Rancho Santiago stakeholders take forensic audit findings to O.C., L.A. investigators
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As Rancho Santiago Community College District officials determine their response to a forensic audit showing conflicts and state education code violations regarding the maintenance of an off-books insurance rebate fund, some are seeking the involvement of a higher authority.
Two individuals with ties to the district, one of them a member of its board of trustees, have reached out to district attorney’s offices in Orange and Los Angeles counties with the audit’s findings and complaints about the Cerritos-based risk pool operator that held the funds, Alliance of Schools for Cooperative Insurance Programs (ASCIP).
Findings from the audit were delivered during a March 10 regular board meeting by Travis Casner, a certified fraud examiner with Houston-based firm Weaver. Casner found current and former Rancho Santiago administrators violated sections of California education code and state budget accounting guidelines when they withheld the risk management fund balances and statements from elected officials as well as their own external auditors.
Accountants contracted by Rancho Santiago CCD found administrators violated ed code, budgetary guidelines and board policies by failing to disclose the fund or its balance, including in district audits.
The report also described conflicts of interest surrounding two now-retired vice chancellors, John Didion and Peter Hardash, who did not fully disclose they served on the board for ASCIP, a joint powers authority, and a subsidiary created by the agency to handle bond construction insurance, even as they recommended policies to the district through the two entities.
ASCIP’s practices were also examined by auditors and called into question during Casner’s presentation. He showed what appeared to be a practice of intentionally obscuring the amount of excess premiums, or rebates, returned to individual member school districts as officials with the agency reported only one grand total on annual audits.
RSCCD Board President Daisy Tong assured constituents at the meeting the board would discuss the ramifications of the audit. But her one of her board colleagues, Phil Yarbrough, is taking things one step further.
The trustee Tuesday forwarded the report to the Orange County district attorney’s major fraud unit, in hopes investigators might follow up on possible violations of law identified in the forensic audit.
“It’s not handled by us. We don’t call the Santa Ana Police Department,” Yarbrough said in an interview Thursday. “[But] I have a responsibility as an elected official to make sure this is being looked at seriously.”
Yarbrough said there are two avenues for prosecutors at multiple levels to explore — violations at the district level and the wider implications of ASCIP’s practices involving the 140 public school district members it serves, from San Francisco to San Diego counties.
While he and fellow board members were primarily focused on the former, investigators may want to look into the joint powers authority that provided a context for RSCCD administrators’ actions, Yarbrough said.
“All of this is pointing to financial fraud, and that’s at the state level. There needs to be an investigation for there to be complete transparency and accountability,” he added.
Kept off the books, and outside the awareness of elected officials, a risk management fund held for Rancho Santiago CCD by a risk pool operator quietly accrued millions — until people started asking about it.
A similar complaint has been brought to the attention of prosecutors in Los Angeles County, where ASCIP is headquartered, by Barry Resnick, a retired RSCCD professor and former faculty union president from 2012 to 2016.
Resnick on Tuesday forwarded the recent audit report to the L.A. County district attorney’s public integrity division, which reviews complaints alleging criminal misconduct, prosecutes crimes committed by public officials in the course of their official duties, according to its website.
In January 2023, the retiree reached out to the Daily Pilot with concerns about Didion and Hardash’s ties to ASCIP and a Hawaii-based subsidiary it created in 2005 to handle bond-construction related insurance—Captive Insurance for Public Agencies, Ltd. (CIPA).
When he discovered last year ASCIP was holding tens of millions of dollars in public school funds, Resnick worked with others to uncover the $8.1 million being held on behalf of Rancho Santiago.
Using records obtained from the organization that were also reviewed by the Pilot, he learned other public school and community college districts reportedly had insurance rebates banked by the agency and contacted them to see what their administrators knew.
“I wanted to know, is what occurred within the Rancho Santiago District an anomaly, or is this a pattern involving other districts?” Resnick said Friday. “And I found out there are other districts that are unaware they have funds being held by ASCIP.”
Resnick is hopeful that, armed with the Rancho Santiago audit and his own findings, prosecutors might take up the case.
“This is not the way taxpayer funds should be handled,” he said.
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