Sonoma County supervisors, county officials have findings from DEMA audit but for now have discussed only behind closed doors

Sonoma County supervisors have received findings from an investigation into questionable billing by the for-profit homeless services provider DEMA and discussed them in a closed-door session Tuesday amid legal threats from the company’s CEO.

Sonoma County Auditor Erick Roeser initiated the probe in response to a Press Democrat investigation into DEMA Management and Consulting’s billing practices. The company has received more than $26 million in contracts to manage homeless services for the county health department without competitive bidding.

Roeser on Wednesday told The Press Democrat that while supervisors and other county officials have a draft of the report, it is not considered final until DEMA executives respond to its findings.

The company’s CEO, Michelle Patino, has a chance to dispute the findings and to offer to fix any problems identified by investigators from the accounting firm Pisenti & Brinker, Roeser said. He hoped that would happen by Monday, and said that the report would be released to the public soon after.

“My intention is still to publicly release the report but this is a standard courtesy to an auditee,” Roeser said.

The board on Tuesday met behind closed doors, which officials said was justified because of a threat of litigation from Patino. While Patino has previously threatened litigation in writing, this threat was oral, Sonoma County Counsel Robert Pittman told The Press Democrat.

He declined to say which officials participated in the meeting or how long DEMA was discussed. Attorney-client privilege and the Brown Act, the California law that governs both open and closed government meetings, allow him to keep that information from the public, he said.

Two county supervisors contacted by The Press Democrat were tight-lipped for now about the audit’s findings.

“It’s going to be an ongoing conversation, I can say that much,” board chairman David Rabbitt told The Press Democrat on Wednesday. “We should own what we need to own,” he said.

He added that county officials face a “quagmire” in the coming weeks given the investigation, the legal threats from Patino and rapidly approaching decisions about awarding significant new homeless services contracts, some of which are currently assigned to DEMA.

Officials described the investigation at the beginning as a probe into questions raised by The Press Democrat’s investigation, which outlined more than $800,000 in billing for staff positions current and former company employees did not remember existing.

Patino did not respond to a request for comment for this story. She has denied any improper billing. She also said she cooperated with the auditor’s requests, though Roeser said in November that the company had not been forthcoming with records. Patino has promised to make the county whole for any errors accountants do uncover. She has also, however, accused the auditor of a bias against her and threatened to sue the county over discrimination.

Roeser has publicly cautioned that auditors did not have the authority to fully review a private company’s books. Instead, they focused principally on the county’s contracts with DEMA and whether it complied with the billing requirements of those contracts.

In November 2023, Roeser announced he was hiring Santa Rosa-based accounting firm Pisenti & Brinker to take over the investigation because it was outpacing his staff and resources. He said at the time that they hoped to conclude the work by mid-January. But that date shifted to mid-February, and will now stretch into March.

The Press Democrat investigation, published in July, was based in part on a a review of 26 months of company invoices. The newspaper found $800,000 in questionable billing focused on a single position, the director of nursing, for which DEMA billed between $76 and $95 an hour.

From August 2020 to October 2022, DEMA billed more than $1.5 million for more than 18,930 director of nursing hours across the seven sites it managed. There are approximately 18,980 hours in 26 months, meaning the company billed for directors of nursing working all but 50 of those hours, according to a Press Democrat calculation.

But 11 medical employees of the company, including one who held the director of nursing position, told The Press Democrat they only ever recalled one person holding the position at a time. At the most, employees said, there were two, since Patino also categorized herself as a director of nursing.

After the newspaper’s initial investigation ran, Patino said she categorized an assistant director of nursing, a clinical director of nursing, herself, along with the actual director of nursing, all under the position when it came to billing. Over the 26 months the newspaper examined, six different people held those positions and did that work, she said.

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