Promote La Jolla settlement signed, tensions remain

By Kathy Day

Staff Writer

The settlement in the Promote La Jolla case will cost the organization’s insurance company $89,992.48.

While the financial matter may now be closed, hard feelings appear to remain among many of the parties involved. The whole brouhaha started with an anonymous whistleblower that sparked a city auditor’s investigations. In June 2009, the auditor released a report outlining “alleged accounting irregularities and possible misuse of city funds.”

The report stated that $112,070 was at issue, including $65,323 — money that PLJ had held in trust to assist employers with parking for their workers — that was taken by First Republic Bank from a Promote La Jolla bank account to cover an overdue line of credit.

The city attorney’s office announced the settlement on Nov. 18. It covers Promote La Jolla Inc., former executive director Tiffany Sherer, former PLJ president Deborah Marengo (who still sits on the board), and Reza Ghasemi, a former treasurer of the group.

The payment will restore the $65,323 to the Coastal Access and Parking Fund and $24,669,48 to pay back the city for a portion of the disputed expenses.

Gina Coburn, spokeswoman for the City Attorney’s Office, said via e-mail “the remaining $22,070 reflected submissions that were reimbursed but were not entitled to be reimbursed.”

Following the settlement last week, Marengo expressed frustration about the auditor’s report and ensuing investigations, which led to a search warrant being served at her husband’s architectural firm, where she works part-time. She is the owner of Goldfish Point Café.

Records seized in the search included statements, books, canceled checks and other bank records for PLJ; the Promote La Jolla Foundation, an allied group formed to help raise money for a La Jolla advertising campaign, and the La Jolla Destination Marketing Alliance, which was a later name for the foundation. They also seized the server for Marengo-Morton Architects Inc., which caused great expense for the architectural firm and caused them to have to rebuild business, according to Marengo.

An affidavit requesting the search warrant was filed by Michael McEwen, a San Diego police officer assigned to the Financial Crimes Unit who is also a certified public accountant and a certified fraud specialist.

A copy was obtained by the Light through a public records request. In it, McEwen wrote that Kyle Elser, the city’s internal audit manager, and DeeDee Alari, an internal auditor, “told me they received a call on the city’s fraud hotline from Rick Wildman, the new president of Promote La Jolla (PLJ). Wildman complained of accounting irregularities and misuse of city funds by PLJ’s former president, Deborah Marengo.”

He also stated that after reviewing the audit trail he “will be able to establish the foundation is missing” money and that the “defendant(s) used all monies obtained for her own, as opposed to Foundation purposes.

When asked to respond to McEwen’s statement that he was the whistleblower, Wildman said, “I’m stunned, absolutely stunned. It wasn’t me … I wouldn’t have created this mess. …. It’s no wonder everyone was so upset with me.”

He also had denied calling the fraud hotline in public at a PLJ meeting earlier this year when Ghasemi, who is a party to the settlement, asked if he had done so.

On Friday while discussing the warrant, Wildman said he had talked to the auditor, Alari, and provided all of the documents requested, including all of his e-mails.

“I really did make sure no one had any liability,” adding that’s why he filed a claim with the insurance company as soon as the audit report was issued.

Although he initially called the affidavit “false,” on Monday, he said that he believes McEwen’s statement was “hearsay based on hearsay” and that there’s no point in making an issue of it. He said he also talked to Marengo about the report.

Reiterating that he wasn’t the whistleblower, he added, “The trouble I have is that this implies it is not an anonymous process. That’s bad.”

While the identity of whistleblowers is protected by AB 1666, the information is contained in a court document, which is why the Light is printing McEwen’s statement.

DA spokeswoman Coburn wrote in an e-mail that Deputy City Attorney Daniel Bamberg “is not at liberty to discuss the identity of the ‘whistleblower’ and tht the identity of the person “will remain confidential.”

Elser refused to comment, citing the law. He would only discuss the process, saying that when a call comes in on the hotline it goes to an “outside provider” who logs the information into the system and the auditor gets an e-mail about the complaint. Their office then conducts an investigation and issues a report, either clearing the matter or referring it for further action as happened in the PLJ case.

Marengo said she cares about the community and is upset at the division the investigation has caused but said “it all started with the parking management district.”

“The good news is that the settlement has made the community’s money whole again; the bad news is that we had to go through the personal and professional attacks.”

She said she is hopeful that new volunteers will get involved in the current effort to form a new nonprofit to seek the contract from the city to run the La Jolla Business Improvement District. (A meeting will be held Dec. 2 at 4 p.m. at the La Jolla Rec Center to pick a name for the group and form committees to get it organized.)

Wildman also said he hopes the community can move forward. In an e-mail he sent after the deal was announced, he said, “We have good reason to be proud of all of the people in both the city of San Diego and in the community of La Jolla whose hard work has removed any taint from Promote La Jolla Inc.”