State Cites DA’s ‘Gift of Public Funds,’ Asset Forfeiture Spending

State audit validates questions raised by county auditor

The auditors criticized District Attorney team-building dinners at a local steakhouse. (Photo courtesy of Paula Stout)

In a sprawling report critical of how Mendocino County manages its finances, the California State Auditor accuses District Attorney David Eyster of wrongly using public funds to host annual steakhouse dinners.

It specifically cited Eyster’s use earlier this year of $3,600 in drug asset forfeiture funds to pay for room space and dinner for staff and their guests, which he described as a “continuing legal education and team building business meeting.” State auditors found that it was, in fact, a “gift of public funds.”

Eyster has been holding the controversial annual dinners for years, racking up expenses totaling thousands of dollars since taking office in 2011. He has repeatedly shrugged off criticism and ignored questioning by county Auditor-Controller/Treasurer-Tax Collector Chamise Cubbison. Her questions, in fact, triggered a bitter feud between the two independently elected county officials and led the district attorney to make a failed effort earlier this year to criminally prosecute Cubbison for unrelated pay issues within her office.

The felony case was tossed by Judge Ann Moorman, and Cubbison returned to office.

Cubbison supporters on Thursday noted the irony of state auditors accusing Eyster of a gift of public funds — the same allegation he attempted to criminally prosecute her for.

To date, local taxpayers have paid in excess of $400,000 in outside legal fees for a special prosecutor hired by Eyster to attempt to try Cubbison on a felony criminal charge, and to defend the county in a civil lawsuit subsequently filed seeking damages and compensation for loss of salary and benefits during an 18-month suspension ordered by the county Board of Supervisors. That lawsuit is still pending and is likely to cost the county hundreds of thousands of dollars more.

Conclusions of the exhaustive special state review, authorized by the Legislature at a cost of $800,000, were released Thursday.

The scope of the 97-page state report is sweeping, focusing on the county’s declining financial condition and the need for corrective action. It examined a variety of issues, including an election snafu and questionable sole-source agreements, as well as the splitting of contracts with outside vendors.

State auditors concluded the county’s current procurement and financial reporting practices “leave it vulnerable to waste, fraud, and abuse of public funds.”

They reviewed 30 expenditures across three county departments and found problems with documentation or justification in half.

“For example, staff purchased items — a $1,000 wide-screen television for the district attorney’s office — without documenting the reasons why, and did not reconcile advance payments to staff for travel with the actual costs of those trips,” according to the state report.

Beyond Eyster’s “gift of public funds” for annual dinners for staff and their guests, the state report also focused on how the district attorney’s office and the Sheriff’s Office spend asset forfeiture funds — money or property seized during law enforcement criminal investigations.

State auditors concluded that the Mendocino County Board of Supervisors and the executive office have not “sufficiently overseen the use of the asset forfeiture funds spent by the Sheriff’s Office and District Attorney’s Office.”

State auditors said county management must beef up its oversight efforts.

“We recommend that the county establish greater oversight over spending and create accountability for the use of asset forfeiture funds by having offices or departments that spend those funds report to the board annually about their use,” the state urged.

“As a result, we found that these offices were making donations of these funds without adequate safeguards against improper spending,” according to state auditors.

They cited a Sheriff’s Office donation to a “religiously affiliated school that violates state and federal constitutional provisions.”

State auditors said the District Attorney’s Office in February made a gift of public funds when it used asset forfeiture money to cover $3,600 for an end-of-year gathering and dinner for staff and guests. The steakhouse dinners have been a regular practice of Eyster since he took office in 2011.

Eyster did not respond Thursday to requests for comment on the state auditor’s findings.

However, in an earlier response to state auditors, the district attorney asserted in a concluding statement that “no improper payroll practices, financial irregularities or personal enrichment by District Attorney staff were uncovered, and all transactions were supported by at least some degree of documentation.”

In rebuttal, state auditors replied, “to provide clarity and perspective.”

“The District Attorney’s Office asserts that its use of asset forfeiture funding has been lawful. However, as our report notes on pages 30 and 31, the office’s use of asset funding has violated state and federal constitutional prohibitions on direct funding for religiously affiliated schools, as well as the California Constitution’s prohibition on gifts of public funds.”

State auditors also said the District Attorney’s Office “has not accurately summarized our findings regarding the presence of waste, fraud, abuse and mismanagement with respect to the office’s expenditures.”

“We noted that some of the District Attorney’s Office documentation — such as undocumented justification for its purchase of a $1,000 wide-screen television for the conference room — was insufficient,” the auditors wrote.

“These issues place Mendocino and the District Attorney’s Office at greater risk for waste, fraud and abuse,” state auditors concluded.

Sheriff Matt Kendall discussed the state’s findings Thursday, particularly as they related to asset forfeiture funding.

“All in all, I think the recommendations are valid, and we will implement changes as recommended,” Kendall said.

Kendall noted that federal guidelines governing how asset forfeiture funds may be spent by local law enforcement changed in 2024.

“Many of the areas brought forward in the audit are no longer of concern,” Kendall said.

The state report cited a $5,000 Sheriff’s Office contribution to St. Mary’s School for an athletics-related program as violating the doctrine of separation of church and state.

Kendall said the state “found no pattern of donations to religious organizations” and noted that he has donated funding on several occasions for sober graduations and various school equipment drives.

Cubbison declined to comment Thursday on the state’s findings.

However, in a letter to the state, she said her office “accepts the California State Auditor’s recommendation.”

“We would like to thank the audit team for their professionalism, thorough review, and willingness to discuss their observations and recommendations with our team,” Cubbison wrote.