Kicking the Tires at Fleet
A city whistle-blower confirms that the trouble at Fleet Services has been much worse than neglected scrap tires and bad record-keeping. And nobody in charge wants to hear it.
By Jordan Smith, Fri., July 2, 2010
Documents recently obtained by the Chronicle show that officials within the city's Fleet Services Division, and many others in City Hall – including former City Attorney David Smith, Chief Financial Officer Leslie Browder, and City Manager Marc Ott – despite their official denials, were told about possible wrongdoing involving the city's dumping of scrapped tires at least six months before we first reported the problems in December.
Correspondence between city officials and Daniel Lomas, manager of Fleet's vehicle service center across the street from Austin Police Department headquarters on Eighth Street, show that, beginning in May 2008, Lomas reported record-keeping problems and possible violations of state law by Fleet officials, including potentially criminal allegations involving former Tire Program Manager Bill Janousek. Janousek was fired earlier this year officially for violating a personnel policy and remains under investigation.
Nonetheless, it is still unclear what Fleet or other city officials did, if anything, to investigate the serious allegations of impropriety that Lomas had reported – allegations not only of dumping scrap tires but also of possible bid-rigging on at least one tire-related contract and theft of new spare tires meant for use on police cars.
Last week, when we requested additional information concerning the tire program, we were told that documents are being withheld due to an ongoing criminal investigation. Austin Police are "working with [prosecutors] and soon there will be clear direction on the issue of whether to recommend prosecution," we were told in a statement from the city's Public Information Office.
In late November 2009, city officials first told the Chronicle that prior to our reporting the matter, they had never been alerted to the problem of scrap tires being abandoned by the city on property southeast of Downtown. The tract was leased by Victor Almaguer, owner of Vic's Tire Service, which formerly held a city contract to repair flat tires. Almaguer was not registered with the Texas Commission on Environmental Quality to transport or to store large numbers of tires, as required by state law. Nonetheless, he had been doing just that since at least 2003, at the request of Janousek, Almaguer told us, work for which Almaguer said he'd never been paid. When we asked the city for information about the tires left moldering for years on Almaguer's property, we were told that our inquiries were the first they'd heard of the problem.
Later, however, the response began to change. In a subsequent official statement provided by city spokesman Reyne Telles, we were told the "allegations are something we take seriously" and it had been "determined that the claims are part of an ongoing investigation." Then, in a Dec. 8, 2009, memo, Browder explained to Mayor Lee Leffingwell and City Council that it was during the "process of researching and compiling the records" responsive to a Chronicle open records request that "management at Fleet Services became aware there was a breakdown in the record-keeping process used to track tire disposals." Moreover, she informed council that the first time the city had actually heard about the tire mound at Almaguer's property was via an anonymous report made to the city's Health and Human Services Department at some time prior to our first report.
When we finally had the opportunity in April to directly ask Fleet's top official, Fleet Officer Gerry Calk, about when he first learned of the scrap tire mess, he said he hadn't known of it until we brought the problem to the city's attention. When pressed, however, he said that at some point in August 2009, he had gotten an "unspecified allegation" that tires "were being diverted from the scrap stream." But he said he was never given any evidence that it was happening – in essence, he said he had nothing to go on from which to investigate the matter.
Yet according to documentation provided by Lomas – including an audio recording from a meeting on Aug. 24, 2009, involving Lomas, Calk, and Sharon Huckabee, Fleet's human resources manager – numerous Fleet officials, including Calk and Deputy Fleet Officer Jennifer Walls, had previously been made aware of a host of allegations involving Janousek and the tracking of city tires, including those intended for the scrap heap.
Moreover, the documents reflect that Lomas had been reporting the same allegations of wrongdoing to high-ranking city officials, including Ott, since at least May 2009 – more than six months before our first report. On May 6, the day after an ethics training class, Lomas wrote to Ott in part, "When I [hear] you plea for the City to join together and conserve our resources, it makes me think that you are not aware of the abuse being allowed and the thousands of tax payers dollars that are not being accounted for."
It bears noting that in 2008, both Calk and Ott were relatively new to Austin. Ott was appointed in January 2008, and Calk arrived at Fleet from a similar position in Kansas City in July. It's unclear whether that transition had any bearing on their responses to persistent problems at Fleet.
Through the following months, Lomas continued to write to Ott and other city officials about the ongoing problems at Fleet. "Victor Almaguer said he has a stockpile of used scrap tires that he got from Bill Janousek that will cost $45,000 to $65,000 to dispose of," Lomas wrote in an Aug. 2, 2009, memo to Ott. "Victor Almaguer said he was not subcontracted by TCI Tire Co. for picking up scrap tires, as ... Janousek had claimed." Moreover, Lomas told Ott that Almaguer "is not registered with the [TCEQ] as required by law for transporting, disposing or storing scrap tires." Less than three hours later, Ott responded in an e-mail sent from his iPhone. "I have received many complaints about Fleet lately and I'm very very concerned," he wrote. "I assure you that we are going to get to the bottom of it. If what you're saying is true those responsible will be held accountable." And in a postscript to then-City Attorney David Smith, Ott wrote, "Let's discuss asap. Thanks Marc."
This week, city officials released statements reiterating that they only learned of the scrap tire problems when the Chronicle inquired about them in November 2009, although they also acknowledged receiving some allegations as early as August – and Ott specifically said Lomas contacted him about the problems in May. In short, the official responses thus far can best be described as inconsistent.
Disappearing Inventory, Official Silence
Although Lomas reported his concerns about the tire program directly to the city manager beginning in the spring of 2009 – in a series of back-and-forth communications on which a number of city officials were eventually copied, including Browder, Smith, Police Chief Art Acevedo, and Deputy Chief Financial Officer Jeff Knodel – Lomas says he received very little response beyond brief e-mail acknowledgments.
It wasn't the first time Lomas had reported possible improprieties at Fleet, and it wasn't the first time he hadn't received any substantive response.
Lomas came to the city's Fleet Services in 2006 after a successful career owning an auto repair shop in Corpus Christi. When his family moved to Austin, Lomas sought a job that would use the skills he'd developed over the last 25 years. Fleet Services was an obvious choice. Lomas was first employed as the Fleet Program coordinator, in charge of training for mechanics and keeping track of their professional certifications, among other things. He was promoted to manager of one of the city's eight auto-service centers in January 2008, running the shop that handles most of the work on Austin's police vehicles, a position he still holds.
It was while he was working as program coordinator that Lomas began to see that there were certain things wrong with the city's Fleet operations – including major problems with the way tires were handled. Indeed, Lomas was one of just a few managers asked by the division's former operations manager, Hiram Kirkland, to look into possible wrongdoing within Fleet's operations. In particular, Lomas was asked to help with an investigation involving missing inventory at one service center and to undertake an investigation of how the tire program was being run, Lomas said. Kirkland "had me looking at different processes with inventory and how we did work within Fleet," Lomas recalled recently. "He told me to look at everything."
But Kirkland was placed on administrative leave in March 2008, while officials looked into a six-month-old allegation that he'd been steering warranty-covered fleet-vehicle work to a dealership where his son worked. Nevertheless, Lomas said, Kirkland directed him to continue with the investigations. (Kirkland was ultimately fired in the spring of 2009, and he filed a whistle-blower lawsuit against the city alleging that instead of looking into the allegations that he had raised and weeding out the bad apples in Fleet, city officials, including within the city's Human Resources Department, instead focused on him. Among Kirkland's specific allegations were that certain contracts were rigged in favor of certain vendors, that $250,000 in auto parts had been literally thrown away, and that at least one employee at one of the service centers was stealing parts and supplies and manipulating inventory documents to hide the theft. In late 2009, Kirkland's lawsuit was dismissed in a summary judgment; the case is under appeal.)
Lomas did as he was told. According to e-mail communications, his earliest reports to his supervisors about possible problems within the tire program came in May 2008, two months after Kirkland was placed on leave. In mid-May, Lomas said he met with several Fleet supervisors – Deputy Fleet Officer Walls, Fleet Operations Manager Irvin Schmidt, and Urcha Dunbar-Crespo, an acting deputy Fleet officer – to report problems with the way the department was recording so-called tire "credits," in essence a tally of all tires removed from city vehicles for repair or retreading. Put another way, the tire credits are a count of all tires removed from city vehicles that remain usable and aren't yet destined for the scrap pile. By early 2008, the number of credits being recorded was dwindling, and by May (just after Kirkland was placed on leave), Fleet officials decided to stop recording the credits at all. Lomas was concerned that failing to record those credits could be a sign of, or lead to, fraud or theft. Indeed, it was Kirkland who had required the credits to be tracked; when Kirkland left, Lomas said, Fleet officials ended the practice. Lomas' concerns about what might happen if those tires were no longer tracked were ignored, he said.
This week, city officials acknowledged that the practice of tracking the credits was ended in "April/May 2008" and that they do not believe it has "any fiscal implications."
At the same meeting, Lomas said he raised two other issues that had come to his attention during the inquiry into the city's handling of tires. First, he said, it did not appear that the tire program manager, Janousek, was following the city's procedures for handling spare tires, especially those that are removed from police cars during the "make ready" process. Because police carry a lot of equipment, there isn't room for a spare in the trunk; when new police cars arrive, the spares are removed and are supposed to be recorded back into inventory and then sent out to be used on the cars as needed. Lomas says he told supervisors he didn't think Janousek was following the proper procedure. Eventually, he said recently, dozens of spare tires simply disappeared from inventory.
Lomas raised concerns about the handling of spares at the meeting on May 28, 2008, and then returned to the subject in at least six subsequent e-mails to supervisors (including Walls, Schmidt, and Calk) – including an Aug. 1, 2008, e-mail in which Lomas told his supervisors that 30 spares taken from the city's fleet of 2008 Crown Victorias had apparently disappeared. It wasn't until July 1, 2009, says Lomas, that he was told that an investigation of the matter was complete and that no wrongdoing had been found. (In all, Lomas told the Chronicle, 60 Crown Vic tires went missing, at a cost of roughly $18,000, and an additional 50 spare tires for garbage trucks, worth about $25,000, also disappeared.) But Lomas said the investigation itself was suspect: "Janousek audited the missing spare tires."
City officials have responded that the audit was in fact performed by Walls, Dunbar-Crespo, and Schmidt and that it found no tires unaccounted for.
Responsibility and Ethics
As it happens, Lomas' complaints were not the first the city had received about apparent problems in the tire program. According to a March 2006 report from then-Assistant City Auditor Susan Wynne, an anonymous complaint had been received that then-city-contractor Almaguer was colluding with an "unnamed Fleet Services Tire Shop employee" to mark as "scrap" tires that were still good. Those tires would then be sold out the back door, the tipster alleged in part. But according to Wynne's report, there was no evidence that anything was amiss. "However, it is important to note that we met with some difficulty when attempting to review Fleet Services inventory records," which were not standardized, she wrote, "which may have impacted our ability to fully detect such patterns, if they existed."
Notably, the Chronicle's report in December 2009 about the scrap tires abandoned on Almaguer's property also recounted that the city had failed since at least 2006 (the first year for which we requested records) to follow the required procedure for tracking scrap tires – a five-part manifesting process required by law. As a result, it was impossible to determine whether the city had properly disposed of any of its scrap tires or if perhaps any of those tires marked as scrap were in fact still usable.
In this context, it was also at that May 2008 meeting that Lomas said he first reported his concern about scrap tires being improperly tracked and disposed of. Specifically, Lomas said, he told his supervisors that Almaguer had been collecting scrap tires from Janousek even though Almaguer was not registered with the TCEQ to do so. That concern was apparently never investigated. A year later, Calk would insist that once the tires leave Fleet Services, they are no longer the city's responsibility – a fundamental misstatement of state law, which requires the original purchaser to track the tires to their ultimate disposal.
"Gerry [Calk], I've turned in documentation [related to the scrap tires], and I gave them to you guys, and you chose to take them that nothing is happening," Lomas told Calk during an Aug. 24, 2009, meeting that included Fleet HR manager Huckabee and Fleet Operations Manager Schmidt, which Lomas recorded. "I think it is a liability on the city's behalf because of all the dumping we've been doing of discarding these tires improperly. And we're talking about thousands of tires that have been dumped, and we're liable for them."
Calk responded, "As long as we are paying a contractor who is registered ... to pick up those tires, who he has come and pick them up under his name is irrelevant to us." Lomas insisted that the city was on the hook for those tires, including their disposal, but Calk disagreed. "Well, they are disposed of when the contractor picks them up for us. If we've got a manifest from a contractor saying they are licensed to do that, showing that they're picked up, our liability [is over]," he said. When Lomas pressed, Calk said he was the "one that's responsible for that" and that if he was wrong he "will take the responsibility."
So far, it does not appear that has happened.
Lomas felt that he had appropriately reported his concerns to his supervisors, but as almost a year passed without any apparent investigation into the issues he'd reported, or even a substantive response, Lomas began to contact officials outside Fleet. In March 2009, he wrote an e-mail to Wynne, saying, "I have not heard anything about the tire issues I reported last May and the abuse appears to be continuing." He was concerned that "hundreds of thousands of dollars" worth of rubber was not "being accounted for," he wrote. "The issues I am referring to can be easily audited and verified," he continued. He says Wynne never responded.
So on May 6, 2009, he forwarded that e-mail as part of his first direct communication with City Manager Marc Ott. "I wish I did not have to write this e-mail, however during an ethics training class yesterday, I was told that I could be held responsible if I gave up and quit reporting illegal acts observed within the City," Lomas wrote. "Mr. Ott you are my last resort." Lomas wrote that he had reported impropriety to his supervisors the year before but had heard nothing in return.
According to Ott's response, it seems that perhaps Lomas wasn't the only Fleet employee with concerns about the way the department was being run: "My my, it sounds like we have some very serious issues in fleet," Ott wrote. "Other fleet employees have expressed various concerns as well. I will look into the issues you have raised." In a postscript, he wrote to Browder that he believed that in light "of the series of recent e-mails" that a meeting should be convened with Ott, Browder, and Deputy CFO Jeff Knodel "to meet and discuss. Please make the arrangements."
Spinning the Wheels
Lomas says he was pleased to hear back from someone at the city who seemed to care about what was going on, and he was more confident that the problems would be addressed. On May 11, 2009, he sent another e-mail to Ott, with a bulleted list of concerns he'd previously reported to his supervisors, allegations that dated back to February 2008. In response, Ott wrote that he would have Knodel look into the matter. Lomas was thrilled: "I don't know how to thank you, I want you to know that I have not given up."
But Lomas would later come to believe that his confidence had been premature. On July 14, 2009, he penned a memo to Ott to say, in part, that Knodel had done little to address his concerns. During a July 1, 2009, meeting with Knodel, for example, Lomas had learned that none other than Janousek had been tapped to do the inventory audit to determine if any tires had gone missing. "The investigation for the tire theft and abuse was conducted by the same people suspected of perpetrating the abuse," Lomas wrote to Ott. "To this day not one single person has been held accountable for any of the wrong doing which I reported," he continued. "Mr. Ott you are my last hope within the City ... for obtaining a full and ethical ... investigation and resolution to the wrong doings I have reported." In a response from Ott, to which Browder, Assistant City Manager Michael McDonald, and then-City Attorney David Smith were copied, Ott said he would "take a more direct look into your concerns. I am very disturbed by what you have described." And, again, in a postscript, he addressed Smith directly: "David, please see me re the attached. I am very concerned about the allegations described below."
What exactly happened at City Hall after Lomas' mid-July 2009 e-mails isn't clear.
On Aug. 2, 2009, Lomas again wrote to Ott, this time detailing a conversation he'd had with Almaguer about problems at Fleet. The previous week Almaguer had called Lomas to share a series of recordings of conversations between Almaguer and Janousek that Almaguer had made. Almaguer also confirmed for Lomas that he was not registered with TCEQ to handle scrap tires and that he had a "stockpile" of scrap that would cost thousands to dispose of. And Almaguer leveled a host of other allegations against Janousek – including that Janousek had "rigged some of the information on the tire service [contract] bid sheet" in order to give unfair advantage to "one of the bidders," Lomas wrote to Ott.
In a recent phone conversation with the Chronicle, Almaguer repeated his claim that the tire-service contract, which Almaguer previously held, had been rigged by Janousek. Almaguer says Janousek told him that he put into the contract a "fake tire size" – listing a real tire but one that the city never uses, in order to allow a knowing vendor to offer an artificially low repair price on that tire, thereby lowering the overall bid.
Janousek's attorney, Andrew Williams, denies that Janousek was involved in any bid-rigging. In fact, he said that Janousek repeatedly reported to supervisors, mostly via e-mail, his concerns with the scrap tire program and other issues in Fleet. Janousek hasn't yet been able to prove that, however, because the city – citing the pending investigation – has declined to release the e-mails in question, Williams said. Instead of protecting his client, Williams said, the city has made Janousek a scapegoat for its Fleet problems. "Basically he is a fall guy for the city and a fall guy for Vic [Almaguer]," he said. According to Williams, Janousek is nothing more than a "hardworking, blue-collar guy who has been through a lot and wants to help people when he can; he does the right thing."
When Lomas wrote to Ott about Almaguer's charges, Ott again responded by saying he was "very very concerned" and he would "assure" Lomas that "we are going to get to the bottom of it."
As far as Lomas could tell, that did not happen. This week, city officials told the Chronicle that they had "never received an allegation that the tire service contract ... was rigged to favor a specific vendor."
On Aug. 24, 2009, Lomas was called to a meeting with Calk, Schmidt, and Huckabee – a meeting that Lomas recorded. The subject of the meeting was not Lomas' complaints but rather to reprimand Lomas for being "confrontational and unprofessional" during a May 2009 contract bid-evaluation meeting. During the meeting, Lomas had made a flippant comment to Janousek about what seemed to Lomas a hostile reaction to news that a Janousek-preferred vendor had not gotten the tire-replacement contract. Lomas received a formal written reprimand for allegedly being rude to Janousek. (Janousek was also reprimanded for his behavior at that meeting.)
Perhaps it was just a coincidence of timing, but to Lomas it seemed that the reprimand, the second he received last year for being "confrontational," was retaliation for his continued reporting of problems inside Fleet. That's what he told Ott in an Aug. 26, 2009, e-mail; Ott responded that he understood Lomas' frustrations. "I assure you that these matters are being investigated in the most serious way," he wrote. Lomas replied once more, to offer Ott additional information about possible improprieties in Fleet. This time, Ott's response was more circumspect: "Please be advised that I have asked the City Attorney to lead this investigation. I must now ask you to direct any future information regarding this matter to our City Attorney David Smith."
In a follow-up e-mail, Ott insisted that Smith was "fully engaged and committed to getting this matter resolved" and asked Lomas not to e-mail him directly any more. "Since at some point, I may be required to make decisions regarding your allegations and complaints, it is important that the investigation proceed independent of my involvement until I am presented with the City Attorney's findings and recommendations."
Lomas did pass information along to Smith expressing his concerns about problems in Fleet and about his feelings that he was being retaliated against for reporting the possible wrongdoing. Notably, he told Smith about the recording he'd made of the Aug. 24, 2009, meeting with Calk and other Fleet officials, and during a sit-down meeting on Feb. 5 of this year, Lomas says, he played the tape for Browder and then Assistant City Attorney Lee Crawford.
Still, nothing seemed to be happening. One month later, Smith wrote a memo to Lomas to say that he and Crawford had determined that Lomas' complaints about retaliation were without merit and that a "criminal investigation" of Fleet's "Operational Issues" was pending. If they needed any additional information from Lomas, they'd let him know, Smith wrote.
In May, following a very public controversy over his handling of the KeyPoint Government Solutions report into the Nathaniel Sanders II police shooting, Smith abruptly resigned his position.
Since then, Lomas has heard very little from the city about any of the allegations he's made, and he's concerned that the city still isn't fully committed to weeding out the problems at Fleet. Janousek may be gone, but Lomas believes that he was in part a scapegoat, a way to avoid having to make any real systemic changes that would prevent these kinds of problems from happening again. For example, he said that even though he'd played the tape of the recorded August 2009 meeting with Calk for city officials – the recording in which Calk tells Lomas that the abandoned tires aren't the city's problem to worry about – when Lomas later spoke with an Austin Police Department detective assigned to investigate the various problems at Fleet, Lomas was surprised to learn that no one at City Hall had bothered to tell APD about the recording. If Lomas hadn't contacted APD, he wonders, would the police ever have known the recording existed?
Asked about Lomas' recording, city officials released a statement saying "the part of the recording we heard didn't appear relevant to APD's investigation." They also claimed that Lomas hadn't provided the city with a copy, yet when Lomas wrote Crawford offering to provide one, he was told just to "hang on to it."
Although it's been more than two years since he first began reporting possible wrongdoing inside Fleet Services, Lomas is, amazingly, still determined to see the investigation through to the finish. Indeed, he said the reason he came forward to provide his e-mail correspondence to the Chronicle is that he was surprised that officials at Fleet and various officials in City Hall had told us last winter that our report was the first they'd heard about the scrap tire problem. "When I first saw that article you wrote, I thought that was crazy," he said recently. "I'd been telling Jennifer [Walls] since May 2008, and I'd just talked to Gerry [Calk] and Sharon [Huckabee] and Irvin [Schmidt] in August" about the problems, "and I told them exactly what the law was and what we were supposed to be doing," he continued. "So I thought that it was just crazy that they would say that."
In the end, Lomas said, he most wants to see Fleet run efficiently and honestly. "Fleet is made up of a lot of good people – really good people. Most want to do the right thing," he said. "But the way the city has handled this ... where things are hidden and nothing really happens to people responsible for wrongdoing" sends a bad message. "What I'd like to see is something major happen where the people on top realize that the city is not going to stand for this," he continued. "We have to have a transparent business that says this is not right and this is not acceptable. And right now, that's not the way it is."
City officials responded to Chronicle questions for this story via a prepared statement, and CFO Leslie Browder released a memorandum to City Manager Marc Ott concerning the matter.
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