Ex-Redevelopment Chief Charged With Embezzlement

Ex-Redevelopment Chief Charged With Embezzlement

Sam Hodgson

Former SEDC President Carolyn Smith (file photo)

The state of California filed criminal charges against two former top San Diego redevelopment officials today, accusing them of embezzlement and misappropriation of public funds nearly three years after a voiceofsandiego.org investigation uncovered their clandestine bonus scheme.

Carolyn Y. Smith and Dante Dayacap face a maximum of seven years and four months in prison if convicted of the charges brought against them by State Attorney General Kamala Harris. They were president and finance director, respectively, at the city’s Southeastern Economic Development Corp., an organization that oversees taxpayer-sponsored development in San Diego’s southeastern neighborhoods.

Law enforcement officials arrested Dayacap today. Smith wasn’t immediately taken into custody.

Each was charged with five felony counts: conspiracy to commit a crime, three counts of embezzlement of public funds and one count of misappropriation of public funds.

In 2008, VOSD revealed that Smith and Dayacap paid themselves and other SEDC employees significantly more than they had reported to their board, the City Council and the public. By keeping key positions unfilled and obscuring budget documents, they funneled more than $1 million over five years to themselves and others without authorization.

Smith and Dayacap were the largest recipients of the bonuses. In fiscal year 2007, for example, SEDC paid Smith nearly $95,000 more than the salary it reported publicly.

The charges against the pair allege 42 “overt criminal acts,” listing in detail the different ways that Smith and Dayacap worked around the City Council-imposed budget limits. They gave out checks for things such as “year end acknowledgement,” “COLA” (cost of living allowance), “holiday bonus,” and “incentive pay.” Court documents said Dayacap would have an accountant project SEDC’s salary costs during the fiscal year in order to figure out how much unused salary could be distributed for bonuses.

On March 3, 2008, Smith and Dayacap signed checks giving themselves bonuses worth more than $20,000 each for “incentive pay,” according to court documents. Two months later, on May 7, they signed checks giving each other more than $22,000. The payments, again, were labeled as “incentive pay.”

According to court documents, Smith told the mayor’s former director of communications that the City Council had denied pay increases, so she found a way around that. In a later deposition, the court documents say, Smith said she felt SEDC employees weren’t paid enough compared to those at their sister agency, the Centre City Development Corp., “so we found ways to compensate them.”

Smith, SEDC’s longtime head, was quickly ousted from her job under fire from the mayor and City Council. It was a rapid and startling fall from grace for the daughter of one of San Diego’s most prominent civic leaders, the Rev. George Walker Smith.

For his part, Dayacap had a history of personal financial troubles, having filed for bankruptcy three times.

A majority of SEDC’s board was soon replaced. And although City Hall sprang to action following the bonus revelation, its leaders had sufficient warning signs about SEDC’s activities under Smith, but either missed or ignored them.

An audit later found that the bonus scheme rose “to the level of fraud.” The FBI seized SEDC’s computers and spoke with its board members. However, as years passed, it looked like the case had dropped off prosecutors’ radars.

SEDC, whose basic survival was thrown into question by the bonus scandal, appears to have recovered from the scandal. It began connecting more with the community under interim leader Brian Trotier, who recently gave way to new President Jerry Groomes. However, with taxpayer-sponsored redevelopment a target of Gov. Jerry Brown, its long-term existence is in question along with all other redevelopment agencies.

Attempts to reach attorneys for Smith and Dayacap weren’t successful.

Check back for more later.

Contact the reporters directly at andrew.donohue@voiceofsandiego.org or 619.325.0526 and will.carless@voiceofsandiego.org. Follow them on Twitter: @AndrewDonohue @WillCarless.

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Will Carless

Will Carless

Will Carless is the former head of investigations at Voice of San Diego. He currently lives in Montevideo, Uruguay, where he is a freelance foreign correspondent and occasional contributor to VOSD. You can reach him at will.carless.work@gmail.com.

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28 comments
Fred Logan
Fred Logan subscriber

Fix potholes, provide police and fire enforce code and zoning. Leave everything else to the free market.

FredL29
FredL29

Fix potholes, provide police and fire enforce code and zoning. Leave everything else to the free market.

Will Dawson
Will Dawson subscriber

Again we have San Diego Public Officials caught with their hand in the cookie jar and prosecution seems to "JUST FADE AWAY" Again in San Diego Crime seems to pay and pay very well.

Sandawg
Sandawg

Again we have San Diego Public Officials caught with their hand in the cookie jar and prosecution seems to "JUST FADE AWAY" Again in San Diego Crime seems to pay and pay very well.

christine mann
christine mann subscriber

so "affordable housing", solving homelessness, all these benevolent sounding things have become absurdly profitable and the solutions do not fix blight or create a sense of well being or fix communities...they destroy communities w/ no accountability whatsoever. try calling 1 of these redevelopment projects and asking for info. they will practically hang up on you telling you they owe you nothing....you just have to pay for it...try calling Todd Gloria,,,he will tell you the developer is entitled so stop fighting it like the 15 million dollar plan to build a 7 story monstrosity at el cajon and florida destroying an entire historic block w/ your $..

cma52572
cma52572

so "affordable housing", solving homelessness, all these benevolent sounding things have become absurdly profitable and the solutions do not fix blight or create a sense of well being or fix communities...they destroy communities w/ no accountability whatsoever. try calling 1 of these redevelopment projects and asking for info. they will practically hang up on you telling you they owe you nothing....you just have to pay for it...try calling Todd Gloria,,,he will tell you the developer is entitled so stop fighting it like the 15 million dollar plan to build a 7 story monstrosity at el cajon and florida destroying an entire historic block w/ your $..

christine mann
christine mann subscriber

Its about darn time!! This is why we need to get RID of redevelopment agencies alltogether and not support this faux "reform bill" that will likely do nothing at all but solidify their existence and Atkins should have to recuse herself from any vote on the bill since she is married to a redevelopment developer.

cma52572
cma52572

Its about darn time!! This is why we need to get RID of redevelopment agencies alltogether and not support this faux "reform bill" that will likely do nothing at all but solidify their existence and Atkins should have to recuse herself from any vote on the bill since she is married to a redevelopment developer.

Michael Reaves
Michael Reaves subscriber

They can't manage internal departments.. How are they going to manage outside providers.

MikeNSantee
MikeNSantee

They can't manage internal departments.. How are they going to manage outside providers.

William Sweeney
William Sweeney subscriber

Gee, I wonder why this isn't being covered by the mainstream media. Why do you think?

Macsvens
Macsvens

Gee, I wonder why this isn't being covered by the mainstream media. Why do you think?

William Sweeney
William Sweeney subscriber

Why, I'm shocked! Simply shocked! And gee, I wonder why it isn't getting any coverage? Now why do you think?

Macsvens
Macsvens

Why, I'm shocked! Simply shocked! And gee, I wonder why it isn't getting any coverage? Now why do you think?

Kathleen MacLeod
Kathleen MacLeod subscribermember

As a governance wonk, this case is a poster child for the failure of blurred boundaries between the public and private sectors. We had contracted services sans oversight by design. A community planner told me that the City regarded SEDC as a private developer so didn't expect it to adhere to the same transparency rules as the City's Redevelopment division. In defense of the Controller at the time, I assume s/he felt that claims signed by a department head sufficed - it wasn't up to him/her to compare SEDC's budget with its claims - that's the job of the non-existent staff to the Redevelopment Agency. Councilmember Marti Emerald's plan proposes to correct this governance failure by having the Redevelopment Agency have its own staff to provide this long overdue oversight and control.

kmacleod
kmacleod

As a governance wonk, this case is a poster child for the failure of blurred boundaries between the public and private sectors. We had contracted services sans oversight by design. A community planner told me that the City regarded SEDC as a private developer so didn't expect it to adhere to the same transparency rules as the City's Redevelopment division. In defense of the Controller at the time, I assume s/he felt that claims signed by a department head sufficed - it wasn't up to him/her to compare SEDC's budget with its claims - that's the job of the non-existent staff to the Redevelopment Agency. Councilmember Marti Emerald's plan proposes to correct this governance failure by having the Redevelopment Agency have its own staff to provide this long overdue oversight and control.

Robert Castaneda
Robert Castaneda subscriber

Great work by the VOSD's Careless on this story. If any readers have not noticed the U/T and their partner KGTV has yet (to my knowledge) printed or broadcast this story at the time of this post. Why? Is it not newsworthy? Not of interest to the public? Well, certainly it is. My sense is that unless these media sources can be the primary judge, jury and executioner in the media there is little or no coverage. Much like the same questions as to why the local D.A., now Mayoral candidate, Bonnie Dumanis did not pursue this issue. Is the sanctity of the public dollar given possible embezzlement not of interest to San Diegans? Was it not a crime? Well, that may or not be the case based on the presumption of innocence, but clearly there was enough HARD EVIDENCE there for the A.G. to issue charges.

Castaneda
Castaneda

Great work by the VOSD's Careless on this story. If any readers have not noticed the U/T and their partner KGTV has yet (to my knowledge) printed or broadcast this story at the time of this post. Why? Is it not newsworthy? Not of interest to the public? Well, certainly it is. My sense is that unless these media sources can be the primary judge, jury and executioner in the media there is little or no coverage. Much like the same questions as to why the local D.A., now Mayoral candidate, Bonnie Dumanis did not pursue this issue. Is the sanctity of the public dollar given possible embezzlement not of interest to San Diegans? Was it not a crime? Well, that may or not be the case based on the presumption of innocence, but clearly there was enough HARD EVIDENCE there for the A.G. to issue charges.

Mel Shapiro
Mel Shapiro subscribermember

I dont know if the Staate knows that the City Controller is involved since his department reimbursed every cent of the illegal bonuses with a City of San Diego check. SEDC sent a funds request to the Contoller every month for reimbursment. He asked no questions.

melshap
melshap

I dont know if the Staate knows that the City Controller is involved since his department reimbursed every cent of the illegal bonuses with a City of San Diego check. SEDC sent a funds request to the Contoller every month for reimbursment. He asked no questions.

Bob Jones
Bob Jones subscriber

Great work Will. I too thought this case had fallen off the radar somewhere. Obviously there was little or no oversight, and that falls directly on the mayor and council. Dayacap with a history of a financial meltdown personally has no business being employed in a position of trust like this. I hope VOSD stays on top of this story. Thanks

Bobbaloo
Bobbaloo

Great work Will. I too thought this case had fallen off the radar somewhere. Obviously there was little or no oversight, and that falls directly on the mayor and council. Dayacap with a history of a financial meltdown personally has no business being employed in a position of trust like this. I hope VOSD stays on top of this story. Thanks