S.F. to return $5.2 million in federal funds
Jaxon Van Derbeken, Chronicle Staff Writer

Friday, October 17, 2008

(10-16) 17:44 PDT SAN FRANCISCO --

San Francisco officials have agreed to pay back $5.2 million in federal grant money the city now admits it was not entitled to under a U.S. program to compensate local law enforcement for fighting border crime.

The U.S. Justice Department audited its Southwest Border Prosecution Initiative grant program last year and concluded that San Francisco - through a private consultant - had applied for money it was not entitled to claim for prosecuting cases for federal authorities and incarcerating defendants.

Rather than basing its claims on specific cases that federal officials referred for local prosecution, as required by the program guidelines, the city and its consultant determined that the city should be paid for 30 percent of all drug-related prosecutions.

Under that formula, San Francisco received reimbursement for 2,300 cases. The city agreed this week that it was entitled to money for only about 5 percent of that total.

The city got $3.7 million in fiscal 2006 alone under the program, more than any other local jurisdiction in the country.

With the audit findings in hand, U.S. Attorney Joseph Russoniello sent a letter to the city in February demanding the $5.7 million that the city received from 2004 to 2007.

After initially disputing the audit's findings, the city agreed in February to pay $2.7 million immediately and sought more time to come up with a list of cases that federal authorities had actually referred to San Francisco agencies.

Federal officials reviewed that list and determined that only 126 cases were valid under program guidelines. That meant San Francisco was entitled to just $522,000 out of the $5.7 million it got in grants.

San Francisco officials have now agreed to pay back an additional $2.5 million, making a total of $5.2 million that the city will have returned to the federal government.

The city's applications for the program were filed by a private consultant, Brad Burgess, who was paid $145,000 out of the grant proceeds. The city has since recouped the money from Burgess.

Several other jurisdictions that submitted grant applications under the program through Burgess are also subject to federal audit, authorities said. Burgess has refused comment.

In San Francisco, the district attorney's office and Sheriff's Department split the federal grant payments. The city had originally determined that it deserved funding for nearly a third of its drug-related cases because narcotics trafficking makes up a large chunk of border-related crime.

District Attorney Kamala Harris said earlier that she had opened an investigation to get to the bottom of what happened. Her office has since established safeguards and review procedures for grant reimbursement applications, said Erica Derryck, a spokeswoman for Harris.

She said the city "detrimentally relied on an outside consultant" and that "the reimbursement submitted under his guidance did not meet the federal program guidelines."

Derryck said the city had worked independently of Burgess to come up with its list of valid claims and correct what the office acknowledges were errors.

She said that "as an office, we were not vigilant in checking the federal criteria through independent sources."

The grant program involved multiple agencies and had ambiguous guidelines and "short turnaround times for submissions," Derryck said. Nevertheless, she added, "we should have had in place the centralized structure we have now adopted."

Russoniello was not available for comment.

www.sfgate.com