December 20, 2014

Sacramento Library Regains More than Half of Embezzled Funds

For any library system, getting a check for $480,000 would be a cause to celebrate. In the case of the Sacramento Public Library (SPL), though, that’s particularly true. Instead of the sort of donation every library director dreams of, the influx of money represents a restitution payment that helps the library to recoup some of the estimated $800,000 dollars embezzled by two former employees, bringing a close to an unpleasant chapter in SPL’s history.

In late 2011, former facilities director Dennis Nilsson, who oversaw payments made to contractors for construction and renovation work at libraries throughout the system, and James Mayle, who ran security for the branches, were convicted—along with Mayle’s wife, Janie Rankins-Mayle—of defrauding SPL out of nearly $825,000 in phony maintenance charges. Mayle and his wife ran a shell company that drastically inflated the prices of typical handyman work performed in Sacramento’s libraries.

Over four years, contractors submitted invoices to the shell corporation for $560,000 worth of work, according to The Modesto Bee. The fraudsters, in turn, submitted more than $1.3 million in bills to the library via Nilsson, who approved the charges while the trio pocketed the difference, spending the proceeds on items like cars, home improvements, and resort vacations. In December 2011, all three were convicted on charges of grand theft and bribery. Mayle was also convicted on conflict of interest charges. All three are currently serving jail sentences ranging from four to fourteen years.

While the convictions were a victory for SPL, they didn’t do anything to fill the gaping hole the thefts left in the organization’s coffers. The financial loss, discovered in 2008, came at a particularly tough time for SPL, as the economy was suffering through the worst of the financial collapse. And the loss had worse ramifications than just squeezing the library’s budget, said SPL director Rivkah Sass. She came to the system in 2009, just after the scandal had broken in the news, and recalls that the fraud did significant damage to one of SPL’s most valuable assets—its reputation in the community.

“You want to get support from your constituents and foundation in tough financial times,” said Sass. “When something like this occurs, it impacts faith in the library as an institution, so you have a higher mountain to climb when it comes to private support.”

While the embezzlement created hardships, Sass said, it also provided a necessary wakeup call that’s helped the system get its financial house in order in the years since. “It was a real learning experience,” Sass told LJ, “in finding out what policies you need to have and don’t have in place.” For example, SPL was nearly five years behind on its financial audit schedule when she took the helm. Now SPL is not only up to date on its audits, said Sass, but has new policies in place for dealing with vendors, contractors, and procurement to help ensure that no one can game the system again. Being able to provide that assurance, said Sass, was key to regaining the trust of the public and the community.

Being able to recover even a portion of the embezzled assets is a rarity, said assistant district attorney Mike Blazina, who worked on the case. In most cases like this one, people who defraud their employers spend the cash immediately, and not on assets that can be seized later. “In many of these types of cases, there are not sufficient funds left for a restitution to be made,” Blazina said. “The money is generally squandered. They gamble it or spend it on things of no lasting value.” Since the three conspirators in this case spent the money on more lasting assets like purchasing or improving homes, there was a rare opportunity to recoup some of the losses. “That’s not something we normally see,” Blazina told LJ. “So it’s a good result to be able to get some of that money back.”

For Sass, while the money is welcome, there are no immediate plans for it, though she admits having to fight an impulse to use lots of it to improve SPL’s collections. More important than cash, though, is closure. Rather than having to live down an embarrassing moment in the library’s history, Sass said, SPL staff “can say ‘Yes, that happened, it’s over, we did the best we could. And now we have libraries to run.’”

Ian Chant About Ian Chant

Ian Chant is the Associate News Editor of LJ.

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