Thursday, December 17, 2015

Ex-official at Bay Area planning agency admits stealing millions

If you think Plan Bay Area isn't a hotbed of corruption, Just Follow the Money...

Ex-official at Bay Area planning agency admits stealing millions

By Bob Egelko
Published 9:57 pm, Tuesday, December 15, 2015

The former director of financial services for the Association of Bay Area Governments pleaded guilty Tuesday to stealing nearly $3.9 million in bond funds — three times the amount with which he was originally charged — that were intended for developments in San Francisco and Contra Costa County.

Clarke Howatt entered a guilty plea in federal court to a felony charge of wire fraud. Prosecutors have recommended a prison sentence of three years and five months, at the low end of federal sentencing guidelines, because of Howatt’s cooperation with investigators, said his attorney, Mary McNamara.

Howatt has already repaid nearly $3.5 million to ABAG, with the help of $1.5 million provided by his parents, lawyers told U.S. District Judge Charles Breyer. He is to be sentenced in March and remains free on bail.

Howatt, 56, worked at financial services companies before being hired in 1995 by ABAG, the regional planning agency for nine Bay Area counties and 100 cities. Colleagues described him as a conservative steward of public funds who regularly turned down deals that failed to meet his standards. He was paid $149,294 a year in salary and $233,375 overall, including benefits.

Last December, a routine audit discovered $1.3 million missing from the South of Market Stabilization Fund, a pool of bond money and developer contributions used for neighborhood improvements. Howatt resigned in January after prosecutors charged him with obtaining the money in August 2014 by posing as the developer of the One Rincon Hill housing complex and claiming reimbursements for nonexistent streetscape improvements.

Three days after the money changed hands, according to public records, Howatt closed a deal to buy a $1.53 million, five-bedroom beach house on the Oregon coast that he named Rincon Hill.

His admissions multiplied in Tuesday’s plea agreement, which calculated the losses at $3.876 million.

The additional thefts, Howatt said in the plea agreement, came from bonds designated for the Windemere Ranch residential development in San Ramon in 2011, 2014 and January 2015.

“Mr. Howatt is deeply sorry for his conduct,” McNamara said in a written statement. She said her client’s depression and bipolar disorder, which he mentioned at the court hearing, were among the causes of his wrongdoing, but “we’re not looking to excuse the conduct.”

The initial reports of embezzlement prompted state Treasurer John Chiang to convene a task force of finance and securities experts in February to propose new safeguards against theft and misuse of state and local bond funds in California. The panel issued its report on Tuesday, calling for local governments and districts to adopt new practices for monitoring the spending and accounting of bond money and make records available to the public.

Chiang said voluntary measures may not be enough, however, and the Legislature should consider a law that would require local officials to oversee and certify controls on bond funds and issue annual reports on the funds’ uses, balances and debts.

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