Feb 12, 2015, 2:39pm PST UPDATED: Feb 13, 2015, 9:11am PST
Controller Betty Yee will audit the Association of Bay Area Governments' accounts following theft allegations, the state said Thursday.
ABAG director of public finance Clarke Howattallegedly took $1.3 millionin bond money from the ABAG's independent affiliate, the Finance Authority for Nonprofit Corporations. Howatt hasn't been charged with any crimes.
'The funds were meant to finance public improvements in San Francisco's South of Market neighborhood. Howatt allegedly posed as a developer to siphon off the funds "in a sophisticated scheme involving illegitimate documents, false identities and deception of the finance authority's board and bank trustees," according to the a statement from Yee's office.
The controller's audit will focus on the two fiscal years between 2012 to 2014 and could expand to target other time periods. The state will review ledgers, contracts, invoices, personnel records, meeting minutes, policies and procedures.
"As California's chief fiscal officer, I am charged with protecting state resources,"Yee said in a statement. "When public money goes missing, I need to determine how it happened and whether effective controls are in place."
An ABAG official said he supported the state audit. "Any suggestions they have that we can do to avoid this in the future, we welcome it," said Brad Paul, deputy executive director at ABAG.
ABAG's goal is to "put in the strongest safeguards possible and make sure it never happens again," he added.
The Federal Bureau of Investigation is in talks with Howatt, said Paul. The FBI has declined to comment on the case.