A 120-page report released Monday traces the Palo Alto Police Department's 11-month investigation into suspected embezzlement at the Children's Theatre, revealing new details and Sgt. Michael Yore's conclusions about the case.
"This is primarily a case of 'skimming' over prolonged periods of time," Yore wrote.
The report, authored by Yore and dated May 15, lists four suspects: Theater Director Pat Briggs, Assistant Director Michael Litfin, Costume Supervisor Alison Williams and Program Assistant Richard Curtis.
The names of Williams and Curtis were redacted before the report was released by the City Attorney's office, following Public Records Act requests by the Weekly and Palo Alto Daily News.
"While I did not find the suspects driving expensive cars or wearing expensive jewelry, the suspects who benefited personally from the thefts take personal vacations every year that may be regarded as 'very nice' to destinations including Hawaii, Fiji, New Zealand and Australia, probably using city funds," Yore wrote.
The report includes several strong statements about Briggs and Litfin.
"Briggs' and Litfin's pattern of conduct is to lie by omitting material facts and to provide false and/or misleading data to decision-makers they interact with," Yore wrote.
"Briggs used her status in the community, theater constituencies and long standing with the city to deter and dissuade internal scrutiny, questioning and auditing of her financial practices," Yore wrote.
Briggs' attorney, Jon Parsons, cautioned that the report "is something that needs to be read carefully and closely. This is the opinion of one person."
A June 2007 burglary of the theater sparked the embezzlement investigation, which began when police learned that traveler's checks had been stolen from the theater but not reported by theater staff.
Police suspicions about mishandled money didn't become public until Jan. 24, when the theater was abruptly closed and Briggs, Litfin, Williams and Curtis were placed on paid, administrative leave.
Litfin died Feb. 1 and Williams is back at work, although she may still face discipline. The city has announced its plans to fire Briggs and Curtis.
The criminal investigation was concluded May 15 and Police Chief Lynne Johnson announced that no one would be charged with a crime.
Yet in his May 15 report, Yore states that he has numerous leads to pursue.
He did not interview Litfin, Curtis or Williams after Jan. 24 and has also not interviewed any members of the Friends of the Palo Alto Children's Theatre, a non-profit that supports the theater, because they refused to be interviewed without the Friends' lawyer present.
"I believe the board members would not be allowed to express true candor about the operation of the Friends organization with (their attorney) present," Yore wrote.
Yore says that Litfin, Curtis and Williams "declined to speak with police." He then states: "It was ill-advised to interview the suspects prior to their administrative leave in order to protect the financial records being stored at the theater."
The Friends are integral to several parts of the criminal investigation, including costume sales, funding of the theater trips and the staging of "extra" performances to raise funds.
The case has six components. None are new, yet the report includes extensive details and even chronicles Yore's daily activities.
First, Briggs and Litfin requested monetary advances from the city before trips they took children on to Atlanta and Southern California. They usually converted this money into traveler's checks, which they said they used to pay for expenses incurred by using their personal credit cards.
The Friends and parents of participating children paid for the trips, Briggs has said.
More than $10,000 in unused checks accumulated in the theater offices and Briggs' and Litfin's homes, however. Briggs and Litfin deposited $957.20 from these advances into their personal accounts between 2001 and 2003 and did not use them to buy traveler's checks, Yore writes.
Yore said he has no evidence Briggs or Litfin used their personal credit cards on the trips or that parents paid for the trips. He also has no receipts from the use of the cash advances.
Briggs continued to request additional money from the city for each trip even though she had thousands of dollars of leftover traveler's checks and a city credit card available, the report states.
"I believe Briggs did not use the traveler's checks from previous theater trips because she and Litfin planned on using those checks for personal purposes once the city destroyed the backup pertaining to the city-issued cash advances they used to purchase them," Yore wrote. That happened after seven years, a policy with which Briggs was familiar, he said.
In a Jan. 24 interview, Yore said he asked Briggs if she had any traveler's checks in her house. She said no, according to the report.
A subsequent search of her Palo Alto home found $1,910 of traveler's checks — about half came from the theater's 2003 trip to Atlanta, the report states.
A second track of the investigation focused on the theater's nearly annual costume sales, held since at least 1985. The sales raise money for the Friends through the sale of used children's theater costumes.
The costumes belonged to the city and proceeds from their sale should have gone to the city, not the Friends, Yore asserts.
The report states that theater staff inappropriately declared the costumes "surplus" because the sales raised about $4,000 each year and anything worth more than $150 should be reviewed by an Administrative Services Department supervisor.
The sales differ from the books sales hosted by the Friends of the Palo Alto Library because the books sold do not belong to the city and the library's Friends give the money "directly to the city," the report states.
Community Services Director Richard James also told Yore in a Nov. 7, 2007, interview he wasn't sure if the costume sales were consistent with the city's policies.
The report also says that James "made a false statement" when he said the city's public/private partnership policy allows the costume-sale proceeds to go to the Friends.
A third theme of the investigation related to staging "extra" performances to raise money for the Friends.
"Briggs and Litfin authored fraudulent 'revenue' contracts, without their supervisors knowledge, to facilitate giving city funds to the Friends. " Yore wrote.
The report cites two of these contracts, from 2001 and 2002, which directed up to $10,000 each year, plus revenue from additional performances, to the Friends.
Assistant City Attorney Don Larkin said the contracts were illegal, Yore wrote.
Larkin told Yore only the City Council could approve a gift of public funds and the City Attorney's office would have needed to review the contacts. Larkin said he found no evidence any attorneys had reviewed the contracts, which had been signed by Briggs, but not by any of her supervisors.
The contracts were filled out incorrectly and were not the proper forms, either, Larkin told Yore.
"Larkin's assessment of the contracts was that both contracts generally are gifts of public funds, which would be illegal," the report states.
In addition, when Administrative Services Director Lalo Perez learned of an extra performance in 2004, the proceeds of which were directed to the Friends, he confronted Briggs, according to the report.
"And I said to Pat, 'Well, Pat, we can't do that. And given that it's relatively a small amount, what's done is done. So we've just got to move forward and I need you to stop this," the report quotes a Sept. 10 interview with Perez.
Perez told Yore he felt confident, given "her stature in the community and all the work and output," that telling Briggs to stop, and notifying James, would be enough to ensure no money from additional performances was given to the Friends again.
In a Jan. 24 interview with Briggs, she told Yore the last time an extra performance was used to raise money for the Friends was "probably about nine, ten years" ago.
"Now, if we had a show, it would go to the city's general fund," Briggs said.
Yore said he had evidence of at least one extra performance as recently as 2005 where money was used to pay for a theater trip and "numerous other extra performances that are still under investigation."
Briggs' habit of submitting receipts to both the city and the Friends was the fourth component of the investigation.
"I discovered 126 separate receipts for which Briggs submitted and received reimbursement form both the Friends and also from the city," Yore wrote.
"This is a theft of $6,863.32," the report states.
Briggs also triple-dipped and even quadruple-dipped, according to the report.
Briggs submitted 21 of the receipts to the Friends twice and once to the city, Yore reported. The Friends paid her three times and the city paid once for three receipts, the report states.
The fifth part of the investigation focused on the 2003 trip to Atlanta.
Yore alleges that $18,857 of city money was inappropriately used for the trip taken by five staff members and 26 children.
He said $6,440 came from improper costume sales and $5,410 from wrongful use of money from extra theater performances. Yore said both the sales and performances served to funnel city money through the Friends back to the city. Briggs and Litfin also requested an advance payment for $14,515.50 for the trip's ground transportation, U-Haul rental, food, T-shirts, hotels and other expenses, Yore reported.
In the request for an advance, Briggs wrote: "Records of expenditures will be log(g)ed. Receipts will be secured. The money expended will be repaid to that account from donations from parents, fundraising efforts and underwriting by the Friends of the Children's Theatre," the report states.
Briggs and Litfin did not use $7,620.96 of that advance but did not return it to the city or use it during subsequent trips, the report states.
They also didn't provide receipts of trip expenses, Yore said.
In addition, "there is no documentation in the city to substantiate that parents paid the city directly for the Atlanta 2003 trip," the report states.
The final section of the investigation focused on the 2005 Atlanta trip, which included six theater staff members and 25 kids.
Although theater staff contracted with a travel company for an "all-inclusive" package, Briggs requested $2,914 from the city in advance to pay for extra meals and a tip for the bus driver, the report states.
Only one meal was not included in the package and the travel company paid for the tip, Yore wrote.
In addition, Briggs and Litfin still had $10,460 in traveler's checks left over from previous trips, the report states.
This trip also used $2,030 of revenue from an "extra" performance that was given to the Friends, Yore said.
In addition, Briggs kept the $986.58 left over and "used $1,783.42 from the cash advance to pay participant expenses in violation of city policy."
The report states several times that "there is significant evidence" Briggs stole money from the city of Palo Alto and inappropriately gave it away. Yore also writes he has "significant evidence" that Litfin, Williams and Curtis have also broken laws.
Yore wrote that he assigned himself to the case on June 25, 2007, after "realizing that Briggs had not reported any traveler's checks missing and after further analysis it appeared City of Palo Alto funds were being deposited directly into one of Briggs' twelve bank accounts."
The report also features state Sen. Joe Simitian, Palo Alto Mayor Larry Klein and City Council member Jack Morton.
Yore writes that he was unable to interview Morton, the accountant for the Friends, due to both Morton's and his own scheduling conflicts.
A section titled "Follow-up" includes five questions Yore would like to ask Morton, including "why he did not report to the city that tens of thousands of dollars of city funds were being siphoned out of the city's general fund (from the costume sales and extra performances) and were being given to the Friends?"
Yore also wanted to know why Morton did not report the "fraudulent contracts (according to Assistant City Attorney Don Larkin) arranged by Briggs and Litfin with the Friends (that) were being used to embezzle money from the city."
Morton has been an outspoken critic of the investigation.
Klein became involved in his role as the attorney for Litfin's estate. Simitian, the executor of Litfin's estate, discovered $3,050 in traveler's checks in Litfin's house that had not been found by police officers during their search.
Simitian gave the checks to Klein, according to the report.
"Initially, Simitian and Klein were reluctant to turn the checks over to the police. " the report states. They turned the checks in Feb. 8, Yore said.
At its June 9 meeting, the City Council is expected to decide whether to hire an outside auditor to investigate the Police Department's handling of the Children's Theatre investigation.
View the police report (PDF)