He's not very well known, but city auditor Roland Smith has one of the most important jobs in Oakland government. The position is so important that it's elected -- to ensure the auditor's independence. Smith is entrusted with uncovering waste, cronyism, and fraud. To be effective, he must avoid even the hint of a conflict of interest.
Smith looks and sounds every bit the nerdy bean counter, bearing more than a passing resemblance to The Simpsons character Hans Moleman. But associates say the city's dweeby elected financial watchdog has a thing for cool cars. Last year, the car buff added a flashy one to his collection, a 1981 DeLorean DMC, the stainless-steel contraption made famous by the movie Back to the Future . But the story of how the nonpartisan auditor snared the ride raises questions as to whether he crossed an ethical line.
For more than a half-decade, Smith and his team have been investigating the city's monopoly towing contract with A&B Auto. The towing company is owned by politically connected Blackhawk resident Bill Taylor. For years, Smith has been convinced that the contract is a sweetheart deal for Taylor and a bad one for Oakland.
Taylor's revenues from the city contract are a closely held secret, but the deal is believed to be worth millions annually. The city auditor has gone to court and sponsored state legislation to get a glimpse at A&B's books. Smith also has issued two reports criticizing the contract and its poor administration by city officials. One of those reports concluded last year that Oakland was losing out on untold sums of money, in part because of the way A&B conducts its public car auctions.
Well, it just so happens that one of Smith's friends bought him the DeLorean at one of those auctions, even while the auditor was still investigating the towing contract. On January 29, 2004, A&B auctioned off eleven cars left unclaimed by their owners. Each had been valued by A&B at more than $4,000. Although the auction was advertised in a local paper's classifieds two weeks earlier, only three bidders showed up. Smith did not attend personally, but one of the three bidders was his longtime friend Kenyon Barnes, whose company, Concrete Wall Sawing in San Lorenzo, donated $500 to Smith's first campaign for auditor seven years ago.
DMV records obtained by the Express show that Barnes bought the DeLorean for $3,403.90 -- at least $597 below A&B's appraisal, and potentially up to several thousand dollars below the car's book value. In fact, that selling price was exactly enough to cover A&B's storage, towing, and selling costs -- the minimum bid it typically asks for. Two days after A&B transferred ownership to Barnes, he turned around and sold the DeLorean to Smith for exactly the same price, DMV records show.
Here's the irony: Eight months later in his report on A&B's "lien sales," Smith criticized the towing company for hocking cars appraised at more than $4,000 at poorly attended auctions not run by a professional auctioneer, thereby keeping the sales prices down. The September 2004 auditor's report argued that low sales prices meant the city wouldn't get its cut for any parking tickets owed. In another twist, the report specifically cited the January 29 auction -- where reps from the auditor's office were present to observe the process -- as a poorly attended auction.
Did Smith use his insider knowledge of the flawed auction process to get a bargain? Well, let's see what a DeLorean is worth nowadays. They are something of a collector's item -- only about 8,900 of the gull-winged cars were made, experts say. A DeLorean with 52,000 miles on it -- which is what Smith's had when he bought it -- can fetch $20,000 or more if it's in good shape, says John Truscott, membership director of the DeLorean Owners Association.
Bob Connor, general manager of A&B, said the DeLorean he sold was pretty beat up. He reviewed the police department's stored vehicle report for Feeder, which he said showed that the body had dents and scrapes; the seats, tires, and bumper were listed as poor; and the radio was missing. (No mention of the state of the flux capacitor.)
Don Steger, owner of DeLorean Motor Center in Garden Grove, says the Collectible Vehicle Value Guide lists a 1981 DMC in "fair" condition as being worth $10,250. But Steger says his shop recently offered someone around $3,000 for a damaged DMC like Smith's.
Smith told Feeder he used no insider's knowledge in obtaining the car. He says he learned of it from A&B's classified ad two weeks before the auction. If anything, Smith says he overpaid for the car, which he says wasn't even running at the time. He adds that he's since put $13,500 into it just to get it running.
Greg Newington, head of the enforcement division of the California Board of Accountancy, which investigates complaints against licensees, says he didn't think what Smith did would even create an appearance of conflict of interest. After all, he says, Smith didn't participate in a backroom deal, but rather bought a car sold at a publicly noticed auction advertised in a newspaper: "If this is an advertised deal, transacted at arms' length, then what is the appearance problem?"
The thing is, Smith's own report criticized A&B for using a small community newspaper, The Montclarion, to advertise its auctions instead of a more widely read daily such as The Oakland Tribune. The auditor's report reasoned that fewer people would see notices in The Montclarion, and thus fewer bidders would attend the auction, meaning cars would sell for low prices.
Smith says he consulted the city attorney's office in advance, and was advised he could attend the auction without creating a conflict. Why, then, did he send his proxy to buy the car? George Briggs, a deputy auditor under Smith during the time of the audit, thinks it indicates that Smith had some reservations. "The way he went about it tells me he knew it was wrong, but did it anyway," he says. (Briggs, it should be noted, is not without bias. Smith fired him in October, and Briggs in turn filed a grievance to be reinstated, which he says he won. Supervising Deputy City Attorney Mark Morodomi declined to discuss the matter.)
In an interview, Smith at first refused to say whether he'd asked his friend to buy the DeLorean for him. Smith later acknowledged that he didn't go because he didn't want A&B officials to know he was interested in the car since his office was auditing the company. Indeed, A&B's Bob Connor says no one at his company knew of Smith's interest. "Everything I do is ethical," the auditor sniffed.
Ultimately, you gotta at least question the guy's judgment for ... buying a DeLorean. Connor says he personally can't understand why anyone would want such an unreliable car. "They were junk when they were made," he opines.
Robert Gammon contributed to this story
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