Oakland City Auditor Courtney Ruby issued a whistleblower investigation report last week alleging that the director of the city’s Parks, Recreation and Youth Development Department (OPRYD) circumvented city rules by hiring contractors without competitive bidding, improperly diverted money between the city and Oakland Parks and Recreation Foundation to pay vendors and city staff, and hired his friends and associates without going through proper channels, including giving a friend of the city’s Housing and Community Development Department director $75,000 for work that was carried out without a contract. The parks department also improperly spent the majority of a $150,000 federal grant intended for the “Town Camp” children’s program on unrelated projects, according to Ruby’s report.
Ruby concluded that the series of improper payments in 2018 and 2019 “reveals either a systemic weakness in the training and competency of the department directors, or collusion by them to circumvent City rules to pay a consultant known to one of the directors, or both.”
The director of the parks department, J. Nicholas Williams, said this week in an interview with The Oaklandside that he strongly objects to the auditor’s characterization of his actions as “fraud” and welcomes the opportunity to tell his side of the story.
Williams accused Ruby of creating a “false narrative” by implying that he and others took city money to enrich themselves.
“The City Auditor used words like fraud and abuse. I think one of the things she said is I diverted money to the foundation,” said Williams. “Not only is that false and untrue, but inflammatory words create this narrative that is biased. There has been no fraud. If there was any penny missing you would see that in the report.”
Williams was hired by Oakland in 2016 to run OPRYD, which oversees sports and activities programming with a focus on children. He said he has grown OPRYD over the past five years to serve thousands more children and create multiple new programs. Using the parks foundation and city resources, he’s raised over $600,000 for scholarships for low-income families to participate in OPRYD programs. His department has refurbished all of the city’s gymnasiums, and grown the city’s “Town Camp” summer camp program from one that served 200 kids to one that now accommodates 1,200 children.
Oakland City Administrator Ed Reiskin issued a press statement last week acknowledging that Ruby’s report “reveals a troubling inadequacy of internal controls, management, and reporting at Oakland Parks, Recreation, and Youth Development (OPYRD), which must and will be expeditiously addressed.” But Reiskin said he also disagrees with the characterization of Williams’ actions as “fraud” and stood by the department director, who he oversees.
“All of the dollars referenced in the report were spent in support of services to Oakland kids,” said Reiskin. “There is nothing in the report that suggests any sort of personal enrichment or benefit to the OPRYD Director or to the Foundation.”
A $75,000 payment to a friend of the housing department director
Ruby’s report doesn’t claim that Williams or other city officials misspent public funds to enrich themselves. In her summary, Ruby noted that one of the allegations made about OPRYD by the anonymous whistleblower who kicked off the investigation was that Williams “used City resources for private gain by using City facilities for a private event for his limited liability corporation.” Ruby said her investigation disproved this allegation.
But the auditor’s report does raise questions about why a local businessman was paid $75,000 by OPRYD through the Oakland Parks and Recreation Foundation, even though he had never been awarded a city contract.
The Oakland Parks and Recreation Foundation is a nonprofit that raises philanthropic funds to supplement city spending on OPRYD programming and park improvements. Although it’s separate from the city of Oakland, the foundation receives city funding—about $230,000 since 2016. The foundation has also raised several million dollars from private donors, and Williams, as OPRYD director, has the authority to direct where these funds are spent. Because the foundation handles money on behalf of the city, it is required to follow many of the city’s rules around competitive bidding for contracts and financial accounting.
In 2017, the head of Oakland’s Housing and Community Development Department, Michele Byrd, introduced Williams to a contractor named Terry Butler who runs a company called Youth Sports Nation. Byrd, Williams, and Butler outlined a plan in which Butler would help OPRYD organize a basketball jamboree at North Oakland’s Bushrod Recreation Center, create music and songs for a youth basketball league, produce a TV show for Oakland’s KTOP station, and co-author a youth engagement plan, among other things.
Byrd, according to emails cited in Ruby’s report, told Williams “I got this person …. He’s going to do some community engagement for you. You guys write it out [scope of services] and Housing is going to pay it.”
City law requires departments to advertise contracts and have contractors competitively bid on them, and it bars department heads like Byrd and Williams from issuing any contracts worth more than $5,000.
Williams told The Oaklandside that he was under the impression that Butler’s company had an existing contract with the Housing and Community Development Department.
“In fact, the way that she described it is that the person was already hired and was working with her and that here was some additional funding available for him to do some community work with the department,” Williams told The Oaklandside.
But in 2018, after Butler asked to be paid, Williams realized there was no contract in place. According to the City Auditor’s report, Williams then “implemented a fraudulent scheme” to pay Butler through the Oakland Parks and Recreation Foundation with city money.
Williams asked the Oakland Parks and Recreation Foundation’s executive director to bill the city for the $75,000. Using this invoice, Williams then had the city’s finance department transfer the money to the foundation. Williams then directed the foundation to pay Butler, all according to the auditor’s report.
According to Ruby, the payments were “fraudulent” because they were made to circumvent city contracting rules, and because the documentation to the foundation never disclosed that the money was being used to pay Butler. Instead, a different OPRYD program was mentioned.
Williams said his department needed to pay Butler for the work and they considered several options, one of which he rejected outright because it “would have absolutely been fraud,” a suggestion by a now former staffer to backdate all the information on the contracts.
Williams said he chose to use the parks foundation because it would create a “complete transparent” paper trail for the payment. “You see the check move from the city of Oakland. You see the check move to the foundation. And you see the foundation cut a check to the vendor. That was the cleanest way, the most transparent way to do it.”
“In hindsight we realized it has caused some confusion as to why we did it that way,” said Williams.
Ruby wrote in her report that one other major problem with the $75,000 payment through the foundation was that it amounted to a misuse of federal funds. According to the auditor’s report, the money used to pay Butler’s company came from a $150,000 U.S. Department of Housing and Urban Development block grant that had been specifically earmarked for the city’s “Town Camp” summer camp program. By using the money to pay a vendor for unrelated work, Oakland violated terms of the federal grant, Ruby found.
Friends and acquaintances were given no-bid work
Housing and Community Development Director Michele Byrd left her job with the city in April 2019. According to NBC Bay Area, Byrd was fired because of her mismanagement of tenant protection laws. It’s not clear if her role in hiring Butler’s company without a contract had anything to do with her departure. The city does not comment on personnel issues.
According to the City Auditor’s report, Byrd may have been friends with Butler when she suggested he be given the $75,000 no-bid job with the parks department. Butler was the assistant coach for a sports team that Byrd’s son played on and for which Byrd was an active parent volunteer.
According to LinkedIn, Byrd now lives in Houston, Texas where she works for a financial company. Attempts to contact her for this report were unsuccessful.
The executive director of the Oakland Parks and Recreation Foundation at the time the foundation was used to pay Butler was Ken Lupoff, who is currently a policy analyst in District 5 City Councilmember Noel Gallo’s office. Lupoff did not respond to a request for an interview.
The City Auditor pointed to other personal ties to contractors hired by Williams to perform work for OPRYD.
In May 2019, Williams brought a Michigan-based “cultural agility expert” to conduct two four-hour training sessions for OPRYD staff at a cost of $3,000. A city credit card was also used to pay for over $800 in hotel, food, and transportation for the expert. According to the auditor, the use of city credit cards to pay for contractor’s expenses is prohibited. Ruby noted that the next year, the expert wrote a positive review of a book written by Williams.
Williams also brought an arts and crafts practitioner from Georgia to lead public workshops for Oakland residents. A city credit card was again used to pay $1,400 to the consultant and for hotel, food, and transportation. Ruby wrote in her report that when her investigators asked Williams how he knew the arts and crafts practitioner, Williams answered that the person is the spouse of one of his best friends and was also a former member of a band Williams played in. The auditor concluded, however, that no “quid pro quo” could be shown in the recruitment of these vendors by Williams.
Williams told The Oaklandside that Ruby’s characterization of these vendors as his friends isn’t fair.
“It’s very inaccurate. For one, Ruby can’t define who my friends are, or who my professional references are,” said Williams. “I worked all over the country in Atlanta, Minneapolis. So over those years, I’ve developed professional references with people who provide professional services, so why shouldn’t Oakland’s kids be able to benefit from these professional experiences and experts?”
According to Williams, the use of city credit cards to pay for the vendors’ expenses was actually suggested to him by the finance director. Katano Kasaine was Oakland’s finance director until August 2019 when Adam Benson was appointed to the job following Kaisane’s departure to take a job with the Metropolitan Water District of Southern California.
Suggested changes to OPRYD’s use of the Oakland Parks and Recreation Foundation
The City Auditor recommended in her report that several changes be made to the city’s use of the Oakland Parks and Recreation Foundation, and that more stringent controls be put in place to prevent improper transfers of city funds. This includes “immediately revoking” the OPRYD Department director’s authority to direct payments from the parks foundation, and informing the U.S. Department of Housing and Urban Development that block grant funds were misallocated.
The auditor also recommends requiring better documentation because of numerous payments that Williams directed the foundation to make to city employees to reimburse them for out-of-pocket expenses. According to Ruby, paperwork for these reimbursements wasn’t always complete. OPRYD also directed the foundation to make payments to part-time parks department employees in order to circumvent annual limits on part-time work, potentially in violation of state and federal labor laws.
City Administrator Reiskin said he takes the auditor’s findings “with the utmost gravity” and he looks forward to working with Ruby to take corrective action.
“The City Administration is carefully reviewing the report and recommendations and working in concert with our Finance Department and other relevant departments, with advice from the Office of the City Attorney, to implement policies that ensure every dollar–public or private–is properly spent, managed, and accounted for,” said Reiskin last week.