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State urges Long Beach to file official response to audit

State officials are investigating separation payments made to

State officials are investigating separation payments made to Long Beach employees.  Photo Credit: Newsday/J. Conrad Williams Jr.

State comptroller officials are urging Long Beach City Council members to decide by Friday whether they will rescind a response to draft audit saying city employees have been overpaid $3.1 million. 

A state draft audit in August said Long Beach did not follow city code and overpaid at least 10 management employees by more than $500,000 in separation payments for sick and vacation time.

The city's response said the audit overlooked $3.1 million in additional payments to union and management employees over the past decade, according to the report written by an attorney and former federal prosecutor hired by the former city manager.

Comptroller officials told the city the state would only accept "one response from your local government which must be signed by the chairman of the governing board or the chief executive officer.”

“A municipality can only speak through its elected and appointed officials. Under the city’s charter, the five-member City Council has overall responsibility for the city’s operation, including appointing the city manager, who serves at the pleasure of the Council,” comptroller chief examiner Ira McCracken said. “In sum at this time, we are in possession of only one response to our report ostensibly submitted on behalf of the city: A document signed by a non-public official, apparently retroactively adopted by an appointee of the city’s governing body … yet expressly disavowed by that body.”

The city’s official response was drafted by Anthony Capozzolo after former acting City Manager Rob Agostisi recused himself, “presumably because he received payments, the validity of which are questioned by the report,” McCracken said.

Council members John Bendo, Scott Mandel and Anissa Moore sent a pair of letters last week telling state auditors that Capozzolo's response was written without approval of the council. They also said they are not able to respond to the audit without first hiring their own outside counsel.

Council members may schedule a special meeting Friday if the majority of the board agrees to rescind the response, but it was unclear Wednesday whether three of the five council members would support that.

Moore, the council president, questioned in emails to council members whether rescinding the city's response could open up the city to liability. She did not respond to a request for comment Wednesday. 

Capozzolo’s report was written with assistant corporation counsel Greg Kalnitsky and later affirmed by newly appointed acting City Manager John Mirando “as the full and official response of the City of Long Beach.”

Bendo and Mandel told state auditors that Mirando’s response should be rejected and “not be considered as the city’s official response” and requested a 45-day extension from the comptroller’s initial Sept. 30 deadline.

The comptroller’s office said “it is imperative the city provide definitive direction on the status of the city’s official response” to the comptroller’s report.  

“Please advise by Oct. 11, whether the city through its governing body, formally rescinds the Capozzolo response as the city’s official response,” McCracken wrote.

If the city’s official response is rescinded, Long Beach officials would have until Nov. 11 to submit a different one.

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