The California State Auditor’s office will soon put public money sent by the city to Visit Anaheim and the Anaheim Chamber of Commerce under a microscope for potential misuse of funds, an audit that could force the organizations to turn over financial records.
The state auditor will investigate how public money sent to the two organizations was used after city-commissioned independent investigators alleged $1.5 million of coronavirus pandemic relief funds may have been funneled to an Anaheim Chamber of Commerce nonprofit via Visit Anaheim in 2020.
“This audit has the potential to bring to light past bad actors and the depth of their actions to hold them accountable and to set a foundation for best practices moving forward,” said Assemblymember Avelino Valencia, a former member of the Anaheim City Council until last year.
Valencia requested the Joint Legislative Audit Committee approve the audit days after the investigators’ report became public July 31.
The committee approved the request and Assemblymember David Alvarez, chair of the audit committee, asked on Saturday, Aug. 12, that California State Auditor Grant Parks prioritize the audit.
“As you are aware, a recent investigation raised serious concerns regarding the city,” Alvarez wrote in a letter to Parks. “I hope this audit will provide much needed transparency and accountability.”
The audit has expanded in scope since Valencia’s original request, he said. The audit will review all contracts between the city and the Chamber of Commerce and Visit Anaheim. Valencia also asked auditors to highlight any corruption they uncover and recommend ways for Anaheim to improve their oversight of contracts.
“This audit will help shed light on the City of Anaheim’s contracting practices and policies to ensure that public resources are being used appropriately and as efficiently as possible,” Valencia said.
Auditors will also look at public funds Anaheim spent on negotiations surrounding the sale of Angel Stadium, Valencia said.
The state auditor has the power to subpoena records and take depositions. The agency’s website lists the Anaheim audit as not having begun yet.
Dana Simas, chief of communications for the California State Auditor, said it would take time to determine when a final report could be released.
Since 2018, the Joint Legislative Audit Committee has approved only three other urgent audit requests, Valencia said. His office on Tuesday sent the city the parameters for the audit.
In Avelino’s Aug. 3 request, he asked for the audit to look into all sources of public funds given by the city of Anaheim to the chamber and the tourism bureau throughout the past 10 years and how they were used. He also requested the audit analyze public funds allocated by the city to organizations affiliated with the chamber or Visit Anaheim.
“We will absolutely and fully cooperate with the state auditor in this matter,” Anaheim Chamber of Commerce CEO Laura Cunningham, who took over in December, said in a statement. “The Anaheim Chamber of Commerce remains focused on effective action in promoting economic growth and job creation for the benefit and prosperity of the whole community.”
While Cunningham interviewed with investigators from the JL Group, the chamber did not turn over documents, according to the report.
The City Council on Tuesday will also discuss the city doing its own audit of Visit Anaheim for $6.5 million sent to the agency in 2020 during the early months of the pandemic to promote tourism recovery. Investigators from the JL Group alleged that $1.5 million of that money may have been diverted to an Anaheim Chamber of Commerce nonprofit, but they couldn’t determine how it was used.
A spokesperson for the city of Anaheim said “we have not heard from the state auditor but stand ready to work with the auditor’s office.”
An April 2, 2020 memo sent by Visit Anaheim CEO Jay Burress to former City Manager Chris Zapata outlined how the marketing organization would spend the money to benefit the city’s tourism economy in light of the pandemic shutdowns, but the Chamber of Commerce is never mentioned.
The plan for the money, Burress wrote, was to use the money to market the city and “reduce the length of Anaheim’s downturn.”
Visit Anaheim did not respond to a request for comment.