Embezzled FAN Funds to be Restored

Internal Investigation Report Released

Clarke J. Howatt, a former employee of the Association of Bay Area Governments (ABAG) and former Secretary to ABAG's Finance Authority for Nonprofit Corporations (FAN) is pleading guilty to one count of federal wire fraud in connection with embezzling $3.9 million. FAN and ABAG have announced they have obtained restitution funds from Howatt to enable all the impacted accounts to be refunded, and are in the process of doing so.

In late January 2015, ABAG learned Howatt had stolen $1.3 million from a bank account holding proceeds of bonds issued by FAN to fund public improvements for the Rincon Hill development in San Francisco. FAN and ABAG immediately contacted the U. S. Attorney's office and the FBI to share resources and information. and took action to restore the entire $1.3 million taken from the Rincon Hill account.

Howatt cooperated fully in the investigation and criminal proceedings conducted by the U.S. Attorney and FBI. In addition to the $1.3 million Rincon Hill theft, Howatt admitted to embezzling approximately $2.6 million from bank accounts established in connection with bonds to fund public improvements for the Windemere Ranch development in Contra Costa County.

In March, FAN and ABAG retained the law firm of Orrick, Herrington, & Sutcliffe (Orrick) to lead its investigative effort. Now that the federal investigation has concluded, FAN and ABAG are releasing a report prepared by Orrick on the results of their investigation (see link below).

Executive Director Ezra Rapport said,"The accounts embezzled by a former employee will be restored in full. ABAG wishes to thank the U. S. Attorney's office and the Federal Bureau of Investigation for their prompt and thorough attention to this matter. We are committed to protecting and preserving public funds and we will be working to put into place remedial measures recommended by Orrick that will enhance our ability to detect and avert any future theft."