A former Kootenai County Finance Director has been convicted by a Los Angeles County Superior Court jury on 11 of 13 counts relating to public corruption .

On Monday, December 9, 2013, Angela Spaccia was convicted on charges including misappropriation of public funds, conflict of interest, and secretion [sic] of the official record. Spaccia committed the offenses while employed from July 2003 until October 2010 as the assistant to the Chief Administrative Officer of Bell, California.

During Spaccia’s trial it was learned that she had served from 1994 until June 1998 as the Associate Director of the YWCA in Coeur d’Alene.  From June 15, 1998, until June 16, 2000, she served as the Finance Director for Kootenai County,  Idaho, in the Auditor’s Office under then Kootenai County Clerk Dan English.  At the time she was known by her married name, Angela Sheffield.  In 2000 she divorced her husband, Thomas Allen Sheffield, and returned to southern California with her son.

Spaccia’s tenure at the city of Bell began July 1, 2003, and ended October 1, 2010, with her arrest along with her boss, Chief Administrative Officer Robert Rizzo, and five now-former Bell city councilmen on corruption charges brought by the Los Angeles County District Attorney’s Office.  In addition, Spaccia and Rizzo are almost certainly under federal investigation for violations of the Internal Revenue Code.

What makes the Bell/Spaccia corruption intriguing to OpenCdA is that during Sheffield’s two years (1998-2000) as Kootenai County Finance Director she was working closely with Sandra Kay Martinson, who served in the Kootenai County Clerk’s Auditor’s Office from July 22, 1985, until November 19, 2010.   Both Martinson and Spaccia (Sheffield) were subsequently convicted of theft.

Spaccia came back to northern Idaho for about six months in 2005 through 2006, reportedly to care for her dying grandfather in Post Falls. During that hiatus, Spaccia continued to collect full salary and benefits from the City of Bell.  This and other payroll manipulations prompted Los Angeles County Deputy District Attorney Jackie Lacey to comment  that what Bell officials had engaged in was “grand theft paycheck.”

Spaccia once again returned to Coeur d’Alene in early 2010 in an effort to buy a house valued at approximately $1.6 million.   That deal fell through.  Here’s another coincidence:  During Spaccia’s returns in 2005-2006 and then in 2010, who was ripping off the City of Coeur d’Alene as an employee in the City’s Finance Department?  None other than Sheryl Carroll.

An obvious question is:  Did Spaccia/Sheffield, Martinson, and Carroll know and provide any criminal support or encouragement to each other, or were their sometimes overlapping presences here just an extraordinary coincidence?

In November 2010 former Post Falls Police Chief Cliff Hayes defeated then-Kootenai County Clerk Dan English in the general election.  Hayes, who had three times also served temporarily as Post Falls Acting City Administrator, was installed as County Clerk on January 10, 2011.  One of the Kootenai County Clerk’s statutory duties is to also serve as the County’s auditor.

Hayes recognized that evidence proving the allegations of embezzlement against Martinson would reveal vulnerabilities in the County’s financial transaction processes.  Obviously, the routine annual independent audit conducted by private auditing firms had failed to reveal those vulnerabilities over a period of several years.

Hayes sought to independently identify the vulnerabilities so they could be analyzed and corrected, not covered up or ignored.  To do that, Hayes asked the Federal Bureau of Investigation to assign a Special Agent/Forensic Accountant who would work with him to examine all the financial records under the Auditor’s Office jurisdiction.  As official and ominous as his request might sound, readers should realize that when local criminal justice agencies lack specific expertise in specialized areas, they frequently request  technical assistance from experts in federal law enforcement agencies.  Whenever possible and lawful, that assistance is frequently routinely approved.

The FBI initially and quickly approved Hayes’ request, but then the approval was just as quickly withdrawn.   Hayes had made a relatively routine request for technical assistance to help the County Clerk identify vulnerabilities so they could be exposed and corrected to ensure the integrity of the County’s financial processes.

The FBI’s quick backtracking on its initial agreement to help prompted OpenCdA to contact US Representative Raul Labrador.  Representative Labrador’s office contact with FBI Headquarters elicited this response in a letter dated May 5, 2011, from Kevin L. Perkins, then Assistant Director, Criminal Investigative Division:

After consulting with the FBI”s Salt Lake City Field Office, it has been determined that the United States Attorney’s Office has recommended that the Idaho state prosecutor continue to handle this investigation, and that FBI involvement was not appropriate at this time.

So Wendy J. Olson, the United States Attorney for the District of Idaho, decided that whatever investigation of Martinson was being coordinated by the Idaho state prosecutor would be good enough for the citizens of Kootenai County.  Olson was apparently satisfied that the Coeur d’Alene Police Department had sufficient expertise in complex financial crime investigations.

But Hayes had not requested the FBI to get involved in the Martinson investigation.  (Hayes would have had no authority as County Clerk to make that request anyway.  A formal request could and should have been made by either the Coeur d’Alene Police Department or the Kootenai County Prosecutor, but for some unknown reason, they didn’t want the FBI nosing around in Coeur d’Alene.)  Hayes had requested technical assistance in analyzing county financial records to identify vulnerabilities that crooks like Sandra Martinson might still exploit.  As the County Auditor, he needed that information to provide to the County Commissioners so they could restructure the specifications of the annual outside independent audits.  Hayes was trying to do his job.

It is almost certain that Hayes would not have known about the LA District Attorney’s investigation of the Bell corruption  in California when he made the request to the FBI for assistance in assessing vulnerabilities exploited by Martinson.   It is less certain that the US Attorney for Idaho, Wendy J. Olson,  did not know of it.

What we do know is that Kootenai County Prosecuting Attorney Barry McHugh decided he did not want to touch the Martinson case, so he asked Bonner County Prosecutor Louis Marshall to handle it.  The result was that for embezzling over $100,000 of public money, Martinson was [supposedly] sentenced to 90 days in the County jail and required to make restitution.    Except she didn’t serve the full jail time.  Martinson was to report to jail on November 3, 2011.  If she had served her 90 day sentence, she would have been released on February 1, 2012.  But ISTARS shows that on November 30, 2011,  the Court accepted an affidavit for a Good Time Release.  ISTARS also shows that an order for Good Time Release was issued on December 5, 2011.  So instead of serving her entire 90 day sentence, Martinson apparently served only about 32 days in jail for stealing over $100,000 from the taxpayers of Kootenai County.

One thing we can reasonably conclude by comparing the Spaccia case in Bell with the Martinson and Carroll cases in Kootenai County:  In the City of Bell, in Kootenai County, and in the City of Coeur d’Alene the annual independent audits failed miserably to reveal horrendous criminal conduct by insiders, employees.  Even more disgusting was the failure of local officials to recognize and fulfill their responsibilities to institute the prophylactic internal controls by direction to their respective Finance Departments.

In December 2010 the California State Controller’s Office conducted a Quality Control Review of the Mayer Hoffman McCann, P.C., FY 2009 Audit of the City of Bell and the Bell Community Redevelopment Agency. This was a review of the company that was supposed to be conducting professional annual audits of Bell’s books.

OpenCdA’s layman summary of the report:  The auditors followed most of the required auditing standards and gathered a lot of relevant data, but they failed to properly and completely analyze the data.  As a result, the California State Board of Accountancy disciplined the auditors for failing to complete their duties.  The California State Board of Accountancy told Mayer Hoffman McCann that simply recognizing that all the required dots are there isn’t enough; it was also their duty to try and connect them.

The difference between Idaho and California?  At least in California the State Controller’s Office and the State Board of Accountancy appear willing to act to protect the taxpayers of the state from meaningless, for-show audits of municipal accounts.

OpenCdA hopes that if the IRS does investigate Spaccia and Rizzo, their investigators will follow up leads in Idaho as well.  The investigation will most certainly involve looking for any assets Spaccia may have squirreled away here.  We fervently hope that the IRS investigation will be coordinated and prosecuted through the Office of the US Attorney for the Central District of California and that the US Attorney for the District of Idaho will be left out of the loop.

ADDENDUM on Wednesday, December 11, 2013, at 4:16 PM:  This editorial was in today’s Los Angeles Times.  Every Coeur d’Alene, Kootenai County, and State of Idaho official and employee ought to read it.  So should the owner, editor, and publisher of our local skewspaper, the Coeur d’Alene Press.

OpenCdA strongly encourages our readers to go to the Los Angeles Times website’s aggregation of stories about the corruption in Bell, California.   The newspaper reporting was excellent.