FRAUD HOTLINE ON 24/7 SCHEDULE CHICK SAYS CITY MAY GET MILLIONS.

Byline: RICK ORLOV Staff Writer

Ratcheting up efforts to crack down on bureaucratic waste, fraud and abuse, Los Angeles officials unveiled a 24-hour whistle-blower hotline Thursday to take tips from workers and the public.

The latest move to clean up City Hall comes two years after the City Controller's Office created a special task force to investigate fraud.

``At any time, day or night, whistle-blowers will have a place to go and be heard with their confidentiality protected,'' City Controller Laura Chick said. ``This gives us an opportunity to open the system to people who see things that just aren't right.''

The city will pay $45,000 a year to The Network, a Georgia-based company, to staff the hotline.

The national Association of Certified Fraud Examiners estimates that business and government agencies lose 5 percent of their annual revenue to employee fraud, waste and abuse.

``If you look at the city -- with its budget of nearly $7 billion and more than 40,000 employees -- we could be talking about significant savings,'' Chick said.

``It's hard to quantify, but I'm predicting we will be saving the city millions of dollars,'' Chick said.

``There will be the money saved or recovered from investigations, but I believe it also will have a deterrent effect from people knowing we are out there and looking.''

More investigations

Los Angeles County created a fraud hotline nearly two decades ago. It received 621 tips in 2003-04, with 1,000 projected for this fiscal year.

The increased number of tips boosted investigations of county employees from 340 in 2000 to 583 in 2005.

In a survey late last year, The Network found that 65 percent of hotline reports among its clients were considered serious enough to warrant an investigation. About 10 percent of the reports were related to corruption and fraud.

Callers can report everything from theft of city resources and contractor or payroll fraud to kickbacks or bribes and misuse of city equipment or property.

Calls to more closely scrutinize City Hall took hold in 2005, when the City Council learned that the City Controller's Office and Ethics Commission were handling dozens of malfeasance allegations.

Anti-fraud reform

City officials endorsed an anti-fraud unit as one of several reforms spurred by allegations that then-Mayor James Hahn's administration traded lucrative city contracts for campaign contributions.

Chick said the task force receives about $414,000 a year to fund the salaries of three investigators. It already has received more than 200 tips that have resulted in a series of audits and investigations saving the city millions of dollars.

Among these, Chick said, was a tip that a parking lot operator was failing to pay business taxes.

2 execs convicted

Chick said a whistle-blower's questions also led to an investigation into accusations that the Fleishman-Hillard public-relations firm had overbilled the Department of Water and Power. In that case, two former Fleishman-Hillard executives have been convicted of defrauding the DWP and other clients.

Chick said other tips have led to the investigation of complaints of sexual harassment, racial discrimination and hazing within the Los Angeles Fire Department.

The investigation, as well as growing concern about the complaints and ensuing lawsuits, eventually forced the retirement of Chief William Bamattre late last year.

Chick said the fraud hotline will have trained operators available 24 hours a day, seven days a week for callers, who will be guaranteed confidentiality.

``A lot of time, people are laying in bed at night and troubled by something they've seen, but they haven't felt they had anyplace to go,'' Chick said.

Calls involving other governmental jurisdictions will be routed to the appropriate agencies, she said.

Chick said she believes the hotline also could serve to head off more costly problems in the future.

``In that sense, it could be considered a risk-management issue where we can head off problems at the early stages with a call or a letter rather than letting it build to a lawsuit,'' Chick said.

``This is not to say that Los Angeles has a more dishonest government. Quite the contrary. But human nature being what it is, some people do the wrong thing.''

rick.orlov(at)dailynews.com

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