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State Files Embezzlement Charges Against Former SEDC Officials

Audio

Aired 5/4/11

We speak to voiceofsandiego.org reporter Will Carless about the embezzlement charges that have been filed against two former Southeastern Economic Development Corp. officials.

We speak to voiceofsandiego.org reporter Will Carless about the embezzlement charges that have been filed against two former Southeastern Economic Development Corp. officials.

Guest

Will Carless, Reporter/blogger, voiceofsandiego.org

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This is a rush transcript created by a contractor for KPBS to improve accessibility for the deaf and hard-of-hearing. Please refer to the media file as the formal record of this interview. Opinions expressed by guests during interviews reflect the guest’s individual views and do not necessarily represent those of KPBS staff, members or its sponsors.

CAVANAUGH: I'm Maureen Cavanaugh and you're listening to These Days on KPBS. We start out with an update on the scandal that led to the ouster of two top officials from San Diego's southeastern economic development corporation three years ago. The -- here to tell us about the criminal charges that have been filed against the SEDC's former president and finance director is Will Carless, investigative reporter for voice of San Diego. Good morning, will.

CARLESS: Good morning. Maureen.

CAVANAUGH: So tell us exactly who's being charged and what those charges are.

CARLESS: Two individuals, Carolyn Smith who's the former president of SEDC, and Dante Dayacap, who is the former finance director. They've both been charged with five felony counties of one of the counts is conspiracy to commit a crime. Three counts of embezzlement, and another count of misappropriation of public funds.

CAVANAUGH: Now, I know that some details have been released about these charges that are somewhat interesting and unusual. Tell us about that.

CARLESS: Well, it's kind of a long fascinating story. I guess they have been investigating this for almost three years, ever since we broke the story back in 2008. And it's sort of a long tale of -- it's sort of a scheme that kind of just got out of hand and just kind of spiralled and got bigger and bigger. But the core of it is basically that the charges state that Carolyn Smith look with her finance director manufactured a system whereby they could pay themselves massive amounts in bonuses every year and the amounts of the bonuses kept getting bigger and bigger until we kind of pointed out that they probably shouldn't be doing that.

MAUREEN CAVANAUGH: Now, how much money are we talking about.

CARLESS: Well, we're looking -- our original calculations that we made back three years ago when we were right in the thick of this story was more than a million dollars that had been paid out in bonuses to everyone on staff. Now, it's worth noting that Carolyn and Dante definitely got the lion's share of that. I think that this indictment -- I mean, sort of official -- the official numbers that are on the criminal charges are that it's more than $200,000. But there isn't an exact dollar amount. And it's wroth noting that as part of these charges, if they're found guilty, in addition to serving time in prison, they will also be asked to fully pay back all of that money to the City of San Diego.

CAVANAUGH: One of the interesting aspects of this, will, is that the state attorney general filed these charges. Why not San Diego's district attorney?

CARLESS: Isn't that interesting, Maureen? I've been asked the same question many times. And we have a district attorney who has a public integrity unit and who has made a big deal of the fact that she's rooting out public corporation. She's certainly know about these cases of she was asked to investigate them back in 2008 by mayor Jerry Sanders. Apparently never decided to do anything on it. So for some reason it was passed over to the state HE, that is unusual, it does seem to fit perfectly within her agreement. I think it's worth notes that Carolyn Smith is a scion of a very, very powerful political figure. Bonnie Dumanis is running for mayor. I don't know that the two are related but certainly it's worth thinking about.

MAUREEN CAVANAUGH: Now, Smith and Dayacap stepped down wen this scandal broke due to reporting by voice of San Diego. And other outlets around San Diego as well after you got the story. What did they say in their defense?

CARLESS: Dante's never really said anything in his defense. Carolyn has been really kind of gung-ho about sort of saying -- her basic defense is, look, everybody knew what we were doing, we'd run this past the board, and we told the City Council, the City Council approved our budget. And without getting too into it, that defense doesn't really seem to hold water because although the City Council did approve sort of a total amount that could be paid out in compensation, it certainly never approved and never gave implicit approval or otherwise to this bonus system that was going on. So that's her defense, you guys knew about this, and certainly everyone on the board and the City Council said no we didn't. We had no idea you were doing this, and if we had, we wouldn't have allowed it to carry on.

BARBER: So right now, will, are Carolyn Smith and Dante Dayacap in custody?

CARLESS: Dante is. He's in the downtown jail. He's gonna be arraigned at 1:30 PM. For some reason, Carolyn hasn't been arrested. I believe she's being allowed to surrender herself. We're still trying to figure out the details of that. I think it involves walking into the courthouse at a certain time and sort of saying here I am for my arrest warrant of so she may or may not be at the arraignment in the afternoon. We're gonna be there, and, yeah, we're gonna see what happens.

CAVANAUGH: Well, thanks for bringing us up-to-date on this big story, will.

CARLESS: Thank you.

CAVANAUGH: That's Will Carless, investigative reporter for Voice of San Diego. If you'd like to comment, please go on-line, KPBS.org/These Days.

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