Orange County leaders are facing renewed questions over how a series of contracts got greenlit during the COVID-19 pandemic after auditors found officials routinely ignored warning signs, conflicts of interest and paid out to vendors without evidence all the work was done.
To read a copy of the audit, click here.
Based on the report, one county supervisor claims the county’s internal auditor has already referred the former head of the OC Health Care Agency to the District Attorney for possible prosecution along with a host of businesses that received millions of dollars in county contracts.
“Taxpayers deserve to know exactly where their money is going, but the county routinely bypassed its own rules,” wrote Supervisor Janet Nguyen in a statement. “They scammed taxpayers in the most difficult time of their lives and no one’s accountable.”
The county’s internal audit department and the DA’s office have not yet confirmed those referrals.
The audit comes nearly two years after the FBI raided the home of OC Supervisor Andrew Do, who later pleaded guilty to accepting bribes and was sentenced to five years in prison after he rerouted over $10 million to nonprofits his daughter worked at.
[Read: Former OC Supervisor Sentenced to 5 Years in Federal Prison in Bribery Scheme]
Auditors found that alarm bells went off all the way back in March 2023, with complaints reaching the CEO’s office about a possible conflict of interest with Do’s daughter working for nonprofits the county was giving money to.
Former OC Health Care Agency Director Dr. Clayton Chau allegedly encouraged the OC Asian and Pacific American Alliance and county staff to subcontract with a nonprofit headed up by Do’s daughter according to auditors, who also noted that Chau blew off repeated complaints from county staff about the conflict of interest.
“During our review, we identified multiple instances where it appeared that Dr. Chau dismissed concerns from HCA leadership concerning a possible conflict of interest related to Rhiannon Do’s position at Warner Wellness and the subcontract with OCAPICA,” auditors wrote.
Supervisors themselves did question some of Chau’s contracting publicly back in November 2021, with Supervisors Katrina Foley and Don Wagner publicly raising concerns about sole source contracts and lack of documentation to back up budget requests.
Read: OC Health Director Publicly Challenged by His Bosses Over No-Bid Contracts Funded by Feds
But county supervisors also were generally supportive of Chau during his tenure, which ended in 2023.
Read: OC’s Top Public Health Leader Dr. Clayton Chau Announces Resignation
For example, six months before he got grilled over sole source contracts, Chau was dubbed the OC Medical Association Physician of the Year in 2021 based on his work on the Covid response, with Foley praising his work.
“Dr. Chau has worked tirelessly to protect our community during this pandemic,” Foley said in May 2021. “He has stepped up and shown exceptional leadership, coordination and determination during an unprecedented year for our County, and under unheard of pressures from community members. I am thankful for Dr. Chau’s steadfast leadership.”
Chau did not respond to requests for comment left at his office with the National Healthcare and Housing Advisors.
In one instance, auditors claim that Chau told staff “Supervisor Do was an attorney and he would know if there was a conflict.”
Dr. Veronica Kelley, who was then one of the top executives within the OC Health Care Agency and now runs it, escalated concerns to then County CEO Frank Kim, according to the report.
Auditors found Kim did not investigate, instead asking Do’s chief of staff at the time Chris Wangsaporn if there was any conflict and was told by Wangsaporn there was not.
“Mr. Kim relied upon information from Former Supervisor Do’s Chief of Staff without independently verifying the information,” auditors wrote, noting that Kim said he “felt lied to,” when he learned Do’s daughter still worked there.
County’s COVID Test Contractor’s Spotty Records
Auditors also dug into more spending by 360 Health Clinic, which was one of the county’s largest emergency contractors during the pandemic to test people for COVID.
After auditors found the county paid over $3.4 million for COVID tests, they couldn’t confirm the tests if the tests were already covered by insurance.
Auditors wrote they then asked the company to prove they gave people the tests and that insurance denied to cover the claim.
But auditors ran into one big problem – the company no longer has enough staff on hand to answer that question.
“We were informed that 360 Clinic no longer has the operational staff to compile this information,” auditors wrote. “We were unable to review supporting documentation associated with the 68,935 tests to determine whether 360 Clinic received payment through private insurance or HRSA in addition to receiving payment from the county.”
By working with the lab that processed the test, auditors confirmed about 96% of those tests were actually done, but couldn’t find any evidence for over 2,600 COVID-19 tests the county got billed for.
“County payments to 360 Clinic associated with the 2,646 tests included on the Uncollectible Claims Reports that were unable to be verified totaled $132,300 ($50 per test), including 1,574 tests that appeared to be double-billed and 1,072 tests that did not have a record in the test kit data,” auditors wrote.
Creating Contracts on the Go
Auditors also found a series of contracts totalling $10.7 million that weren’t created until months after the county was already working with contractors.
One of those contractors, dubbed Mercy Pharmacy, was selected in December 2020 and was allegedly hand selected by Chau, according to auditors.
“Based on information provided by HCA, it is our understanding that Dr. Chau was friends with Mercy Pharmacy and wanted to use them because they do good work,” auditors wrote, noting they didn’t get a contract in place until almost four months after they started providing services.
Mercy Pharmacy also failed to provide much explanation for nearly $750,000 worth of vaccinations according to auditors.
“Invoices submitted by Mercy Pharmacy totaling $748,720 for the January 2021 – June 2021 time period contained limited information, including the total number of vaccines administered each month and the number of mobile events held each month,” auditors wrote.
“While the contract required Mercy Pharmacy to provide a report of claim data to the County on a monthly basis, no supporting documentation was provided.”
Mercy Pharmacy did not respond to requests for comment.
Alleged Co-Conspirator Who Fled the Country Got Free Cookware
Bridgecreek Realty Investment Corp spent over $500,000 in county funds, but couldn’t answer auditors’ questions on where over half of it went.
But one of their payouts went to the Perfume River Restaurant, which received around $35,000 for things like a double gas grill, new tables and a folding gate, according to auditors.
According to auditors, that money went to a company associated with Peter Pham, who is facing over 15 charges from federal prosecutors and is currently a “fugitive from justice” for his role in several different nonprofits that allegedly received money improperly from the county.
[Read: Feds Charge More Conspirators in OC Corruption Scandal]
Frank Jao, CEO of Bridgecreek, told auditors he was approached by Do about the “opportunity to help restaurants in the Little Saigon Business District,” and ultimately the Perfume River Restaurant was the only place to retain the outdoor dining equipment, according to auditors.
Jao did not respond to requests for comment.
“It is our understanding that these were the only equipment items that were not retained by Bridgecreek as part of the outdoor dining infrastructure, as these items were retained by Perfume River Restaurant,” auditors wrote.
Noah Biesiada is a Voice of OC reporter. Contact him at nbiesiada@voiceofoc.org.
