Auditor-Controller Eric Woolery, Orange County’s top watchdog of public dollars, is accused in a lawsuit of misusing taxpayer money by having government employees drive his young children to and from school and other activities during work hours and babysit them at the office.

The suit against Woolery was filed Monday by Tonette (Toni) Smart who was the director of the auditor-controller’s internal audit division until she was placed on leave last fall and, the suit says, wrongfully fired in mid-January. 

The Superior Court lawsuit also claims Woolery leaked a confidential draft report to Voice of OC last year about a failure by the county’s central Information Technology (IT) officials to implement basic safeguards to protect county computer systems from hacking.

Woolery declined to comment about the lawsuit’s allegations Wednesday, saying he couldn’t speak about ongoing litigation, particularly when a person leaves county employment.

But in an emailed statement Thursday, Woolery said, “Unfortunately, the law does not allow for me to say why Ms. Smart was fired. Only Ms. Smart has the power to waive her right of confidentiality so the entire termination file can be disclosed.”

But, he continued, “She will NOT be reinstated in her position; the Director of Internal Audit should be ethical, moral and beyond reproach. This lawsuit is a media stunt and its intent is to bilk the taxpayer into a settlement. This will not work.”

The Auditor-Controller’s Office is responsible for keeping watch over the $6 billion in annual spending by county government.

The duties of its roughly 450 employees include serving as the county’s main accountants, ensuring payments to contractors are being made properly, and investigating potential fraud and weaknesses in financial procedures through audits.

At events and around the office, Woolery often wears a “Taxpayer Watchdog” pin featuring an illustration of a dog.

In August of last year, the suit says, Smart “voiced her concerns verbally and in writing to County officials that Mr. Woolery (the self-proclaimed taxpayer watchdog) was using County taxpayer resources to perform personal family services such as County staff supervising his two young children when they were in the office (especially during the summer).”

Woolery also instructed county employees “to taxi his children to and from school, dance class, and other extracurricular activities during the work day,” according to the suit.

“On October 25, 2017 Tonette Smart was suspended from her position as the Director of Internal Audit after she complained and refused to participate in certain illegal activity carried out by Mr. Woolery,” the suit states.

About one month before her suspension, the suit adds, Smart “learned that Mr. Woolery secretly disclosed confidential County of Orange information to the Voice of OC (a local newspaper [sic]), sensitive confidential information that identifies certain weaknesses in the County’s IT system which could result in the compromise of the County’s computer systems.”

The suit claims Woolery told a staff member he would leak the information – a draft audit – to make the county’s top information technology officials “look bad” if Woolery did not get the approval he wanted from the county Board of Supervisors “for his own IT project.”

After Voice of OC published an article based on a version of the draft report, the suit says Smart emailed her team to express her concern that the leak would hurt the auditors’ credibility with the other county departments they’re charged with investigating.

Smart said she was wrongfully placed under investigation for the leak, and said she told Woolery in a Nov. 3 email that he was attempting to fire her “in retaliation regarding the leak of the confidential [central IT] pre-draft report to the press. You know you leaked it and I know you did.”

Woolery didn’t respond to the email, and Smart was fired on Jan. 19, the suit says.

(Click here to read the lawsuit.)

Voice of OC published an article about the technology audit on Aug. 31, noting auditors found the central IT office’s failure left the county unnecessarily vulnerable to hacking until the problems were uncovered by the audit.

Voice of OC did not disclose how it obtained its copy of the draft report, and the article described only the vulnerabilities that the draft report said had been fixed.

Some key vulnerabilities, which the article did not describe, apparently still weren’t fixed months after auditors notified the central IT office about them. And the audit raised larger questions about the county’s cybersecurity leadership, policies and practices.

Smart is represented in her lawsuit by Devon Lyon, the same attorney who represented Christine Richters, the former aide to county Supervisor Todd Spitzer who sued the county last year alleging he mistreated his staff.

Six months after Lyon filed that suit, county supervisors settled it with a $150,000 taxpayer payment to Richters.

“Ms. Smart was retaliated against after she exercised her lawful right to complain about illegal behavior ongoing within her department,” Lyon said in a statement Wednesday.

“After 15 years of faithful service to the County, they essentially invented a pretext by tearing apart her computer and accusing her of receiving personal emails on her County account. Ms. Smart looks forward to her day in court.”

Asked via phone if the email probe discovered anything more serious than the emails cited in the suit, Lyon said she wasn’t sure how to respond, but that the email investigation “was completely just a made-up pretext to substantiate their retaliation” against Smart.

Because Smart’s lawsuit is against both Woolery and the county government, the county Board of Supervisors gets to decide whether to fight the case in court or settle it.

Woolery has repeatedly drawn the ire of some county supervisors since he took office in early 2015.

That year, he challenged a retroactive $247,000 pension payment for Supervisor Shawn Nelson, who publicly had refused to take a county government pension and then succeeded in getting a ballot measure passed that he later said required him to receive a pension.

The following year, Woolery temporarily blocked taxpayer payments on several mass mailers from supervisors Andrew Do and Lisa Bartlett in the weeks before the June primary election. The mailers prominently featured the supervisors’ names as Do ran in a tight re-election and Bartlett sought a seat on the county Republican Party’s central committee.

Woolery said at the time he was concerned the mailers may violate state laws limiting how elected officials can display their names on publicly-funded mail.

After Do learned Smart had been placed on leave, Do brought it up at the Nov. 14 supervisors’ meeting.

“We have…very weird dynamics going on, where we have an auditor-controller that feels like he actually oversees this Board of Supervisors. Okay? He feels like he’s the one who gets to review, actually, the legality of everything we do,” Do said.

Under state law, Do and the other county supervisors decide how the county responds to lawsuits, including whether to seek a quick settlement or fight a given case, which can require people to testify under oath and turn over documents.

Woolery is sponsoring a state bill, introduced last February, that would allow county auditor-controllers to hire their own attorneys for matters that pose a conflict of interest with their Board of Supervisors, instead of having to rely on attorneys that report to the supervisors.

The bill, SB 292, did well in Sacramento last year, winning a unanimous 40-0 vote from the state Senate in May, followed by a unanimous 9-0 vote to advance out of the Assembly Local Government Committee in June.

The bill’s momentum then slowed down, with no further votes held since June.

Woolery, a certified public accountant, previously served as Orange’s city treasurer and was elected as the county’s auditor-controller in 2014. He is running for re-election in June, and is the only candidate to have filed for the race as of Wednesday.

In her lawsuit, Smart said she was hired by the county in 2002 as a “Senior Auditor/Accountant,” eventually rising to higher-ranking positions and ultimately leading the internal audit division.

Through her suit, Smart is asking a Superior Court judge to order Woolery and the county to reinstate her at her county job, compensate her for lost wages and benefits, pay her attorney’s fees, and pay additional penalties.

The county’s response to the lawsuit hadn’t been filed as of Wednesday.

Woolery’s full emailed statement: “I believe in transparency and look forward to court where the evidence of Toni Smart’s abuses of the taxpayer will be shown. Unfortunately, the law does not allow for me to say why Ms. Smart was fired. Only Ms. Smart has the power to waive her right of confidentiality so the entire termination file can be disclosed. She will NOT be reinstated in her position; the Director of Internal Audit should be ethical, moral and beyond reproach. This lawsuit is a media stunt and its intent is to bilk the taxpayer into a settlement. This will not work. I hope the Voice of OC provides the same coverage after the County and my office are completely vindicated in court. Furthermore, I will continue to cooperate with law enforcement in any investigation of Ms. Smart’s abuses of her office.”

Nick Gerda covers county government and Santa Ana for Voice of OC. You can contact him at ngerda@voiceofoc.org.

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