Report Reveals Improper Fundraising, Poor Accounting for City Events

Events Losing the City Money, Auditors Recommend City Institute New Policies

The Carson City Council received a report at its Feb. 18 meeting that reviewed expenses and fundraising practices around City-sponsored events, such as Cinco de Mayo, Filipino American History, Juneteenth, and others. The report, conducted by an independent accountant, makes clear that many of these events are losing money and had been organized with improper checks and balances.

At the center of many of the report’s findings is the Carson Citizens Cultural Arts Foundation, a group closely aligned with Councilwoman Lula Davis-Holmes and which Carson Accountability & Transparency (CAT) has previously called out for review.

In March of last year, CAT wrote the City asking for an audit of the Cultural Arts Foundation. CAT noted the Foundation held two events in October 2018 which featured Councilmember Davis-Holmes on their flyers within 30 days of an election in which Davis-Holmes was on the ballot. CAT’s letter to the City Council was included in this final report, and was cited within the report itself for calling attention to issues with the Foundation.

The auditor “identified instances where solicitation letters were sent by City Council members requesting support for City events on City letterhead but for payments to be made to Not-for-profit Organizations directly.”

Funds solicited for the City, using the City’s name must always be paid directly to the City. This was violated in four examples given in the report, all four featuring Councilwoman Davis- Holmes’ photo and a request to donate to an event by the Carson Cultural Arts Foundation.

Examiners “noted several instances where members of City Council directly entered into contracts with vendors, circumventing the City’s internal control processes over purchasing.” The report found that only 1 of the 16 contracts they analyzed was properly signed and approved. Again, five specific examples were given of improper activity in the report, and all five involved the Cultural Arts Foundation. Four of the five improper contracts had a signature by Councilwoman Lula Davis-Holmes or referenced her as the contact.

Examiners also reviewed eight public events to determine their total costs to the City. All events were shown to have lost money under this analysis. The Women’s Health Conference lost the most money at $42,082, followed by the Juneteenth Celebration which lost more than $31,000. Both of these events are hosted by the Foundation and promoted by Councilwoman Davis-Holmes. Both were included in the examples of improper fundraising letters.

Of the five Not-for-Profit organizations auditors requested data from, only two responded. Among those not providing a response was the Carson Citizens Cultural Arts Foundation.

That these issues have been brought to light is a significant win for transparency in Carson. Public events have been used by members of the council to self-promote and support specific groups within the City. The examiners recommended a host of changes, as well as encouragement for the City to follow its already established rules. The full report and recommendations can be found here.

CAT encourages the City Council to quickly adopt all of the examiners' recommendations.