The Children's Theatre may have warranted an investigation but the case could not be prosecuted because of its complexity and serious gaps and flaws in evidence, according to Steve Lowney, the deputy district attorney closest to the case.
Since November Lowney has met regularly with Palo Alto detectives, he disclosed in an interview with the Weekly.
He said he has reviewed "a good portion" of the investigation and evidence, and outlined to detectives what they needed for formal charges to be filed to take the case to court .
But despite his close familiarity with the case, Lowney said he is still puzzled by it.
"I can't explain what was going on (at the Children's Theatre). I don't know," he said.
The huge practical reason why the investigation had to be dropped was the need to be able to explain it simply to a jury.
"I have to come up with something I can explain to 12 people in five minutes. If I can't do that, there's nothing there," Lowney said. Lowney is the one-person Government Integrity Unit of the Santa Clara County District Attorney's Office.
Police Chief Lynne Johnson Thursday announced via press release that no one would be criminally prosecuted despite there being evidence of "significant instances of serious financial misconduct and other possible criminal activity."
In his meetings with detectives, Lowney said he outlined relevant legal theories and types of evidence needed to further prosecute the case.
The department just doesn't have that essential evidence, he said.
"'This is a real strange case' is not a good theory. It's just not going to fly," he said.
While investigating a June burglary at the theater, Palo Alto police learned that $3,600 in traveler's checks made out to Director Pat Briggs, Assistant Director Michael Litfin and Costume Supervisor Alison Williams had been stolen during the burglary.
Briggs had not reported the checks missing, police say, although her attorney has disputed that.
Additional traveler's checks were found in the theater and in Briggs' cluttered office.
Officers learned about the theater employees' odd accounting system, which involved accepting cash advances from the city for out-of-town trips, using the money to buy traveler's checks, then using the checks to compensate themselves for official purchases charged to their personal credit cards.
This practice continued even after the employees were issued city-approved credit cards for authorized purchases, according to search warrant affidavits unsealed April 29.
The trips are paid for by parents or scholarships from the non-profit Friends of the Palo Alto Children's Theatre, theater supporters say.
But when police began to track the expenditures, they found gaps.
Briggs told them that she had checked with a city employee, who told her the city didn't want any leftover money from the trips back, after the city's advance was reimbursed from funds from parents or the Friends group. .
Briggs' attorney, Jon Parsons, said Briggs could have talked to someone as much as 20 years ago. Briggs has led the theater since 1961.
But when police checked with the Community Services Department and financial staff members, and were told they never said to keep the leftover checks, they believed they had caught Briggs lying.
The presence of thousands of dollars worth of traveler's checks "certainly warranted" a criminal investigation, Lowney said Thursday.
"There's just no doubt about it. It would have been negligent not to pursue it in that way, in my opinion," he said.
But the fact that the checks were still around the office seems to negate an intent to steal them, he noted.
"It was a very, very odd set of facts. I've never heard of anything like it," Lowney said. "It doesn't sound right, so you want to get to the bottom of it and there were conflicting statements" made by theater employees," he said
Lowney has been with the District Attorney's office since 1994 and specialized in fraud until recently.
Lowney said two crimes seemed possible in the Children's Theatre situation: embezzlement or misappropriation of public funds.
Embezzlement requires a public official to use public money for a personal use, "with the specific intend to deprive the public entity of the money." That crime has no statute of limitations and could result in three years in prison on each count.
Misappropriation of public funds is the unauthorized use of the money, without a specific intent to steal. It has a four-year statute of limitations and could result in four years in prison on each count.
In her statement Thursday, Johnson said the investigation would be discontinued because of "the statute of limitations issue together with the reduced likelihood of reaching the high burden of proving criminal activity beyond a reasonable doubt. …"
But Lowney said several other factors were the primary reasons the case wouldn't make it in court.
First, in order to show wrongdoing, investigators would need proof that the theater employees used the traveler's checks for personal purposes, Lowney said.
"They weren't used, period. That was odd. There's no doubt that was odd and certainly warranted an investigation," he said.
In addition, the thousands of dollars worth of traveler's checks were found at the theater.
"That's city property. It never left city property. That's very unusual," Lowney said.
"You have to get up in court and say 'This woman stole money from the city,'" Lowney said. "Well, they actually were never cashed. When you hear that somebody stole money from the city that never left the theater. …
"By that time, it's apparent you don't have a case beyond a reasonable doubt."
Briggs' and the other theater employees' stellar reputations would only be relevant if prosecutors were trying to demonstrate "intent," Lowney said.
If the proof was weak, it would be much easier to convince a jury that someone with three prior convictions for theft was guilty rather than a "person (that) has an entire life of no record for theft and for all intents and purposes has been an upstanding member of the community," Lowney said.
In fact, Briggs' reputation would even help her out of another potential charge, Lowney said.
On Thursday, Johnson said she has proof that on 150 occasions Briggs received money from both the non-profit Friends group and the city for the same purchases.
"There's no doubt that that occurred," Lowney said.
But the Friends would likely say that Briggs made a mistake and ask her to pay back the money, Lowney said.
"So you have no victim," he said. "That's what I found was difficult."
But the discovery of the double payments provided additional motivation to continue the case.
"You see that conduct and it can't be ignored because it did in fact occur," Lowney said.
During the investigation, police had focused on the theater employee's spending and trips between 2000 and 2004 because there were no records during that period, Lowney said.
"After 2004 (Briggs) turns in receipts, before 2000 she turns in receipts," Lowney said. "It's a huge gap."
An individual can't be convicted of misappropriation if he or she had permission or authorization to use the money, Lowney said.
And Lowney said he has "pretty good proof" the city never asked for any receipts or other documentation from theater staff during that period.
"For example, if (Briggs) says, 'I thought I did turn in receipts' or 'I was told I didn't have to turn in receipts,' how can I disprove that?" Lowney said. "There are no receipts and no demand for follow-up."
The city is "not denying that either," Lowney said.
To prosecute, Lowney said he would have to prove the employees used city money for their own personal purposes.
"You have to come up with a real, provable theory as to why the checks were sitting there," he said.
He doesn't have a theory and even after reading all the materials, Lowney admitted he "can't explain what was going on. I don't know."
Reached Thursday, City Manager Frank Benest admitted the city had erred.
"There should obviously have been stronger efforts to ensure that they turned in receipts and that was not done. That's quite clear," Benest said.
Benest said he doesn't think the accounting gaps extend beyond the Children's Theatre, however.
"No, I do not believe so. I cannot comment further than that."
work, Richard Curtis is recommended for termination