Palo Alto police are expected to announce early next week they have dropped the criminal investigation into financial wrongdoing at the city-run Children's Theatre, sources familiar with the case said this week.
Yet Police Chief Lynne Johnson denied that an announcement of the conclusion of the investigation is imminent.
"I don't know who your sources are, but they're way off base — they're way off base," Johnson said. Johnson earlier said an announcement of some type might be made by Friday or possibly Monday.
"The announcement has been put off till early next week, and they [the county District Attorney's Office haven't even seen our case yet," she said of the reports of an end to the probe.
If accurate, the news would come 15 weeks after the abrupt closure of the theater — when Director Pat Briggs, Assistant Director Michael Litfin, Costume Supervisor Alison Williams and Program Assistant Rich Curtis were placed on paid leave — and 11 months after the burglary that launched the investigation.
But several sources asserted the investigation will not lead to charges.
Although Briggs, Williams and Curtis would be free from the threat of criminal prosecution, they could still face penalties — up to termination — from an ongoing, separate administrative investigation that is probing their compliance with city rules and procedures.
The three longtime city staff members are unable to talk to the media, or each other.
"Assuming your sources are correct, that's absolutely the right outcome in this case," Diane de Seve, Briggs' attorney told the Weekly Thursday.
Members of the nonprofit Friends of the Palo Alto Children's Theatre, which has also been involved in the case, were ecstatic.
"We are overjoyed that this nightmare has come to an end," President Paula Collins said in a statement, in response to the news.
"The City of Palo Alto and the Police Department owes the suspended staff, the Friends of the Palo Alto Children's Theatre and all of the theater community an apology for the way the investigation was handled," Collins said.
After keeping the case tightly under wraps for months, hundreds of pages of documents (search warrant affidavits) were released last week, revealing that police suspected at least Briggs, Litfin and Williams of embezzlement.
The Children's Theatre staff members used an accounting system even Litfin had called "screwy," which involved accepting cash advances from the city, depositing the money in their personal accounts, purchasing traveler's checks and then using the checks to reimburse themselves for theater-related expenses.
Litfin died Feb. 1 while undergoing treatment for stomach cancer.
Palo Alto police have been working since November with Deputy District Attorney Steve Lowney of the Santa Clara County District Attorney's Office Government Integrity Unit.
But it is up to the police chief to submit the case formally to the district attorney, who can then decide whether or not to prosecute the suspects, according to Johnson and Lowney.
The Palo Alto police have not submitted the Children's Theatre case formally to the district attorney and were expected to announce Friday they do not plan to, or may drop part of it, such as costume sales.
Johnson said earlier this week the announcement will probably come in the form of a press release.
The affidavits showed that police also suspected the theater staff of illegally selling children's costumes owned by the city.
On Tuesday, Johnson said that the costume portion of the investigation was complete, but she stopped short of confirming that costume allegations would not be pursued.
"You may be right," she told the Weekly.
As of Tuesday, police were still trying to trace whether the theater staff have repaid the city for the cash advances, which were used for trips to events in Atlanta and southern California, Johnson said.
Theater staff members have maintained that trips were paid for by parents and the Friends.
Assistant City Attorney Donald Larkin, who is familiar with the administrative investigation, said Wednesday via e-mail that the city lacks the documentation to show that those involved in the trips repaid the "full amount" of the cash advances.
Johnson said Det. Sgt. Michael Yore, the lead investigator on the case, asked Santa Clara County Judge Douglas Southard to unseal the search warrant affidavits last week because "we decided we're at a point we didn't think that anything could be jeopardized in the investigation."
On Tuesday, Johnson said that she may release information about the timing of the investigation on Friday or early next week.
The administrative investigation is ongoing, Larkin said this week.
He said he anticipates receiving a report from the contracted investigators — David Reuben with Davis-based DR Associates International and Doug Freifeld, an attorney with Fagen Friedman & Fulfrost.
Then, if needed, the city would issue a "preliminary report of discipline," he said.
The employees have the opportunity to meet and discuss the report before the city issues a final notice, which can then be challenged through the city's grievance process.
Williams and Curtis are members of the Service Employees International Union Local 521, and Briggs is a member of the city's Management/Professional bargaining group.
Attorney Jon Parsons, who is representing Briggs for the administrative investigation, said he expects the first report will be issued within two weeks.
Both Parsons and de Seve have emphasized the city's responsibility to oversee the financial management of the theater.
"I do not see any criminal conduct based on what is alleged. Nor do I think there was any criminal wrongdoing. At best, there was poor accounting practices with absolutely no oversight or checks and balances by the City of Palo Alto," de Seve wrote in an e-mail.
"I'm not saying everything was done absolutely perfectly," Parsons said.
"Pat had a mission she was performing. That mission was helping kids and putting on plays. She never refused to turn in a report she was asked to turn in," he said.
"For seven years, no one ever asked for a report. In fact, what that indicates to us is that the city didn't get reports, didn't expect reports, didn't ask for reports. Now I turn around [on the city that seven years: At what point does complacency become complicity?"
Larkin said the city plans to investigate its role in the financial errors.
"There will be follow-up to determine what went wrong and how, most likely," Larkin said.
The timing of the Police Department's announcement next week isn't known. (Staff writer Becky Trout can be e-mailed at email@example.com.