What evil lurks in the bowels of city hall? Only the city auditor knows for sure, and he’s not coughing up many details, at least not to the public. Every three months, auditor Eduardo Luna releases a Quarterly Fraud Hotline Report, revealing a chamber of alleged financial horrors, involving “fraud, waste, or abuse” and “violations of certain federal or state laws and regulations,” and the backlog is burgeoning. Alleged incidents of fraud listed as “Open/Unresolved” in the April 7 report included “embezzlement by a city employee,” “abuse of public moneys [by] a group/association,” “misappropriation of funds by an agency,” “improper expenditures by an agency,” “fraudulent disability claim,” “supervisor receiving kickbacks for making favorable work assignments,” “contracting irregularities,” “excessive overtime,” “theft of materials,” and “City staff wasting resources on projects unlikely to be funded.” Another complaint, reported by Luna as “Referred, Awaiting Response,” dealt with “accounting irregularities involving receipt and deposit of City Funds.”

During the nine months between July of last year and March 2010, Luna’s report says, his office spent “approximately 1041 hours investigating 23 Fraud Hotline complaints, and 15 of those complaints are still open.” (Nonfraud-related complaints are referred to City departments for investigation.)

Enter Mel Shapiro, a retired accountant who has sued the City under the state’s Public Records Act to force Luna to turn over copies of complaints, minus names, filed in 66 hotline cases that are identified by the auditor as closed. “The succinct summaries of closed and/or substantiated complaints do not provide the public the ability to assess the specific problems or potential solutions,” Shapiro’s complaint alleges. “There is also nothing to prevent a Department from holding onto the complaint forever, effectively killing it like a ‘tabled’ bill in Congress. In this fashion, the subject department becomes a ‘black hole’ for complaints that may enter, but never return to the Auditor or public. In Los Angeles, in contrast, a neutral body conducts hotline complaint investigations.”

“There is an inevitable potential conflict of interest when the Department investigates behavior complained about in those very departments. This is particularly true, when the complaints are about department heads and other people with administrative authority in the subject department that handle their own hotline complaints.”