Statement Regarding Arrest and Felony Charges Filed by LA County District Attorney against Retired LADWP Employee Thatcus “TC” Richard

Statement Regarding Arrest and Felony Charges Filed by LA County District Attorney against Retired LADWP Employee Thatcus “TC” Richard

LOS ANGELES — In March 2012, the Los Angeles Department of Water and Power Security Services Division received an anonymous complaint from the Los Angeles City Controller’s Office alleging that an employee, Thatcus “T.C.” Richard, an Audio-Visual Technician, was using Department equipment and resources for personal gain.  LADWP Security Services’ Office of Special Investigations immediately began an investigation.  Based upon its findings and subsequent criminal investigation by the LA County District Attorney’s Office, it is believed that Richard defrauded the Department and its ratepayers of over $4 million, violated conflict of interest laws and used Department resources for personal gain.  Richard was arrested earlier today and has been charged with 27 felony counts, including violation of California Penal Code Section 424 (Misappropriation of Public Funds, and 504 (Embezzlement), and California Government Code Section 1090 (Contract Fraud).  During the course of the law enforcement investigation, Richard retired from the LADWP on June 1, 2014.

“City of Los Angeles employees should be working for the public interest, not enriching themselves by stealing from the public,” said Mayor Eric Garcetti. “The suspected criminal activity was discovered through the vigilance of the Controller’s office and the DWP’s security services division and reported to law enforcement. The perpetrator should be fully prosecuted, and every effort will be made to recover the money that was stolen by this former employee.”

“Any employee who violates the public trust and defrauds the DWP and our customer owners should be prosecuted to the fullest extent of the law,” said LADWP General Manager Marcie Edwards.  “Since this investigation was initiated, we have taken significant steps to strengthen our ability to detect fraud and deter a scheme like this from ever occurring again and will take additional steps to better detect and prevent the fraud that occurred in this case,” Edwards added.

Based on the investigation initiated by LADWP’s Office of Special Investigations, it is alleged that beginning in 1993 and continuing through the investigative period, Richard acted as a Contract Administrator on approximately 140 contracts and purchase orders between LADWP and four outside audio-visual vendors, each of which were actually owned by close friends of Richard. The total amount paid to the vendors was approximately $4.4 million. The majority of the contracts were for dollar values below $50,000, an amount that is subject to lower-level supervisory approval. Most of the contracts were competitively bid, which made the alleged fraud more difficult to detect.  It is alleged that Richard prepared the bid specifications in such a way that there was a very limited response and in almost all of the cases, only companies owned by his friends bid.

By all of the evidence gathered and reviewed, it is believed that Richard acted alone within the Department while perpetrating the alleged fraud scheme.  He operated in a very small business unit within the Department, which made concealing the illicit activity easier. 

Pat Findley, LADWP’s Director of Security Services and Emergency Management, oversaw the internal investigation and referred the case to the District Attorney. Mr. Findley is a retired 31- year veteran of the Los Angeles Police Department. Under Mr. Findley’s direction, LADWP’s Office of Special Investigations has served as the primary contact with the District Attorney’s Office throughout the investigation.

Based upon this case, the LADWP has taken several steps to better detect and deter this type of fraud from occurring in the future.  The measures include:

• Immediately reviewing all contracts initiated by small business units within the Department over the past five years and conducting audits based on specific criteria. 
• Initiating a Department-wide mandatory contract administrator training, which includes stronger ethics and procurement training, and a specific focus on roles and responsibilities throughout the procurement and contract administration process.
• Establishing a vendor authentication function within LADWP’s procurement office (Supply Chain Services) in January 2015.  Analysts verify the ownership and legitimacy of companies who are doing business for the first time with LADWP to better detect potential fraud.
• Expanding LADWP’s current Conflict of Interest Disclosure process to require the submittal of Conflict of Interest (COI) statements from those individuals who develop specifications as well as those who are involved in approving the purchase.   The COI process currently requires managers on higher dollar procurement items to attest that they have no conflict of interest on a matter. The revised process will serve as a deterrent and aid in any subsequent investigative or disciplinary action.

The focus to date has been on assisting law enforcement with its criminal investigation. The Department is continuing its own internal, disciplinary investigation of this matter and will report to the Mayor, City Council and Board of Water and Power Commissioners on the progress made to implement the above corrective measures and any other actions that may be taken.

“We have taken significant steps to prevent fraud like this from occurring in the future and hope that the arrest and prosecution of Mr. Richard will serve as a strong deterrent to anyone who attempts to steal from the Department and our customer owners in the future,” added General Manager Edwards.  

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