Former SEDC officials charged with embezzling
The former president and finance director are accused of improper bonuses
SEDC bonuses
SEDC chief authorized extra pay for herself
SEDC plagued by fraud, auditors say
Judge blocks severance pay to ex-SEDC chief
Two former top officials of an agency tasked with revitalizing some of San Diego’s poorest neighborhoods were charged with conspiracy, embezzlement and misappropriation of funds on Tuesday by the Attorney General’s office.
Former President Carolyn Y. Smith, 54, and former finance director Dante Dayacap, 62, are accused of wrongly approving more than $800,000 in bonuses for themselves and others at the Southeastern Economic Development Corp. The payments were labeled as bonuses for holidays, longevity, cost-of-living, “year-end acknowledgment” and other purposes, according to the 10-page felony complaint.
The two left the agency in 2008 under pressure, after an investigation by voiceofsandiego.org. A subsequent city audit outlined many of the same payments and said they amounted to fraud.
If proved, the criminal charges could result in up to seven years and four months in state prison for each of the defendants.
The payments were requested and personally approved over a number of years, according to the five-count complaint which alleges 42 overt acts.
“Each bonus check was signed by Dayacap and Smith, including Smith’s own bonus payment,” the arrest documents say. “The Board was never informed of the bonuses or asked to approve them. City Council was never informed of the bonuses or asked to approve them.”
Officials from the state Attorney General’s Office answered general questions about the arrest warrant but declined to comment on the scope of the allegations.
A spokesman said Tuesday that Smith had not yet been arrested but was informed she would need to turn herself in for booking soon; Dayacap was arrested Tuesday and is scheduled to be arraigned Wednesday on five separate charges.
The same official said the FBI assisted with the investigation. Neither Smith or Dayacap could be reached Tuesday for comment.
Smith joined the agency in 1984 and took over as its head in 1994. The organization promotes economic development in seven square miles east of downtown, and is set up as a nonprofit city agency.
The arrest documents allege a number of lies, omissions and misrepresentations used to keep city leaders in the dark about compensation at the agency. In discussing the budget for 2007-08, for instance, the documents say, “Smith’s explanation of merit bonuses was also a misrepresentation, listing an example of $2,000 when in fact Smith had already received $53,500 in bonus compensation alone that fiscal year to date.”
Smith was fired after the city audit.
She originally was awarded a $100,350 severance package but that payment has been withheld. Last year, Smith filed a lawsuit to recover the tied-up severance package but the payment remains in legal limbo.
According to the arrest affidavit, Smith told city officials she found ways to compensate the agency’s employees because City Hall rejected raises and the staff was underpaid compared to a sister agency, the Centre City Development Corp.
Smith defended her record in an August 2008 interview with the Union-Tribune.
“In a nutshell, everything we’ve done in redevelopment has accrued back to the community, and that’s huge because often you find redevelopment displacing people that are living there, but our first priority has been to the residents and businesses in this area,” she said.
Jerry Groomes, who served as president of the Southeastern Economic Development Corp. in the early 1990s and reassumed that job Feb. 1, said he had no idea arrest warrants were forthcoming.
“We were just kind of caught off guard like everybody else,” he said. “It’s unfortunate, but the organization is moving forward. We’re trying to do what we need to do to revitalize the community. That’s my focus.”
An aide to Mayor Jerry Sanders noted that Sanders called on Smith to resign as early as July 2008.
“Now that this is a criminal matter, it would be inappropriate for the mayor to comment publicly beyond that,” spokesman Alex Roth said.
