Calling for a thorough inquiry into the criminal investigation of the Palo Alto Children's Theatre, the City Council voted 8-1 Monday night to expand the workload of the city's independent police auditor.
The probe must be broad enough to examine fully the 11-month police investigation into suspected embezzlement by theater staff, Mayor Larry Klein said.
City Manager Frank Benest, after a discussion with police auditor Michael Gennaco of the Los Angeles County's Office of Independent Review, proposed an inquiry that would examine whether the Police Department's investigation was warranted and if the police responded appropriately throughout the investigation.
The auditor would review documents and interview police and Santa Clara County District Attorney's Office personnel, Benest suggested in a brief staff report.
That isn't nearly enough, the council voted, with some members citing specific questions.
"I don't like the idea of an investigation that's constrained from the start. Then people on either side can say you didn't do enough," Klein said.
Councilman Yiaway Yeh was the sole vote against the review.
An after-the-fact analysis that might produce distasteful results won't help resolve the community's current angst, he said.
"Our hearts are focused on a separate process that is beyond the purview of the council," Yeh said. "An investigation of an investigation will not have an effect on that."
Instead, the city should look forward, ensuring that its procedures and policies won't allow the financial slips behind the entire episode to recur, Yeh said.
Councilman Greg Schmid also proposed commissioning a non-police auditor to examine general city procedures.
The mystery is why should the police find the financial problems, he said. "Why didn't our policies and procedures find that?"
The council rejected his proposal on a 7-2 vote, with Schmid and Yeh voting yes.
City Attorney Gary Baum and the council's Policy and Services Committee will negotiate a contract with Gennaco that broadens the scope of the audit so Gennaco can interview other city staff members, board members of Friends of the Palo Alto Children's Theatre and others, Klein said.
The police auditor team does not usually conduct independent investigations -- it usually only reviews existing work, Baum said. The city will need to prepare a separate contract with the auditor for this assignment, he said. No cost estimates for the work have been prepared.
Klein said he would like to work directly with the auditor to understand his limitations and concerns.
The police auditor will report directly to the council, Klein said.
The council on May 19 decided to consider reviewing the criminal investigation of the theater and its staff members, primarily Director Pat Briggs and Assistant Director Michael Litfin, who died Feb. 1.
Police Chief Lynne Johnson announced the criminal embezzlement investigation was over May 15 and that no one would face charges, following a decision by the Santa Clara County District Attorney's Office.
Morton -- an outspoken critic of the investigation, whose name appears several times in the police reports as accountant for the non-profit Friends group -- began Monday night's debate by expressing his support for an audit of "this whole sordid affair."
His language troubled Councilman John Barton.
"Your motion presupposed there was a problem that needed to be investigation," Barton said.
He said he could only support the audit if the goal was, "Let's go find out and see if there is a problem."
Morton said he was open to whatever conclusions the auditor reaches.
"The answer might be there was no problem, everything is as it should be. That's what the community will have to hear," Morton said.
Baum said he will work with Gennaco to communicate the council's goals for the probe. Gennaco would then meet in person with the council.
Benest also said in his written report that he plans to hire an independent accountant to review the city's handling of cash, expense reimbursement and travel policies and procedures.
Councilman Pat Burt said he would like the council to consider hiring an outside consultant, reporting directly to the council, to review the city's errors and existing policies and procedures. The city did not ask theater staff for receipts, approved two "fraudulent" contracts giving money from the city to the Friends and reimbursed Briggs for the same purchases more than once, according to police findings, some of which have been challenged by the Friends group.
That issue will be discussed at a future meeting, Klein said.
Theater supporters continued their weekly testimony on the important contributions and high moral character of theater staff. Briggs and Program Assistant Richard Curtis are facing a recommended termination under an administrative investigation separate from the criminal probe.
The council adjourned at 12:50 a.m. Tuesday.