Posted by Charles Marsala, a resident of the Atherton: West Atherton neighborhood, on Oct 4, 2008 at 10:27 am

As a council member since 2002, I have a fiduciary responsibility to the residents of Atherton and a moral responsibility to provide them with transparency. As Mayor in 2006, I was aware of the undermining Finance Director John Johns was doing to the Building Official, Police Chief, and City Manager. I also became aware of incorrect financial practices that were in place, some I had voted for, believing the presentations I was given earlier. Others were discovered either by a staff member advising me of a problem or later validating if council direction was being followed.

The first to come to light was the Off-Haul Fee, presented to the council by John Johns in March 2005. In June 2006, shortly before he retired Building Official Mike Hood informed me he thought it was illegal and council should address it. In September 2006, council refunded all funds collected with interest.

Last year I was informed by Interim City Manager Wende Protzman, that the 2003 re-engineered Business License Fee designed by John Johns and approved by council is double-charging residents in certain areas. In other areas it is charging more than justified. The new Business License Fee has increased revenues by more than $150,000 a year. Soon the council will take action on this. Refunds are due to residents and those who paid for the Business License Fee Permits.

For the last four years, I have been on the Town Facilities sub-committee. As I began working on the financials for the Town Center Project, I remembered back in May 2000 that Mike Hood proposed to council that permit fees be increased from $110 per square foot to $250 per square foot. This was shortly after the second defeat of the Parcel Tax in March 2000. Council approved.

Mr. Hood proposed that $146,000 annually of Building Department revenue go towards the Town’s Administrative budget, for services rendered to support the Building Department. The Building Department had been relocated to trailers in 1998, he proposed that $200,000 a year be set aside for a permanent building.

During the next six years of his tenure with the town the Building Department had substantial surpluses. A surplus is defined as revenues minus expenditures.

Year Surplus

2001 $1,235,903

2002 507,625

2003 394,309

2004 479,816

2005 587,863

2006 292,511

Total 3,498,027

Finance director John Johns placed these surpluses in the General Reserves, where they have grown with interest. It appears he did not deduct the $146,000 per year for Administrative overhead. Which reduces the net to $2,622,027.

As I have researched this situation. I have been advised that State Law prohibits a city or town from making a “profit” on Building Department operations and restricts how those funds can be used. With proper cost accounting the overhead might be greater than the $146,000 per year. However when I see the surplus of $1,235,903 for 2001 alone, I realize that a large amount of funds placed in the General Reserves since 2001 may be at risk as they come from the Building Department surpluses.

Whether or not this qualifies as and Investigation or just doing my council and committee assignment, identifying and solving the problem needs to happen.

John Johns’ current Freedom of Information Request contains a binder I gave to the Interim Finance Manager in January of this year, more than five months after John Johns was placed on leave in August 2007. The binder contains John Johns credit card statements, three concerning purchase orders, and comments regarding requests by the City Manager for him to change days he was not in the Atherton Office to either vacation days or sick leave.

The compiling of this information resulted from a front page story in September 2007. Our auditors pointed to concerns with Atherton expense documentation. Although having been placed on Administrative leave prior to that meeting, John Johns contacted the press and pointed to three glasses of wine the Chief of Police had with meals while attending a conference. The wine turned out to be the dinner salads.

This distracted the press from what was on John Johns Atherton Credit Card: an Ipod, two cameras, multiple meals exceeding $50 with no documentation, flowers, internet dating services, subscriptions, and Commonwealth Club fees, to name a few. On at lease one occasion City Manager Jim Robinson had Mr. Johns reimburse the town.

I noticed an extra person in town hall and was told that John Johns had brought in his neighbor to do some work. This was done by issuing two purchase orders to his neighbor totaling over $20,000; any purchase order over $15,000 needs council approval. I received requests from residents to make the information public. I presented the binder to the Interim City Manager in January 2008. Some residents have asked for copies of the binder.

In April 2008, the GAO issued a report discussing Government credit card abuse with the same items as those found on John Johns’ credit card. The council has asked to discuss improving financial controls at a future meeting.

The history of this ordeal:

In November 2005 John Johns went to City Manager Jim Robinson, concerned that it had been inappropriate for the Building Department to tell residents of the off-haul fee increase prior to the May 17, 2005 effective date. In December Mr. Johns proceeded to get into a shouting match at the Building Department on this issue, and filed a complaint with Jim Robinson.

In January 2006, Jim Robinson brought in a personal investigator who interviewed more than twenty people. After the investigation Jim Robinson was satisfied that Building Official Mike Hood had acted appropriately and resolved the matter. On June 28, 2006 John Johns undermined Jim Robinson, bypassed the full council, and went directly to the press at a meeting 48 hours before Mike Hood was to retire, claiming Mike Hood showed favoritism with the implementation of the Off-Haul Fee.

This became known as the Phase One Audit. A few weeks later John Johns would issue a Phase Two Audit. In August the full council voted in favor of a Phase Three Audit. At that point I felt a no vote, would indicate a lack of interest in transparency.

Based on information supplied solely by Mr. Johns to the Grand Jury, they issued a report in February 2007 that only 63 out of 189 building permits had been inspected by Menlo Fire for fire in Atherton. In fact, Menlo Fire reported they inspected 226 out of 257 permits and 100% of the applications since the sprinkler ordinance passage had been inspected for fire. The other permits had been deemed minor and had been inspected by the Atherton Building Dept.

The Council’s response to the Grand Jury was termed “defiant”. The Grand Jury called and requested on May 2, 2007 from Jim Robinson building permits on council members. On May 3, 2007; John Johns without Jim Robinson’s approval sent an email to an outside attorney with information concerning those files. On May 8, 2007 John Johns forwarded to Jim Robinson a copy of the email, he had sent to the attorney. That day Jim Robinson retired. When I asked him why, he said “this is never going to end.”

Starting in September 2006, John Johns would claim “Whistleblower” protection and threaten to sue the town whenever challenged by managers for not coming into work. John Johns sent an email to Jim Robinson discussing a situation regarding a challenge to John Johns’ time card.

In mid August 2007, a female staff member came in crying about comments John Johns had made. Her son was in intensive care after being hit with a baseball. She reported that John Johns had remarked to her that he knew where there was a sale on baseball bats.

Interim City Manager Wende Protzman reviewed with the City Attorney what action should be taken. As this was not the first incident, she decided to place John Johns on leave and have an independent investigation done. Actions resulting from that investigation were deemed appropriate by The Almanac, in an editorial in November 2007.

John Johns currently has dismissed his case against the town with prejudice. Our town has faces many challenges: High Speed Rail, Environmental Awareness, Financial Stability, Recreation Resources, and Zoning and Quality of Life issues. The Council, Staff, and Committees are still addressing these while dealing with John Johns’ claim.

Regards,

Charles Marsala

Council Member

Posted by john p johns, a resident of another community, on Oct 7, 2008 at 8:52 am

Sorry Charlie, you've got it all wrong.

Here's a letter I sent to you and your colleagues on the City Council

October 7, 2008

Mayor Jim Janz

Mayor, Town of Atherton

91 Ashfield Road

Atherton, CA 94027

Dear Mayor Janz:

In your capacity as Mayor of the Town of Atherton, I would respectfully suggest that you consider urging Mr. Marsala to be more deliberate in his statements to the news media.

Certainly Mr. Marsala has a first amendment right to freedom of speech. However, it also stands to reason that, as a member of the City Council Mr. Marsala has an obligation to the Town of Atherton to exercise this right in a way that does not place the Town of Atherton in further jeopardy of financial loss from civil litigation.

To that point I would like to call your attention to certain statements that are inflammatory, and either without any basis in fact or contrary to information contained within documentation that is in the hands of Mr. Marsala .

These statements (with emphasis added in italics to certain portions thereof) are extracted verbatim below along with my responses thereto:

"Based on information supplied solely by Mr. Johns to the Grand Jury, they issued a report in February 2007 that only 63 out of 189 building permits had been inspected by Menlo Fire for fire in Atherton. In fact, Menlo Fire reported they inspected 226 out of 257 permits and 100% of the applications since the sprinkler ordinance passage had been inspected for fire. The other permits had been deemed minor and had been inspected by the Atherton Building Dept."

In reflecting upon the above proclamation by the former Mayor, one may ask how Mr. Marsala derived this information. Did he consult with members of the Grand Jury and if so has he violated the sanctity of the Grand Jury’s confidentiality? I would hope not because it is my understanding that if such were the case, Councilman Marsala could be found guilty of having violated or having conspired to violate California Penal Code Section 924.

"During the next six years of his tenure with the town the Building Department had substantial surpluses. A surplus is defined as revenues minus expenditures….. Finance director John Johns placed these surpluses in the General Reserves, where they have grown with interest. It appears he did not deduct the $146,000 per year for Administrative overhead. Which reduces the net to $2,622,027.

As I have researched this situation. I have been advised that State Law prohibits a city or town from making a “profit” on Building Department operations and restricts how those funds can be used. With proper cost accounting the overhead might be greater than the $146,000 per year. However when I see the surplus of $1,235,903 for 2001 alone, I realize that a large amount of funds placed in the General Reserves since 2001 may be at risk as they come from the Building Department surpluses."

One might ask whether Councilman Marsala, in conducting his research, reviewed the journal entries to account for Building Department proceeds, notably a journal entry prepared at the end of each year wherein the revenues in excess of direct and indirect building Department costs were placed in a reserve for future building inspection.

One might also inquire as to whether Mr. Marsala consulted with the Town’s financial auditors as to whether the accounting treatment for Building Department proceeds was correct. Presumably the accounting treatment was correct or the Town’s independent auditors would have recommended an adjusting entry. For the above reasons, Mr. Marsala should consider sticking to his chosen occupation as a tool salesman, rather than second guessing the judgment of certified public accountants.

"In January 2006, Jim Robinson brought in a personal investigator who interviewed more than twenty people. After the investigation Jim Robinson was satisfied that Building Official Mike Hood had acted appropriately and resolved the matter. On June 28, 2006 John Johns undermined Jim Robinson, bypassed the full council, and went directly to the press at a meeting 48 hours before Mike Hood was to retire, claiming Mike Hood showed favoritism with the implementation of the Off-Haul Fee."

Councilman Marsala suggests that Mr. Robinson appeared to have been satisfied that Building Official Mike Hood had acted appropriately with respect to road impact fees. If such were the case, one might inquire as to why Mr. Robinson directed me to perform a Phase II audit of the Building Department after having completed Phase I. Additionally, since Mr. Marsala has been provided with unrestricted access to my e-mails, he undoubtedly came across an e-mail from Mr. Robinson directing staff of the Building Department to give the Finance Department its full cooperation as it conducted the Phase II audit.

Councilman Marsala also appears to forget that a former building department employee who in her own words is currently “selling stamps at the post office” made public a letter of reprimand issued by the City Manager as a result of Lance Bayer’s personnel investigation for “undermining the road impact fee”.

Finally, Mr. Marsala seems to be unaware of Mr. Robinson’s response when I brought the fee collection problems to his attention in late 2005 to wit:

“If there is a cancer in the organization, we need to cut it out”.

These are but a few errors, omissions of fact and misrepresentations by Councilman Marsala. With such a reckless disregard for the truth, one might ask a question that is more than just rhetorical:

Does Mr. Marsala have the judgment and temperament to serve effectively on the City Council?

Sure it may be a full two years before Mr. Marsala’s term expires, but perhaps now is the time for the voters of Atherton to begin contemplating such matters.

Respectfully submitted,

John P. Johns CPA

Cc: Ms. Andrea Gemmet, Almanac News

Each member of the City Council

Mr. Jerry Gruber, City Manager

Ms. Kathi Hamilton, Interim City Clerk

Posted by anonymous, a resident of another community, on Jan 8, 2009 at 11:51 am

Dear Fellow Anonymous

Here's something else to think about. With all those e-mails flying around from members of the Atherton City Council about wanting to be apprised of Mr. Johns' investigation during closed session, how in the world did they ever think that word wouldn't get out?

________________________________________

From: Carlson, Alan B. [mailto:ACarlson@littler.com]

Sent: Friday, September 21, 2007 10:36 AM

To: Wendé Protzman; mhynes@netgate.net

Subject: Special Meeting

Wendé

I would like to schedule a special council meeting for Oct. 3 or 4 for an update on the ongoing investigation, at 6:00 p.m. Please check availability of everyone concerned.

Also, Marc, given the publicity of the new Grand Jury investigation, would it be appropriate or permissible for the Town to submit a written statement to the Grand Jury concerning the suspension of Mr. Johns and following investigation of his conduct.

Alan

Alan B. Carlson

Littler Mendelson

50 W. San Fernando St., 14th Floor

San Jose, CA 95113

Telephone: (408) 998-4150

Facsimile: (408) 715-0309

Email: acarlson@littler.com

Posted by anonymous, a resident of another community, on Jan 8, 2009 at 12:05 pm

Dear Anybody who might be knowledgeable about the law. What's the Atherton City Attorney doing releasing pursuant to a public records request that has the title Attorney Clent Privilege? Why is the City Council getting a copy of Johns' responses to the questions posed by Mary Topliff? Does this constitute Council interference or is Johns and his lawer barking up the wrong tree?

________________________________________

From: Marc Hynes [mailto:mhynes@netgate.net]

Sent: Monday, October 01, 2007 11:01 AM

To: acarlson@littler.com; raljer@ix.netcom.com; jjanz@sideman.com; cemarsala@yahoo.com

Cc: Wendé Protzman

Subject: Fwd: Atherton

CONFIDENTIAL-ATTORNEY CLIENT PRIVILEGE

I am forwarding the responses to Mary Topliff's most recent questions. Mary will be present at the closed session to answer any questions the Council may have. I have sent the responses to Kathy McKeithen by facsimile transmission along with a copy of Government Code Section 8314 which provides, in pertinent part:

It is unlawful for any state or local officer or employee to use public resources for personal purposes which are not authorized by law. Personal purpose means activities for private gain or advantage, or an outside endeavor not related to state business. It does not include the incidental and minimal use of public resources, such as equipment or office space for persona purposes, including an occasional telephone call.

Public resources means any property or asset owned by a local agency including computers and state-compensated (i.e. public) compensated time.

Use means a use of public resources which is substantial enough to result in a gain or advantage to the user or a loss to the local agency for which a monetary value may be estimated.

The District Attorney may prosecute intentional or negligent violations of section 8314 with a civil penalty liability not to exceed $1000 for each day on which a violation occurs, plus 3 times the value of the unlawful use of public resources.

The person who performed forensic analysis of the hard drives from the computers produced by John will be present at the closed session to report the findings and to answer questions.

Marc

Delivered-To: 7-mhynes@maps.netgate.net

Subject: Atherton

Date: Thu, 27 Sep 2007 17:08:52 -0700

X-MS-Has-Attach: yes

X-MS-TNEF-Correlator:

Thread-Topic: Atherton

Thread-Index: AcgBY8DaTv+7Uah7TuC5c98M6QaXVw==

From: "Louis Leone" <leonel@stubbsleone.com>

To: Wendé Protzman <wprotzman@ci.atherton.ca.us>

Cc: "Marc Hynes" <mhynes@netgate.net>

X-OriginalArrivalTime: 28 Sep 2007 00:08:52.0448 (UTC) FILETIME=[C0959E00:01C80163]

X-pstn-levels: (S:99.90000/99.90000 R:95.9108 P:95.9108 M:97.0282 C:98.6951 )

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X-pstn-addresses: from <leonel@stubbsleone.com> forward (user good) [2945/121]

Attached is Mr. Johns responses to the recent questions posed by Ms. Topliff.

Louis Leone Esq.

Stubbs & Leone

2175 North California Blvd.

Suite 900

Walnut Creek, Ca. 94596

925-974-8600

925-974-8601 (fax)

Posted by Kathleen O'Keefe, a resident of another community, on Jan 11, 2009 at 9:08 pm

To anonymous:

The release of a privileged document destroys the "force field" of the attorney-client privilege, and all other privileged communications on the same subject(s) are discoverable.