Report from Sonoma County’s financial investigation into homeless services provider DEMA delayed again

Sonoma County officials again delayed the release of a report into the billing practices of the for-profit homeless services vendor DEMA after the Board of Supervisors spent hours this week talking about the investigation and the company behind closed doors.

It was the second time in as many weeks that the supervisors and other officials met in private to discuss the case.

The county’s elected auditor, Erick Roeser, said last week he intended to publicize the conclusions of an audit into DEMA’s billing that he initiated in response to a Press Democrat investigation published in July.

When he began the inquiry, Roeser estimated it would take as long as two months. After encountering difficulties in obtaining information from the company and bringing in a private firm to take over the investigation, he estimated the report would be ready by mid-January.

On Thursday, two days after the supervisors again discussed DEMA in a meeting that was closed to the public, he told The Press Democrat he was advised by County Counsel Robert Pittman not to release the report yet. He did not have an updated timeline, he said.

For two Tuesdays in a row, the five elected supervisors, Pittman, Roeser and an unknown number of other officials have met about DEMA, saying they were legally justified in taking the discussions behind closed doors because of threats from the company’s CEO to sue both the county and the private accounting firm Pisenti & Brinker.

On Feb. 27, DEMA was one of five topics discussed in a session that apparently lasted longer than three hours, based on a Press Democrat review of the meeting minutes and video.

Pittman last week refused a Press Democrat request to specify how much time the county’s elected officials spent discussing DEMA specifically, and also declined to disclose who the other officials were that participated in that meeting.

On March 5, DEMA was the only item on the agenda for the closed session. That meeting’s video suggests the supervisors and other officials spent nearly three hours in the session.

“We’re doing our due diligence,” Supervisor Chris Coursey told The Press Democrat Thursday. “There’s a lot of complicated stuff going on here and a lot of different information from different parties.”

He said he believed the county will ultimately release the report “in its entirety.”

DEMA CEO Michelle Patino threatened to sue both the county and Pisenti & Brinker, according to brief remarks Pittman made on his legal reasoning for taking the discussion about the vendor behind closed doors.

Had there been a written threat, the county would be required to disclose it, as it did when Patino threatened litigation by email in November.

The most recent threat was made orally, however.

A representative from Pisenti & Brinker declined to comment.

In a phone interview Thursday, Patino initially declined to tell The Press Democrat whether she would sue the county. She has provided the county a response from a forensic auditor she hired, she said. Pisenti & Brinker, she said, received “very biased directions” from the county on what they should examine.

“I believe this will come out in my favor,” she said. “I don’t think there’s evidence that I’ve done wrong but I have learned a lot from the audit and it will help me improve how this company operates.”

But later that night, Patino emailed a reporter to say she had reconsidered her answer. “I have every intention of suing the county,” she said, “specifically stating the auditors office and (County Administrator’s Office) for harassment, withholding payments and contracts, breach of contract, and failure to follow county policy and procedure.” She would also sue for discrimination, she said.

DEMA billed the county more than $26 million in county contracts to run shelter sites for medically vulnerable homeless people during the pandemic. The contracts were awarded without competitive bidding.

After The Press Democrat investigation the company continued to receive contract extensions from county supervisors worth millions of dollars, even as the audit dragged on through the fall and winter.

Today, DEMA runs two housing sites for the county, one at its emergency shelter site, which has been open for 11 months, and the other at Mickey Zane Place, a former hotel in downtown Santa Rosa.

All of DEMA’s contracts were awarded under emergency orders. In the nearly four years since Patino began working for Sonoma County, her firm has never been awarded a contract through a competitive bidding process.

Officials initially described their investigation as a probe into questions raised by The Press Democrat’s reporting, which outlined more than $800,000 in billing for staff positions current and former company employees did not remember existing. Patino has denied any improper billing.

Last week, Roeser said he was waiting on Patino to respond to Pisenti & Brinker’s findings in order to complete and release the report. On Thursday, he said the latest delay stems from new information from the Department of Health Services, which first contracted with DEMA in August 2020 and oversaw the company’s work.

Roeser said this week he learned the health department "may have“ DEMA records it had not previously disclosed to his office or the outside firm, he told a reporter via text message. Health services officials were now looking for additional records it may have received from DEMA, he said. Roeser did not specify what type of records were in question.

Coursey declined to comment on the specifics of the closed discussion or whether supervisors were weighing how to proceed with DEMA's existing contracts.

“We want to make sure we’ve covered all our bases and given everybody a chance to make their case and not everybody’s case is being made in the same direction,” he said.

A health department’s spokesperson did not immediately respond to a request for comment Thursday.

You can reach Staff Writer Andrew Graham at 707-526-8667 or andrew.graham@pressdemocrat.com. Follow him on X (Twitter) @AndrewGraham88