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Extracted from Consolidated Report

This investigation was originally published as part of a larger consolidated report containing multiple investigations. View the consolidated PDF for the complete document.

Tulare County Grand Jury • 2009-2010

Transfer of Funds – Did Council Know?

3 pages
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Findings 11 findings

F1
The MOU states in Section F (2), “Modifications within the scope of the instrument shall be made by mutual consent of the parties, by the issuance of a written modification, signed and dated by all parties, prior to any changes being performed.”
F2
TMSC established an “escrow account” with a local Tulare bank. The account was established to reimburse the costs paid by the City of Tulare for the TMSC Environmental Impact Report (EIR).
F3
The monies in this account were encumbered by the following agreed upon conditions: "1) Funds on deposit may not be withdrawn by TMSC from the account prior to certification of the TMSC Environmental Impact Report; 2) The City of Tulare is authorized to withdraw funds from account # XXXX, based upon; a. the withdraw or cancellation of the TMSC applications for entitlements for the development of the TMSC racetrack project and the failure of TMSC to pay City’s demand for costs to process the TMSC project: or b. a material breach by TMSC of the terms of the Agreement with the City of Tulare regarding the costs for the Environmental Report for the TMSC project. T U L A R E C O U N T Y G R A N D J U RY R E P O R T 2 0 0 9 - 2 0 1 0 Ø 78 The foregoing instructions may only be amended in writing by TMSC and the approval by the City of Tulare.”
F4
The “escrow account” instructions were amended as follows on December 29, 2008: “TMSC shall not withdraw the funds on deposit without the prior written consent of the City of Tulare or upon agreement for payment of the EIR fees and costs with the City of Tulare.”
F5
On Friday, February 6, 2009, late in the afternoon, a TMSC representative brought funds transfer documents to the Fresno airport, where they were signed by a City Councilman. The documents authorized the transfer of funds from the local Tulare bank to a bank in Fresno.
F6
A fax was sent to the local Tulare bank with an electronic signature from the City Manager for the release of the funds to the bank in Fresno.
F7
The “escrow account” instructions did not follow the funds transfer; therefore the funds moved from the bank in Tulare to the bank in Fresno are no longer protected. The City lost control of these funds.
F8
The City of Tulare does not have a copy of the signed February 6, 2009 document.
F9
The entire City Council was not fully informed or aware of the funds transfer to the Fresno bank prior to June 2009.
F10
The City Council did not vote to approve the transfer of funds from the local Tulare bank to the bank in Fresno.
F11
Tulare does not have an ordinance which addresses the movement of large sums of money without full City Council approval.

Recommendations 3