San Joaquin Regional Transit District - Multiple Grand Jury Investigations

Multiple Grand Jury Investigations

The San Joaquin Regional Transit District has been the subject of multiple Grand Jury Investigations and a lawsuit.

The 2004/05 San Joaquin County Grand Jury received complaints from RTD staff about the General Manager's handling of the termination of Union Officials, procurement practices, and the use of agency credit cards. The case (#1904) was further investigated by the 2005/06 Grand Jury.

In November 2007, as a result of further complaints by RTD staff, another Grand Jury investigation was launched into agency practices and procedures. Issues under investigation included: the GM's use of agency credit cards for the purchase of personal gifts and meals, and other agency cards being used for over $11,000 in meals, the use of a consultant who had a conflict of interest to negotiate for construction of the Downtown Transit Center, the ongoing use of a sole-sourced training consultant for several years in a row at the rate of $9,000/month not including expenses, ongoing practice of hiring employees and consultant without going through a competitive process, the GM not providing updates to the Board of Directors of contracts executed by her and exceeding her authority in executing contracts, consultants consistently paid for undocumented services against a retainer, the agency deliberately withholding contracts from the Grand Jury and had to be subpoenaed, GM not following proper procedures for change orders.

On Friday, June 20, 2008, it released a nine-page report for finding, among other things, inappropriately spending taxpayer money. The report cites excessive use of consultants, credit card abuse and inappropriate hiring practices.

Further in the report RTD was cited for having “some witnesses were evasive, self-serving and deliberately misleading in their testimony and did an inadequate job in providing documents," Furthermore the grand jury goes on to state. "this made the investigation more difficult and lengthier than it should have been" and in turn required the grand jury to obtain a subpoena.

RTD is publicly funded and has a $37.5 million budget. RTD is citing that this coming fiscal year in the state budget that they are being cut out of $3.5 million in state funding. RTD has already implemented an Inter-regional Commuter service fare increase to help offset the impacts associated with the increase in fuel costs and the decrease in available state operational funds.

The jury cited RTD for inappropriate use of credit and purchase cards. It goes to state that American Express cards held by Donna Kelsay, General Manager/CEO of RTD and her administrative assistant were used to buy gifts and meals for RTD employees. The district spent $1,038 for a dinner for 40 employees at the now defunct Stockton restaurant, Mallard’s. Kelsay has also admitted to going to Costco and spending $500 on 40 lidded coffee mugs so her employees wouldn’t spill coffee on the new carpet in the Downtown Transit Center facility. Also cited were the fact that purchase cards were used to spend $8,790 on movie tickets which were given to employees for their birthdays or resold at the cost paid. Kelsay was also accused of awarding contracts without the consent of RTD’s board of directors.

The 2008/09 Grand Jury launched yet another follow-up investigation (Case #09-08A) finding that: itemization of consultant deliverables continues to be inadequate, a training and labor relations consultant is still under contract for his fifth consecutive year and now being paid approximately $6,000 per month, and the agency still budgets excessive amounts for legal services ($960,000) and two security staff ($200,000) and may influence the entire budget process and could result in unnecessary increased fares and cuts in services.

Further adding to the controversy, Bobby Kuhn, former Director of Maintenance for RTD, and three other RTD staff members were terminated just after they testified to the Grand Jury. Mr. Kuhn and two of the other terminated employees have filed a civil action against the District and Donna Kelsay (Case #39-2008-00192086-CU-OE-STK) claiming that their employment with RTD was terminated as the result of their cooperation with the Grand Jury. Donna Kelsay states in an interview with News 10’s Tim Daly, that there was “absolutely no retaliation” but instead attributes it to the rising cost of fuel.

On February 3, 2012 after 3.5 years of delays the case was finally in the hands of the jury. The deliberations were not as delayed as the jury was unanimous in finding that Kuhn's testimony before the Grand Jury was a "contributing factor" in his firing. Evidence produced during the trial showed that RTD staff had presented a fuel budget of 4.4 million dollars to the Board of Directors in effort to support their firings. One year later the actuals showed a more stable 2.2 million dollars which is what was actually spent in fuel. Kuhn gave compelling testimony that using Consultant Phil Pennino, ex Mayor of Lodi, as a negotiator on the F&H Construction negotiations was an organizational conflict of interest and likely led to a significant over payment. Donna DeMartino testified that while Phil Pennino was working for both F&H Construction and RTD at the time of the negotiations, she saw no conflict. In reviewing Donnna DeMartino's contract, her lack of concern was related to her bonus for closing the project regardless of the money spent. The closing argument by Jeff Fulton showed that by March 2009, only 8 months after the terminations, the District had hired on even more positions then when Kuhn was fired. Several post-trial motions are currently pending before the court.

It has been noted publicly that, since the rise of Ms. Kelsay to the GM position at RTD, attrition of management employees has been unusually high, and can be attributed to the departure of employees who did not agree with the procedures and operation of the District that has come under such scrutiny from the Grand Jury.