In Wake of Embezzlement Scandal, City Moves to Limit Staff From ‘Too Much’ Authority to Issue Loans

Pasadena’s Housing and Career Services Department has created a new Internal Housing Loan Committee to review housing loans and reduce the chances another embezzlement scandal could occur.

Last December three people, including a former Pasadena Department of Public Works analyst and another former city employee, were arrested and charged in connection with a scheme which allegedly siphoned off $6.4 million in city funds.

It took at least a decade before the embezzlement was discovered. City Manager Michael J. Beck in December said the scandal happened unnoticed that long because there was a “complete breakdown on internal controls.”

In establishing the new Loan Committee, the Department said it hopes to prevent any staff person from having too much responsibility and authority over a particular loan.

With a Loan Committee, the Housing Division staff says it will have a simple and easy-to-implement third part review of proposed affordable housing loan activities. Housing staff will make recommendations to the Loan Committee on proposed new loans to affordable housing developers and first-time home buyers, and financial modifications or less than full pay-offs of existing affordable housing and first-time buyer loans.

The Loan Committee will also provide a new level of oversight especially for the many single-family loans that typically are not brought before the City Council because of the small dollar amount.

Director William Huang of Housing and Career Services leads the committee.

The other members include Will Rivera, Chief Assistant City Prosecutor for the Pasadena City Attorney/City Prosecutor’s Office; Susan Kim from the Pasadena Human Services and Recreation Department, and Lola Osborne who is the Northwest Manager in the City Manager’s Office. All three have held important positions related to the review of housing policies and addressing the homeless problem in Pasadena.

The Internal Housing Loan Committee will meet every month and will also provide an annual general review of the performance and status of the entire housing loan portfolio.