former Rancho Santiago Teachers Union president, has requested numerous records related to ASCIP and the Risk Management Fund, but during a visit to the district in 2019, Martinez said that during a 2019 visit to the district, a then-retired professor He said he was informed about the account after meeting with him. Didion and Joint Powers Bureau Chief Executive Fritz Heilig.
“He said Didion and Heirich told him that ASCIP had money for the district,” he said Wednesday. “And public records show that on the day he was hired, that account had $771,127 in it. If 3/550,000 is held at an off-site vendor, that raises questions. .”
Martinez declined to say when or how he learned about the interest-bearing accounts. However, district spokesperson Chi-Chung Keung confirmed in an email Friday that “funds held in ASCIP on our behalf are subject to an audit process.”
Despite being removed from the district’s audit committee, Yarbrough said he will do everything he can to ensure the fund receives a thorough accounting.
“We’re going to find out where that money came from, where it went, and find out whose fingerprints are on it,” he said.
