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San Bernardino authorities confirm probe into city finances

A memorial to fallen police officers stands at the entrance to the City of San Bernardino Police Department on July 12, 2012 in San Bernardino, California. The San Bernardino City Council voted this week to file for Chapter 9 bankruptcy protection, making San Bernardino the second largest municipality in the nation ever to file for bankruptcy and the third in California to opt for bankruptcy in the past two weeks. Stockton, California with a population of nearly 300,000, became the biggest when it filed for bankruptcy on July 3. The Sierra Nevada Mountains ski town of Mammoth Lakes, California also voted for bankruptcy July 3. The city is facing a $45.8 million budget shortfall and is in danger of not making payroll for the next three months. City officials are set to discuss the next steps in the bankruptcy process and may also declare a fiscal emergency at its meeting July 16.
David McNew/Getty Images
A memorial to fallen police officers stands at the entrance to the City of San Bernardino Police Department on July 12, 2012 in San Bernardino, California.

San Bernardino's chief of police says his department and county authorities are looking into allegations of wrongdoing in some city departments.

The probe was triggered by city attorney James Penman’s claim this week that numbers had been fabricated in 13 of the last 16 San Bernardino city budgets. On Tuesday, the San Bernardino city council voted to seek Chapter 9 bankruptcy protection.

After Thursday night’s town hall meeting in the city’s Sixth District, police chief Robert Handy confirmed the investigation.

“We have committed some resources to an investigation, yes,” said Handy. “I spoke with the sheriff and the district attorney’s office and we’re going to be transparent. We are involved in looking into some things. It’s not a brand new issue.”

Handy declined to say which current or former city administrators or departments might be the focus of the probe.

San Bernardino County Sheriff Rod Hoopes issued a statement Thursday that said the investigation was opened several months ago at the request of unnamed city officials.

Before the San Bernardino City Council’s bankruptcy vote Tuesday, City Attorney Jim Penman announced that unidentified city administrators had cooked the books to make it appear the city had more cash in reserve than it actually had.

The alleged deceit was uncovered during an audit by new finance staff working under interim city manager Laura Travis-Miller, who took over four months ago.

Former city manager Fred Wilson led the finance department between 1996 and 2011. Wilson, who’s now the city manager in Huntington Beach, has not commented publicly on the claims that some budget numbers in San Bernardino were phony.

Sixth District councilman Rikke van Johnson said Penman gave a short briefing to council members prior to the council’s emergency budget meeting Tuesday. But he said it was short on details.

“It wasn’t nothing as far as, ‘OK, this year that happened’ or ‘that year, this happened’ or anything like that,” said Van Johnson.

“There wasn’t no specifics, other than he said that it’s under investigation. And unfortunately, what was said in that so-called briefing should have stayed in that so-called briefing and went to the right parties. Because we’re dealing with an even bigger issue then that that as far as bankruptcy. All the sudden your issue becomes the lead issue when it shouldn’t be.”

Van Johnson and other city hall watchers said City Attorney Penman is “blowing smoke.” They question the timing of his allegations.

It's not clear whether the claims of budget deceit pushed the city council’s decision to seek Chapter 9 bankruptcy protection. The city is $45 million in the red, has no cash reserves and can barely make payroll.

Next Monday, the council will try to figure out how to pay San Bernardino’s bills over the next 30 days before the city is granted the shelter of bankruptcy.