EXCLUSIVE: Former Lubbock City Manager Lee Ann Dumbauld speaks out, a KCBD/Sandstorm Scholar Investigation

Published: Jun. 24, 2014 at 3:08 AM CDT
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Former Lubbock City Manager Lee Ann Dumbauld
Former Lubbock City Manager Lee Ann Dumbauld

LUBBOCK, TX (KCBD) - Former Lubbock Manager Lee Ann Dumbauld is talking to KCBD, talking about invoices the city acquired that never showed up on financial statements, talking about irregularities in the bid process, when LP&L issued a 2013 request for a proposal for power generation for 2019 and beyond, and in this exclusive interview, Dumbauld reveals that she was contacted by the FBI more than a year ago about purchasing practices at the electric utility.

On Monday night, for the first time since her termination, the former city manager shared information about the investigation into LP&L.

We caught up with Lee Ann Dumbauld at her home in Lubbock, which led to our first question: Why are you still in Lubbock?

"I love Lubbock. Absolutely love it. I've always said I wish I had raised my children here," Dumbauld said.

Lee Ann Dumbauld's background was municipal finance and accounting before being hired as Lubbock city manager. While in this position, the city of Lubbock was given several awards for transparency and financial accounting.

But in 2013, Dumbauld received a phone call that changed everything.

"I received a call from the FBI in January 2013 regarding concerns they had about job order contracts related to LP&L procurement practices...there were enough concerns that we had that we paused on issuing financials statements. We contacted our external auditor, BKD."

These purchasing practices were front and center when the EUB was considering CEO Gary Zheng's employment status last month.

In May, LP&L's purchasing director, Felix Orta, made a presentation in the executive session of the EUB.

Orta told the board how year-old invoices for hundreds of thousands of dollars suddenly made their appearance at the electric utility….a cost that will be passed to the ratepayers.

According to his presentation, which KCBD obtained through open records requests, Orta told LP&L's Electric Utility Board that invoices and meetings revealed that a company, E3 Consulting, said they would not charge them for work completed if they received the winning bid for the power generation project.

E3 did become a finalist for that project, but all bids were thrown, E3 sent over all over the previously-withheld invoices.

We asked Dumbauld if she had any issues with the way these E3 invoices were handled.

"Absolutely. Any liability incurred by the city, and that includes LP&L, must be recorded on its financial statements and on its books. And when there are invoices sitting out there on someone's desk they have in fact created a liability for the city - in other words a debt, which is not reflected on the financial statements," Dumbauld explained.

"If they worked for me they wouldn't be working tomorrow," she said.

We asked Dumbauld if she notified the city council about the FBI investigation into LP&L after she received that phone call. The former city manager posted that she wanted to discuss the audit she had requested on a March 2013 agenda. She said that's when she had planned on giving official notice to the council about the FBI's investigation into LP&L - but that never happened.

"A motion was made and seconded to adjourn the meeting before the meeting was actually ever underway," Dumbauld said.

We asked Dumbauld if she thought her firing was related to her requiring a purchasing audit at LP&L. Her response? "You need to ask council that question."

And what about the invoices that LP&L's purchasing director told the EUB about?

"I see the underlying, behind closed doors purchasing deals that are struck that the public has no idea that they go on. The second problem is that because of these poor practices they are incurring liabilities that aren't reflected on the city's books and again, it's all behind closed doors. There should be no liabilities that aren't recorded on the books of the city," she said.

"In my book I believe it's a fraud that's perpetuated, at a minimum, against all of our local taxpayers and users of the LP&L service," Dumbauld said.

Dumbauld told us that LP&L management had a sworn obligation to accurately represent the utility's financial status.

"He says in this letter and he attests to it: 'We have no knowledge of any known or suspected fraudulent financial reporting or misappropriation of asset involving management or employees who have significant roles in internal controls.' But in fact, from the documents that you've received from the city via open records, we know from Felix's timeline that in fact they did know and they were not recorded on the books of the city," Dumbauld said, referring to the annual audit and Orta's timeline.

Was it wrong to cut a "back room deal" for a potential bidder on an RFP?

"I think it is," Dumbauld said. "Because it gives them a leg up on getting that final contract award, which is a huge contract. It needs to have all of the light of day shined on it...only the LP&L board can contract for the city."

So how does Lubbock's former city manager spend her time? Dumbauld told us she spends time doing civic work and travelling. We asked her about speculation that she might some day run for council:

"That's a good one," she laughed. "Oh wouldn't that be everybody's worst nightmare. Oh, and that's a quote. I'll just run for mayor and skip city council."

We also reached out to LP&L on Monday. They gave us this statement:

"LP&L and the Electric Utility Board gathered all pertinent facts and worked hard to learn as much as possible on this matter in order to ensure appropriate actions are taken.

"Proper procedures and professionalism will always be at the forefront of every decision. This is evidenced by the EUB agendas over that past few months that show the Board's diligent oversight of this item.

"LP&L strives to be among the best utilities in Texas by continually providing reliable and affordable electricity to our citizen owners. The highest level of ethics and integrity is paramount in order to operate in a manner fitting of those we serve."

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