Risky Business

A former employee says Maricopa County is better at covering up than cleaning up its environmental hazards. And that could get the county in trouble for financial fraud--again.

Walters never determined the actual costs of the county's environmental hazards himself; he was never supposed to. The county needed to hire an outside expert to do that. Instead, Walters' job was simply to design a spreadsheet of the county's known environmental risks--a document that would then be used as the basis for a formal study of the trouble spots and the cost of fixing them.

"These numbers were created entirely to be illustrative. . . . [They were] totally imaginary because I'm not an environmental dude. I'm a program manager," he says. "I've managed environmental programs and I've written on environmental topics, but I couldn't tell you the difference between asbestos and dust. . . . So when I was coming up with these numbers, they'd say, 'What do you think our asbestos problem is?' And I'd say, 'Somewhere between a million and a billion.'"

For example, on his spreadsheet, Walters put in a hypothetical range of "up to $3.35 million" for asbestos cleanup for the entire county.

But in an estimate prepared after consultants had reviewed Maricopa Medical Center, Walters' boss, Roland Bergen, projected a cost of $3.1 million for asbestos cleanup at the hospital alone. (That $3.1 million estimate also was never reported in the county's annual reports or bond documents.)

The study that was supposed to determine real estimates for Maricopa County's hazards was canceled abruptly. County officials won't say why, and Walters doesn't know.

Walters says John Paulsen, a deputy county attorney who works with risk management, and Victoria Taylor, a finance division staffer, reported his made-up estimates in the county's annual financial report, in a memo to the auditor general and in county bond documents.

"This is fraud on the consumers and the taxpayers," Walters says.
Taylor says she never saw the numbers until they were in the county's financial report. Paulsen refused to discuss the matter with New Times.

When Walters brought this up with his supervisors, no one was too eager to correct the problem, he contends. Maricopa County's officials didn't want to know how much environmental problems would cost, Walters alleges, because it would've been too expensive to pay for them.

"They certainly didn't want people to get wind of the fact that Maricopa County had maybe as much as a billion dollars in environmental liabilities that they hadn't set up any reserves to pay," he says.

After he started raising questions, Walters started getting pressure to join the team, or at least shut up, he says.

"They didn't take this well at all," Walters says. "They'd put together this rather sophisticated fraud, and here one of their own staff members had discovered it and was bitching about it. And all of a sudden, I went from being an exceptional performer in Maricopa County to being everybody's least favorite character."

Unknown to Walters at the time, he also became a target in Deborah Larson's infamous e-mails.

On September 19, Larson e-mailed Bergen (subject: The Shadow Knows . . . ), worried that Walters might be collecting information from the office.

"Forgot to mention--Loretta [Barkell] said Michael came in last Friday evening around 7:00 after he had called in sick that day," Larson wrote. "He seemed surprised to see her there. He said he had to pick up some paperwork or reading material or something for the weekend. I think we may have a real culprit on our hands. Lock everything up, and be sure the key is only in Loretta's hands."

Walters' October 25 performance review begins with praise. But couched in the evaluation's polite management-speak is what Walters took as a threat:

"Michael needs to utilize his considerable talents constructively: positively assisting his coworkers, developing his professional skills and actively supporting the goals of the department and administration. . . . Michael can either be a tremendous asset . . . or he can be self-destructive," Bergen wrote. "The choice is ultimately his to make."

"It was like [they were saying], 'Get with the program,'" Walters says. "I 'needed to share organizational goals and objectives.' Well, their organizational goals and objectives were illegal, and I wasn't going to share them."

For Walters, who got into government work because he thought it would be less cutthroat than the business world, it was a rude awakening.

"I tucked my tail between my legs . . . went back to my desk, and tried to behave in a manner that was responsible as a county employee," he says. "But once the cat was out of the bag, it was too late."

Now Walters believes that nothing he could have done would have prevented his firing.

"I had discovered the fraud, and certainly I wasn't going to help them perpetrate it against the community," he says. "They certainly had some problems with me staying there."

As evidence, Walters points to an October 3 e-mail he obtained. The message, from Deborah Larson, is marked "Confidential."

"Had a confrontation with Michael today about funding for the environmental audit," Larson wrote. "We must find a way to quietly eliminate him. His knowledge of the [self-insured trust] and our environmental liability could be devastating if revealed to his friends at ADEQ or the SEC. If the rating agencies get wind of these shenanigans all our work could be undone. Check his phone and computer records. We must find a good reason to dismiss him or David [Smith, county administrator] will never allow it. Roland will resist his termination, but, I will work with him. Keep this strictly confidential, I do not want his elected friends to get wind of this until we are ready to act."

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