Wednesday, Aug. 19, 2009 | Two years ago, Dante Dayacap managed a more than $30 million budget as finance director of the Southeastern Economic Development Corp. At the same time, he had a history of problems managing his personal finances.
Dayacap, who left the public redevelopment organization last November following a bonus controversy that an audit described as rising to the “level of fraud,” filed for personal bankruptcy three times in the last 22 years.
Dayacap filed jointly with his wife in 1987, prior to his 1991 employment with SEDC, and then again as an individual in 1993. Both were Chapter 13 filings, which reorganize debt. Most recently, Dayacap had a third bankruptcy discharged earlier this month, this one a more serious Chapter 7 liquidation filing.
It is unclear if SEDC, a city created nonprofit responsible for redeveloping seven square miles southeast of downtown, looked into Dayacap’s financial background prior or during his employment. Dayacap started signing as SEDC’s finance director in 1998, seven years after he began working at the company.
Dayacap, whose official salary was $105,000, was a central figure in a scandal that paid more than $1 million in unauthorized bonuses to himself, then-SEDC President Carolyn Y. Smith and other employees. An audit released last September said Dayacap “decided how much to pay himself” in extra compensation and critical data related to pay was “systematically omitted” from SEDC’s records.
SEDC interim head Brian Trotier, who took over after Smith’s termination, said he didn’t know if SEDC was aware of Dayacap’s prior filings or if the agency had done background or credit checks prior to his hiring.
Trotier added the agency was now running credit checks before hiring financial department employees.
“Part of the reason I’m asking for it, quite frankly, is that we had a failure in financial management,” he said.
SEDC Chairman Cruz Gonzalez also didn’t know about the bankruptcies Dayacap filed prior and during his employment at SEDC. Gonzalez wasn’t sure if other board members had been aware.
“The financial director having financial problems I think should be something the board should know,” Gonzalez said.
The city’s other nonprofit redevelopment organization, the Centre City Development Corporation, does not do credit checks for potential hires, including in the finance department, said board Chairman Fred Maas.
But Maas said the corporation, which is in a hiring freeze, is open to the practice.
“To the extent that we do hiring in the future, having criminal background checks and credit checks, I think that’s something that’s healthy for the organization,” Maas said.
CCDC also is developing tighter scrutiny for the hiring of a new president, following its own financial scandal for previous president Nancy Graham.
Mayoral spokeswoman Rachel Laing said the city uses search firms to hire for high-level positions and those firms’ background checks include credit checks.
Top management employees, such as finance directors in the public and private sectors, typically receive advanced background checks that include credit, criminal and education records, said Jim Zimmer, a San Juan Capistrano-based private investigator and president of the California Association of Private Investigators.
“I think it would be telling if someone could not manage the affairs of his personal life,” Zimmer said. “What makes you think they could manage the affairs of your nonprofit?”
Circumstances beyond someone’s control, such as one-time medical costs, could cause a bankruptcy, according to Arnold S. Rosenberg, an assistant dean at Thomas Jefferson School of Law in San Diego. But bankruptcies could cause an employer to rethink hiring a job candidate, particularly for a top financial position.
“If they reflect a mismanagement of finances, then I would certainly have misgivings about hiring that person as a finance director,” Rosenberg said.
Dayacap’s most recent filing, made April 27, lists $1.1 million in assets, including a $5,000 Rolex, and $1.7 million in liabilities. He has earned no employment income this year, but has made $1,538.44 a month from rental and disability payments.
Neither Dayacap nor his bankruptcy attorney, David Weil, could be reached for comment.
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