A Bay Area public finance official pleaded guilty Tuesday in federal court to stealing millions of taxpayer dollars.
Clark Howatt, who spent two decades working for the Association of Bay Area Governments (ABAG), admitted that he embezzled nearly $3.9 million from the regional planning agency. The 56-year-old bureaucrat used the money to buy luxury homes and reinvent himself as an art collector, yacht enthusiast and ballet aficionado, according to prosecutors.
ABAG is a joint powers authority dealing with land-use, housing and economic development in nine Bay Area counties, including the entire South Bay. In the plea deal reached this week in U.S. District Court, Howatt confessed that he used his authority as finance director to siphon public money into his own accounts.
The plea agreement details how Howatt created a fake entity posing as a developer to claim million-dollar reimbursements for public projects that never happened. Another time, he convinced the agency he worked for to transfer money to “Windemere BLC Land Company LLC,” a straw company under his personal control. He would bundle the fraudulent transfers with several legitimate expenditures to escape notice.
The missing money was uncovered in a routine audit in December 2014. The FBI and U.S. Attorney General zeroed in on Howatt back in February, just after he bought a $1.5 million five-bedroom beach house on the Oregon coast. In total, prosecutors say he stole $3,876,132.21.
Until his sentencing in March, Howatt remains out of custody. The maximum penalty he faces is 20 years behind bars, a $250,000 fine, three years on parole and restitution.
Months after Howatt's resignation, State Controller Betty Yee audited ABAG and found that a lack of financial oversight left the door wide open to fraud.
“Crucial internal control standards were not adequately followed at ABAG in its oversight of the Authority,” Yee concluded. “Local governments must protect public money by ensuring that those who authorize spending are not the same people who write the checks.”