Orange County Fair officials spent more than $220,000 in state money on improper food, beverage and catering for undisclosed people and groups, paid for travel to states prohibited under the Attorney General, and didn’t report a suspected embezzlement of more than $9,000 from the agency, among other suspect activities, according to a state audit.
The fair, known as the 32nd District Agricultural Association, is a state agency in charge of state dollars, and the audit comes from the state Department of Food and Agriculture that oversees similar fairs up and down California.
The audit spans a year, 2018, in which the OC Fair and Events Center was under previous leadership of former CEO Kathy Kramer, who was fired by the Fair Board in late 2019 after a series of controversies like improper payouts disclosed in previous audits and apparent conflicts of interest.
The audit details more than $220,000 in catered food, paid for by fair officials, for multiple events throughout the year without proper documentation, and didn’t maintain a list of individuals who received food and beverages paid for by the 32nd DAA, the topics discussed, or the benefit received.
The audit wasn’t clear about which OC Fair officials, agency executives or board members, were responsible for the lax documentation on meals.
The fair’s Governor-appointed Board of Directors are set to discuss the findings of the audit at their next meeting on June 25.
The Department of Food and Agriculture in the audit says it reviewed $174,067 — or 77% — of the exact $223,913 spent by the fair on food and catering, and pointed to a state Accounting Procedures Manual, which states “… purchases of food and beverages, other than business meals reimbursed in accordance with the Department of Personnel Administration (DPA) rules and regulations, will be questioned as to necessity and benefit to the State.”
Fair officials also improperly allowed employees to travel to two states, Kentucky and Tennessee, that were placed on a prohibition for state-funded travel by the California Attorney General, according to the audit.
In May 2018, two employees attended an International Association of Fairs & Expositions summit in Kentucky, and in September 2018, one employee attended an International Entertainment Buyers Association conference in Tennessee, according to the audit, which says travel costs for these two events amounted to $3,576 in state money.
Fair officials also didn’t report a suspected theft to the California Department of Finances’ Office of State Audits and Evaluations, as well as the California State Auditor, as required, according to the audit.
A temporary employee working as a ticket seller during the annual fair allegedly pocketed $9,845 in ticket sales, and the reports weren’t reviewed in a timely manner by a supervisor to make sure it didn’t continue “from day to day.” The OC Fair later contacted the Orange County Sheriff’s Dept., according to auditors, and the employee was charged for grand theft by embezzlement; the case is ongoing, according to the audit.
Fair officials also improperly hired outside attorneys for undisclosed legal services in the amount of $7,090, without prior approval from the California Attorney General’s office.
Click here to read the audit.
In a response letter, Fair Board Director Natalie Rubalcava-Garcia — who with Board Director Doug LaBelle sits on the agency’s audit committee — responded to each finding with a commitment that the fair would rectify the problem.
Responding to the improper food and beverage expenses finding, Rubalcava-Garcia wrote “In the future the 32DAA will report all actual or suspected fraud, theft, or irregularities in a timely manner to the appropriate control agencies. Furthermore, the 32nd DAA will review all ticket seller reports in a timely manner to ensure all cash discrepancies are analyzed to determine the reason. The Board of Directors has reviewed this issue and referred to the Governance Committee to ensure this policy is documented.”
Responding to the audit’s findings on improper state-funded travel, she wrote “the 32nd DAA learned from the California Department of Food & Agriculture that the travel ban to certain States was in effect only after 32nd DAA employees had traveled to Kentucky in May, 2018 and Tennessee in September, 2018.”
Since being notified, she wrote the agency “has complied with the ban and the Board of Directors upheld the ban at its September, 2018 Board meeting by voting to deny a request for travel to the annual International Association of Festivals and Expositions (IAFE) Convention in San Antonio, Texas, November 25–28, 2018. The 32nd DAA will not approve any travel to States currently on the banned list.”
Responding to the findings on the unreported embezzlement, Rubalcava-Garcia wrote that In the future fair officials “will report all actual or suspected fraud, theft, or irregularities in a timely manner to the appropriate control agencies.”
She added the agency “will review all ticket seller reports in a timely manner to ensure all cash discrepancies are analyzed to determine the reason. The Board of Directors has reviewed this issue and referred to the Governance Committee to ensure this policy is documented.”
Rubalcava-Garcia added that, in response to the scrutiny over the outside legal counsel payments, the Board in May had adopted a policy prohibiting the fair officials from paying outside legal unless approved by the Attorney General’s office in writing and the District’s Board of Directors.
The scrutiny into the agency’s spending is the latest in a series of controversy over the fair’s policies revolving around the use of public dollars while grappling with its uncertain future in the midst of the Coronavirus pandemic.
On May 28, Fair Board directors mulled over loaning $5 million to its neighboring Del Mar Fairgrounds in San Diego County, while at the same meeting hearing a “worst case scenario” $18 million revenue shortfall as a result of this year’s fair cancellation .
Before the pandemic hit, fair officials between December of last year and January this year predicted that shifting regional economic forces like minimum wage increases would ramp up the fair’s operational costs, therefore demanding increases to gate ticket prices.
At the same time, fair watchdogs criticized the Governor-appointed Fair Board directors for spending hundreds of thousands of state dollars on private dinners for themselves during the fair season — complete with concierge services and a private restroom.
Fair Board directors opted not to increase ticket prices in January, but didn’t rule them out for future years.
Brandon Pho is a Voice of OC staff writer and corps member at Report for America, a GroundTruth initiative. Contact him at [email protected] or on Twitter @photherecord.