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Full disclosure. I am the author of the Betta Report, a 56-page expose and pedagogy connecting the dots on the South Pasadena City Council’s financial mismanagement. Published in June 2020, the Betta Report devastated a carefully crafted façade of municipal virtue. Only days later, South Pasadena financial experts Sheila and Steve Rossi proved that the City Council was shopping two proposed budgets – the favored one being $14.9 million greater than the other.
The Betta Report. The Rossi reports. The Council’s public silence in response was deafening. Then, out of nowhere, the City Council released a “secret” 2018 consultant report from Citygate Associates demonstrating that the Council had been aware of 34 interrelated technical problems in its Finance Department for 2 years, and that in the second of those 2 years the Council was aware that its city manager had addressed only 1 of the 34 findings.
S**t got real. City Manager Stephanie DeWolfe was fired without severance. The Finance Director disappeared into infirmity. And Councilmember Marina Khubresian, South Pasadena’s big boss powerbroker, stepped on the lines of criminality by using fictitious email accounts to threaten City critics.
Since this time, and for the last two years, the South Pasadena City Council has not acknowledged their responsibility for its devastating municipal failure, much less apologize for it.
On top of it all, disgraced City Manager DeWolfe has been a consultant with Citygate since her termination.
Do these facts and events deserve the cliché “Citygategate?”
Back to 2020. The South Pasadenan’s expert investigative reporter, Ben Tansey, broke the news in a series of stories. A web of deceptions was reported. Tansey offered proof that City Hall’s financial management during the long watch of councilmembers Michael Cacciotti, Bob Joe, Marina Khubresian, Diana Mahmud and Richard Schneider was beyond broken — and the Council had been aware of that fact for at least two years.
Ben Tansey’s reporting was uncontested and undisputed. Here’s a few items on the City that surfaced:
- Failure to perform financial audits for more than 2.5 years.
- Failure to produce a single financial analysis report in more than 3 years.
- Adoption of annual budgets without knowing how much money was in the bank or in reserves.
- City Treasurer Gary Pia, in complete disregard of the primary function of his office, hadn’t published a report on the City’s more than $40 million in idle cash for more than 7 months. He didn’t even bother to mention the problems to the Council or Finance Commission. (Pia just declared he wasn’t running for reelection).
- Inappropriately placed “reserves” in unauthorized accounts – and they didn’t add up correctly.
- Failure to perform bank reconciliations for more than a year.
- Failures in grants accounting of such severity that it is likely that the monies the City Council said were available for spending were not, in fact, available for spending.
- Illegal terminations of a police officer, a firefighter and a Finance Department employee, each action requiring substantial settlement.
- Deficient contracting practices that were consistently a source of public conflict.
The City Council retreated to public silence. Then it got worse. Finance experts Steve and Sheila Rossi proved that the City Council had published two versions of the proposed Fiscal Year 2020-2021 Budget. The budget that vocal councilmembers Marina Khubresian and Diana Mahmud favored for adoption was $14.9 million greater than the other. Their arguments advocated “moving forward.”
Then it got worse. Shamed, it’s back to the wall, the City Council released a consultant report they had kept secret for two years. The Citygate Report. The Citygate Report revealed that the City Council had known about serious dysfunction in financial management for two years, and that during the second of those two years, that the City Council was aware that its city manager was refusing to remedy the problems.
Take a moment to re-read the above paragraph. The City Council made decisions designed to deceive the public. The Council knew the difference between right and wrong. They chose, with deliberation and foreknowledge and an excessive number of closed-door meetings, to do wrong.
Need more? How ‘bout a threefer? One, Citygate’s relationship with the South Pasadena City Council resulted from a no bid contract. Two, the Citygate employee charged with the South Pasadena work was Andrew Green, a friend and former coworker of South Pas City Manager DeWolfe. (In 2015 Finance Director Green was fired from the City of Pasadena after the discovery of a $6.4 million embezzlement scheme that took place under his watch). Three, DeWolfe is now employed by Citygate.
Incredibly, the Council’s public silence continued. No statement of responsibility or remorse was made. Can you say “South Pasadena Citygategate?”
There was a woman behind the curtain. Councilmember Marina Khubresian. In terms of content, Ms. Khubresian had harnessed a fearsome, white hot social media base that “governed” the City behind the scenes. That is: distanced from Constitutional check and balances. A frenzied galaxy of email and internet posts. Making friends. Unfriends. Frenemies. Enemies. Heroes. Villains. The collective force hit its peak when Stephanie DeWolfe was hired as City Manager and self-respecting government was no more. The worst kept secret in town? Employees, citizens, business owners and, yes, city councilmembers were intimidated by blunt forces.
In terms of style, Ms. Kubresian made herself a suburban legend in the San Gabriel Valley. She assembled “The Squad,” a women only collection of ambitious power players that included the city manager, the finance director, a finance commissioner, and, it is said, Councilmember Diana Mahmud.
Like many a 21st Century transgressor, Ms. Khubresian took internet technology a step too far. Expert South Pasadena journalist Chris Bray would prove – in a video, no less – that Khubresian had been using false email accounts to launch email attacks on critics of the City’s financial management. (This author is a proud recipient of one).
Then worse got ugly. Ms. Khubresian was forced to resign from the City Council. The remaining City Council requested the Los Angeles County District Attorney investigate her potentially criminal actions.
It was ugly, but again it wasn’t enough for the City Council to make a public statement accepting responsibility for events, much less an apology. Interim South Pasadena City Manager Sean Joyce, one of the most highly regarded city managers in the State, wasn’t fooled. He declared upon taking office that he had “more questions than answers, such as what is the current cash position of the City and are all funds accounted for.” In this instance, Gary Pia, City Treasurer and self-styled investment guru, again failed his office with silence. Pia recently announced he won’t seek reelection.
The utter chaos of this City Council conduct era is head spinning. In 2019, the Council authorized the removal of experienced finance director Craig Koehler, via cash compensation and a nondisclosure agreement — and replaced him with Karen Aceves, a young analyst from another City department (read: no professional financial background).
Yes, heads other than Ms. Khubresian’s did roll. City Manager DeWolfe was fired. Finance Director Aceves took medical leave and did not return. Still no public apology from the City Council. Mayor Bob Joe’s administration was dumbstruck. Next, Diana Mahmud became mayor. Her administration kept the silence. Perhaps now, with Michael Cacciotti back in the Mayoral driver’s seat for the 5th time in his 20+ years of public service, the time is ripe for the City to make things right with a South Pasadena community that deserves dignified, honest government. New City Manager Armine Chaparyan and her able staff more than deserve a clean slate.
There’s another hitch in the City Council’s git along. The Ad Hoc Finance Committee. The Committee was established to get to the heart of 2020 wrongdoings. A couple weeks ago it appeared the City Council acted to dissolve the Committee. Confusing. Committee members aren’t sure. One thing is for sure: at this writing, the Committee still hasn’t completed its final report. Shall we assume the City Council doesn’t want the final, finger-pointing document published?
A Reasonable Request
I ask that the South Pasadena City Council schedule on its public agenda a discussion to consider public apology for its gross mismanagement of the City’s financial affairs. The Council’s discussion should reference the Los Angeles County District Attorney’s Office investigation of Marina Khubresian’s alleged criminal actions.
Those that would question the relevance of this request — those tempted to argue that “moving forward” is the coin of the realm, those given to ideologies favoring one form of “justice” over another — should take notice of recent City Council precedent intended to right the wrongs of the City’s past. In February 2022, the City Council adopted a resolution condemning the City’s history as a “Sundown Town” and past practices of institutionalized racism. “The City of South Pasadena acknowledges, apologizes for, and condemns all racist aspects of the City’s history, and deeply regrets the pain, hurt, and suffering such policies have caused.”
Municipal mismanagement relies on collaboration. It’s a family affair. In 2018, City Attorney Teresa Highsmith offered up a suspicious judgement that allowed the City Council to keep the Citygate Report secret. The all purposed “privileged information” claim. Ms. Highsmith redacted 4 lines from the 100-page Report. (See page 8 of the Citygate Report). She failed, however, to redact the same 4 lines that were reprinted on page 61 of the Report. Have a look.
“Per interview comments, some staff are working overtime and not reporting it to keep up with their workload. Although these staff seem to be doing this with good intentions, this violates Federal law, specifically the Fair Labor Standards Act, and can lead to additional cost to the City due to penalties and potential labor grievances.”
Wondering about fair play? I contacted Citygate officials weeks ago explaining my intention to make allegations about their contractual relationship with South Pasadena. I gave them due process. Here’s the catch: although Citygate is a private firm exempt from public disclosures, their consulting services exist to serve and profit from the public sector. The odds of them doing so are small, but I call upon Citygate to make public comment.
By every means, the South Pasadena City Council needs to have a conversation about Justice. Three of the five councilmembers just won their seats on the City Council with vague calls for reform. Four of the five are attorneys. To all these, South Pasadena’s public trust was given in exchange for the career-enhancing privileges of elected office. Now, caught in the glare of a shameful gross mismanagement scandal, they must respond to their oaths of office.
They are called to courage and leadership. Speak forth, Honorable Mayor and City Council.
Josh Betta was the first permanent finance director in the City of Bell following the infamous municipal scandal. He was South Pasadena’s finance director from 2001 to 2008. His daughter, Keena Betta Moro, was co-valedictorian of the SPHS graduating class of 2005. Go Tigers.
