>>> Pedro "Pete" Lucero 5/26/2005 6:41:18 AM >>>
thank you for your comments, regarding the misspellings, this is a working document and not yet finalized.
 
2.  we will review our entries
3.  our statement stated that we received no data, his 2004 franchise fee was paid at 1000, his 05 fee was 500, however due to the termination we did not receive it.
4. we will recheck our entries

EXHIBIT B:  2004 GROSS RECEIPTS DOCUMENT DATED MAY 20, 2005  SEE ATTACHED SUMMARY IN FOLDER.

The corrected document did not show up in email and corrections were not made in a timely manner. I reported the matter to Executive Director Oscar Braun and CWP General Counsel Mr. Frank Iwama that the corrected documents were not available as requested. On June 16, 2005 I was requested to attend a meeting at BOR –CCAO Office at Folsom, CA. This meeting lasted approximately 2 hours. CCAO Deputy Director Johnson and a large contingent of BOR staff, including Lake Berryessa Park Manger Peter Lucero were in attendance. My purpose at the meeting was act as a resource to the DDRT and I had very little to relate at the meeting.  CWP Mr. Frank Iwama raised numerous subjects in the 2-hour meeting.

One significant item was the lack of response to the DDRT request for corrected data. Mr. Iwama had a handout and it was the 2004 Gross Receipts document dated May 20, 2005 and loaded with the numerous errors. Mr. Iwama raised the question about the delay tactics underway or as Mr. Iwama called it “stonewalling”. This immediately got a rise out of Park Manager, Peter Lucero and he almost came out of his chair. He was seated at the end of the table and became very perturbed and defensive about this issue in front of his peer group. He blurted out “this is a working document” and “only a working document.” This was not a nice, warm and comfortable meeting and we left the CCAO Folsom compound around noon to return to the Bay Area.

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On the next day June 17, 2005 I received the following email from Park Manager Peter Lucero   

Corrected worksheet attached
Date: 6/17/2005 10:18:26 A.M. Pacific Daylight Time
From: LuceroPLUCERO@mp.usbr.gov To:  HAZMATKING@aol.com Sent from the Internet (Details)
Note correction to Rancho Monticello and Spanish Flat
 
Pete Lucero, Park Manager
Bureau of Reclamation - Lake Berryessa
5520 Knoxville Road
Napa, CA 94558
707-966-2111 x106
707-966-0409 fax
Attach:  Resortsreceipts2004XLS (26.0) KB

This document will be shown as Exhibit C. Review of this document reveals numerous errors and indicate a serious lack of attention to detail and gross mismanagement. This was a four page Excel Spreadsheet.
*******************************************************************************

July 2, 2005
To: PLUCERO@mp.usbr Subject:Another request for a correction to errors on Gross Receipts

Hi Pete, tried to get a hold of you on Friday but you were away quite a bit, guess getting ready for the busy weekend ahead. Anyway attached is a letter detailing some more problems with the corrected second attempt on the gross receipts? I would hope you would take a look at whom is doing this work for you from your staff and advise them that the work products they present to you have direct reflection on your oversight management and that you will not accept slipshod attempts of your staff.  As always when you follow Secretary Norton's lead you can't be far off from excellence. I believe in her 4 C's principles.
 
Thanks and I look forward to the next corrected document on this subject of gross receipts and franchise fees.
Letter attachment to above email
        
                                                                                                     
July 2, 2005

Peter Lucero
Lake Berryessa Field Office
Lake Berryessa Manager
Good Morning,

Thank you for forwarding the corrected document to me via Email system on June 15, 2005. I appreciate your effort to minimize the problems of documentation flowing out of your office and I am assured that you will require 100% accuracy on documents that will charge concessionaires and assess their Franchise Fee allocation. Part of my efforts in the Lake Berryessa ongoing stage is to retain records of interest and keep them in chronological order. That being said, be they news, BOR region releases, letters from your agency, letters from the CCAO, letters from Mid Pacific and Commissioner Keys office in Washington DC and items from Secretary of Interior Gale Norton.  My Master’s is in Urban Economics so I tend to follow along the money trailside of things generating within your agency and look closely at computations.

EXHIBIT-C: GROSS RECIPTS REPORT 2004 (See Analysis)

If you will remember I was able to determine that there were several errors in the “Working Document “ version and brought those to your attention. I don’t know who you have handling this paperwork, but their attention to detail is poor to say the least.

On the June 17th document I would like to bring to your attentions some other errors in the Excel spreadsheet, which you sent to me after the meeting we had at Folsom BOR on
 June 16. I have my suspensions on who is handling this paperwork inside your agency at Berryessa and I will reserve my comments of their abilities to document this process.

Issue 1  Putah Creek Fourth Quarter is evidently entered in error. It shows:

         2004      GROSS            NET               F. FEE     FRANCHISE
 QUARTERS  RECEIPTS    RECEIPTS    RATE          FEES

 FOURTH   $174,504.83      $166,198.10        3.00%    $4,985.94
 AND SUB TOTAL UNDER THE FOURTH QTR.

In a letter dated March 25, 2004, Mr. Dufer sent out a memorandum to Mr. Braun
It detailed the Gross Receipts for year 2003 for all resorts and especially in the area we are talking here about Putah Creek.

  2003                      GROSS      NET              F.FEE     FRANCHISE
QUARTERS      RECEIPTS   RECEIPTS    RATE         FEES

 FORTH (MSP)   $174, 504.83  $166.198.10   3.00%   $4, 985.94

The 2004 numbers are in error and this skews the entire report .  It requires correction of the proper entries for 4th Qtr 2004 data for Putah Creek.

Issue 2 Putah Creek 2004   3rd Qtr reporting. There are three possibilities with a high degree of error rating in this section the Third Quarter is always the highest gross receipts of all seven resorts and if you look at the former 2002 report & 2003 reports you will see the match and trend.  Gross Receipts 2003 Putah Creek reported at $509, 441. 31. The Gross receipts for 2004 Third Qtr show $160, 387. The trailer space rental fees take is about $56,000 monthly x 3 months (third qtr) = $168,000.Let alone this does not include the slip fees or other cost, this shows a (317%). This data must be accurate as this is part of the base factors in computing the Franchise fees. Is this underreporting for Putah Creek?

I crosschecked the Rancho Monticello Resort and they are all computed off the Net receipts. I will address that in Issue 4.

I crosschecked the Lake Berryessa Marina Resort and likewise they are all computed off the Net receipts.

Issue 3. Next was Steele Park, immediately I noticed the Gross Receipts were the same as the Net Receipts. So there are some major errors in reporting this data correctly.

Of particular note was the lack of reporting on the part of Pleasure Cove. A major question has arisen about the profits that Mr. Petty amassed from Jan 1, 2004 until the contract was signed on May 2004. We understand that over $250,000 +  trailer space fees and the annual moorage fees paid one year in advance are also not reported in the First Quarter and Second Quarter 2004. Likewise I sympathize with you about his failure to report data in a timely manner. It is a matter of interest to us for US Treasury, IRS purposes, Franchise Tax Board, and County fees that he may have owed.

In regards to Markley Cove it is reported the Franchise fee rate is 1.5% how did that rate become established. Is their some special legislation allowing them a lower Franchise Fee?

Lastly in this issue 3 please look at the Lake Berryessa Totals, (Last Page summary) and especially at the line across for Steele Park.

There is a visual error: The Gross Receipts are reported at $2,291,514.85 while the Net Receipts are reported at $2,951, 514.85. I guess you would have to flip those around to get a set of workable numbers. But the numbers don’t compute. If you return to the Steele Park worksheet you will find the error in the total block and all of it is error. So that area needs major rework and the final item is the Totals need a rework.

Issue 4.  I looked through your Lake Berryessa Operations Policy Manuals and specifically Operation Policy 3, (which is quite—redundant and 1983 version) Revised Policy for Uniform Accounting and Reporting Systems for Lake Berryessa Concessionaires, 3-1-83 and Reclamation Manual / Directives and Standards PEC 03-01
From that manual I was unable to tell how you are managing the Franchise Fees at Lake Berryessa. I have noticed in the Annual Gross Receipts here were variable percentage fees being charged at Markley Cove and previously at Pleasure Cove before major flat fee structure was created for the Petty& Associate Pleasure Cove Resort, May 20, 2004 contract and further exacerbated in the June 1, 2005 contract for Pleasure Cove Marina.

So how are the franchise fees set and how did they get removed from Pleasure Cove? Who had the authority to zero out the fee structure in the 2004 and 2005 contracts? I utilized your web site and pulled up contracts for each of the resorts. For instance Spanish Flat resort talks about Franchise Fees in Section 8 on page 8, I could not find any dialogue about the fee structure being set off the net receipts. Did somebody, ( Dufer the Concession Manager) decide that the computation would be off the net receipts. For instance in all of your BOR manuals when it talks about Uniform Accounting Procedures, it does not talk about Net gross profits. I would like an explanation from you or a copy of some official document that sets the franchise fees for each resort, the reporting dates, Quarterly etc. and methods of computation. Just looking at this from the outside this is some serious money.

The Spanish Flat contract gives this explanation of Gross Receipts:

“The term “gross receipts” as used herein shall be construed to mean the total amount received or realized by or accrued to the concessionaire from all sales for cash or credit services, accommodations, materials or other merchandise made pursuant to the privileges authorized in this contract, including gross receipts of sub concessionaires, and commissions earned on contracts or agreements with other [person or companies operating in this area, but excluding intra-company earnings on account of charges to other departments of the operation ( such as laundry, charges to employees for meals, transportation, etc.) cash discounts on purchases, cash discounts on sales, returned sales and allowances, interest on money loaned or in bank accounts, income from investments, income from subsidiary companies outside the area, sales and excise taxes, gasoline taxes, fishing licenses, postage stamps, and items which the concessionaire is accountable in full.”

I’m sorry that I took up your time to relate this important run-on sentence to you. I also realize you Mr. Lucero did not create this phraseology. There is no discussion of Net Receipt reporting and computation in the contracts. I am sure this matter will be of interest to you since you did not arrive until August 2004 officially as the new Park Manager.  On a aside, when you get your feet more on the ground please look at the Operational Policy manuals/ They are dated and in poor condition. In review I believe if this has been computed wrongly for a long period of time by the BOR Concession Manager there should be an investigation at your level to ascertain what I am surfacing. Who is setting the variable franchise fees at Lake Berryessa? If you compute these numbers out on the Gross receipts versus the Net Receipts there is a sizeable amount of money that has not been reported properly. Of course I may be 100% wrong on this factor, but please show me the manual to calculate on the net receipts and what manual that allows the rate to float. A lot of this has to do with the “fairness doctrine” to other concessionaires.

Summary

I appreciate meeting you professionally at Folsom BOR on June 14, 2005, and on the phone. As you may know from my background and involvement in this Lake Berryessa process have been profound and accountable. Hidden inside your organizational culture is an ingrained position that the Franchise Fees are a just another area you must manage. This culture is further harmed by high rank GS-11 and above individual professing their chagrin about managing the money.  Part of the dichotomy comes from BOR officials openly expressing there insightful position about the money going to the US Treasury and not being able to re-spin or reuse the money at Lake Berryessa.

Hank Howard
________________________________________________________________________
FRANCHISE FEES

During this discussion period it was learned the BOR had made a new Concession contract with Forever Resorts on June 1, 2005 to operate Pleasure Cove Resort (Marina). Part of that contract contained a very gratuitous clauses of the BOR and it set the franchise fee at flat fee rate of  $2500 for a 30-month contract.

In another document currently being prepared for the US Attorney General Referral,   I would like share an extract from the Referral Position Paper to carry this matter forward here and attach the item here regarding Franchise Fees.

• Franchise Fees  set a fixed rate of $1000 for each of the two operating seasons of the contract. Or a total of $2000 to run the resort for 15 months. All the rest of the gross receipts were money gained by Mr. Petty and Associates. It is estimated over $1.5 million was gained from his operation of the Resort and marina in the 10 months he operated the resort. This poor Franchise Fee provision was stated in the contract Section 6 “to assure a reasonable opportunity for a profit to interim concessionaire”. It is unknown if Mr. Petty paid the first Franchise Fee promptly by July 1, 2004. An investigation should resolve that matter. His second franchise fee was due on July 1, 2005.  The BOR defaulted his contract on March 28, 2005. This same resort paid an annual franchise fee payments in 2003 for the amount of  $33,323.55. This amounts to a “gift of federal money” in excess of $62,000 for the two periods and minimal payment of  $2000 if the concessionaire were to fulfill the full 15 months of the contract. This is unbelievable that this could occur and what were the rules and directives to allow this gratuitous overture to this concessionaire. In retrospect the provisions of BOR Reclamation Manual / Directives and Standards PEC 03-01 were grossly violated. The document states that revenues generated from concessions, boat docks and marinas, shall be considered as incidental revenue. (eg. franchise fees). Sect 2. Responsibility. The method of crediting revenues is not discretionary in contract negotiations nor is it subject to arbitrary change in Reclamation policy.  Sect 4. Reclamation does not have authority to change this revenue distribution scheme in dealings with particular contractor and must follow Congress instructions. Who allowed this measure to be entered into the contract? Was the Regional Director Kirk Rodgers the authority to authorize this gratuitous overture?

• As a side issue to this position paper I have placed the BOR Lake Berryessa Park Manager, Peter Lucero on notice that I have requested the US Treasury to conduct a full investigation and audit of the handling of franchise fees for the seven resorts at Lake Berryessa within the full grasp of the Statue of Limitations. I have advised him of multiple errors in annual reports for 2003 and 2004 in computations and poor reporting being processed that make the documents worthless and a disgrace that this type of workmanship and poor fiscal accountability is allowed to exist. 

 • In the contract Section 6 – Fees - D. Asset Rental with Petty and the BOR it required Mr. Petty to set aside $20,000 into a escrow account or other appropriate account. This was to be submitted in four (4) $5000 increments. Where is this money and did it go to the estate of Richard DeLooze? The provision appears to have been an illegal forfeiture and seizure of assets of the former concessionaire, Mr. Richard DeLooze estate. The DeLooze estate was in Probate Holding until October 14, 2004. This entire paragraph needs close review and ascertain where the $20,000 was placed, did the DeLooze estate receive the token amount of $20,000 which the BOR set up in an arbitrary number. In the same time frame Mr. Petty may well of made over $750,000 in sales and fees collected in managing the DeLoooze estate and contract.
• The terms of the May 20, 2004 contract in Section 5 A. Reimbursement for Investments in Fixed Assets Constructed by Concessionaire. Subsection 1. Needs a thorough review. In this section the government writes in new powers to conduct seizure and forfeiture of assets and declare property abandoned without an adjudication measure or closure of the Probate Estate of Richard DeLooze the former concessionaire.

• Contract Section 8 Accounting Records and Reports – “If the gross receipts are between $250,000 and $1,000,000 a gross receipts statement will be reviewed by an independent certified public accountant in accordance with standards. On June 14, 2005 at a meeting at Folsom CCAO-BOR, which I attended the Park Manager revealed that Mr. Petty had never submitted any financial statements, balance sheets, or accounting for his operations at Pleasure Cove for 2004 and from Jan 1, 2005 until March 28, 2005 termination date.

• Section 10 Special Provisions A. 3.of the Petty contract (5/20/04) required him to enter into new long-term rental agreements with the permittees and mobile home and travel trailer owners by June 20, 2004, and shall specify the terms of the contract. This provision was an the enabler for the BOR to illegally cause the removal of trailers by November 1, 2005, the deadline date to have them off the property was set for February 28, 2006 and it also set about a new policy called month-to-month for this resort only. This clause was in violation of the 1992 Record of Decision (ROD).

• Under the terms of the contract the BOR colluded with the Concessionaire Mr. Petty in a contract clause Section 7 G. Bonds “The Concessionaire may require trailer owners to have bond that would cover cost of trailer removal should a permittee refuse to remove their property or abandon their property on site.” This provision was direct collusion with the BOR and Mr. Petty and it is alleged that this provision was used also as trade-off measure to the $750,000 Performance Bond requirement and used as a measure to “buy down “ or lessen the process that Mr. Petty was facing. So acting as an agent of the government Mr. Petty called a hastily meeting of all permittees at pleasure Cove and laid out his policy for each long-term trailer to provide a $10,000 bond. 33 of the 83 trailers complied with Mr. Petty’s demands. Review article attached here:

On July 29, 2005 I forwarded Mr. Lucero another email on Request for Status of 2004 Gross Receipts. This matter was not responded to by BOR.

REQUEST STATUS OF 2004 GROSS RECEIPTS
Date: 7/29/2005 1:09:04 P.M. Pacific Daylight Time
From:  HAZMATKING

To: PLUCERO@mp.usbr.gov

I am certain you will remember the 2004 gross receipts documents which I previously requested from your Office at Lake Berryessa. I reviewed a same subject item which I have in a suspense file in an email to you, dated July 2, 2005 with attachment and 4 page letter denoting to you several errors remaining in the corrected 2004 report  and that I had requested information on the accounting principles and franchise fees.
 
In further review I looked back at 2003 Gross Receipts documents and found numerous errors of computation and likewise poor reporting. Here are a few of the errors in the 2003. This is in an attachment letter to Oscar Braun dated March 25, 2004     Subject Letter of Intent attached PDF file for your perusal.
 
The first five pages are all skewed because the reporting of individual resorts is incorrect. Also the person who prepared the report did not spell the word "fourth" and used "forth" thru the document. This occurred on all pages of the document.
 
Steele Park Resort Gross and net receipts are reported exactly alike, this surfaced also in the 2004 Excel spreadsheet.
 
Steele Park Resort Total the Gross and Net are not correct and reported as both $2,749,115.90
 
Pleasure Cove Resort 1st Quarter 2003 has a open visual error and both the gross and net are report as $392, 418.17.
 
Markley Cove Resort 1st Qtr the Gross and Net receipts are reported the same amount, $201,481.
 
After that revelation, now go back up to Steele Park 1st Qtr and see the amount of $392, 418.17. I believe there is a major error here because it is the same amount of money for Pleasure Cove and Steele Park reported in the 1st Qtr. This is a terrible error. It makes the report and data sharing in year 2003 skewed and unacceptable. I am concerned about this poor handling and actually what money is going into US Treasury lock boxes promptly and being correctly computed and submitted.
 
If you have any questions about this matter please advise.  After taking a second look at this again, my best advise to you is to get an audit of the Franchise Fees conducted in the very near future and go back as far as the Statue of Limitations will allow. It is apparent you have major problems in this area and it needs to be managed professionally and with a high degree of accountability.
   
 This matter sat in BOR hands and was not responded to accordingly as of August 2, 2005.

Summary

You will find here depicted gross mismanagement of these controlled US Treasury “lockbox” funds and gross malfeasance to the highest degree. It is apparent that whoever is managing this and overseeing this at the BOR Lake Berryessa Field office has absolutely no grasp of the seriousness of this matter.  If they did they would respond and fix the matter and discipline or terminate the person making these serious errors. There is a sizeable amount of money here not being accounted for properly because they are computing the Franchise Fees on the net profits not the gross. I highly question the timelessness of this process and fault the Lake Berryessa Park Manager and CCAO Director Finnegan for allowing this matter to continue to bubble and defraud the US Treasury of earned credits from Gross Sales Receipts and assessing the proper Franchise Fee submittals per the established contracts.  This shows organizational contempt and lack of credibility. I allege that criminal woeful acts have been committed here and charges should be rendered accordingly. I do not expect this type of behavior from Senior Grade Scheduled - Rated employees of the Bureau of Reclamation. Lastly, the finding and posting of an additional $1.362 million Gross Receipts in the Rancho Monticello Resort latest submittal of July 17, 2005 is unbelievable. Whoever is involved in the process of should be removed from there position, disciplined and/or terminated for malfeasance. The amount of newfound money on June17, 2005 in comparison to the May 20, 2005 report attributes to an additional $40, 860 in Franchise Fee dollars to the US Treasury.   

Respectfully Submitted

Henry (Hank) Howard