Sanitation district board hires former IRS investigator for audit

May 7, 2015
John Wallace

John Wallace


The South San Luis Obispo County Sanitation District Board voted 3-0 on Wednesday to hire Knudson and Associates to pursue a financial and past managerial review of the last 12 years.

After several years of voting against an audit, in January, the district board agreed to allot $40,000 for an audit of the district’s finances. On Wednesday, the board elected to pay $55,500 for a two phase investigation.

In the first phase of the investigation, Knudson and Associates will analyze financial statements, QuickBook accounting records and district files in an attempt to isolate anomalies. In phase two, the investigators will interview former staffers and district board members before producing a final report.

In January, sanitation district staff spoke of the importance of an audit in order to put into place policies to prevent future financial discreations. Staff said that under Wallace’s administration, chemical costs ran about $600,000 a year and under the current management, chemical costs have fallen to $240,000 a year.

Under Wallace’s administration, former staffers at the plant said the company Wallace purchased chlorine from also provided top management perks such as inclusion in a yearly boar hunting trip.

In 2013, amid allegations of mismanagement, Wallace stepped down. Within months, the plant was operating cleaner at less than 50 percent the cost, according to financial reports obtained from the district.

After voting for an audit, the district board selected nine people as members of a proposal review committee which reviewed candidates. In the end, the committee recommended the hiring of Knudson and Associates. Carl Knudson was a special agent to the IRS who conducted investigations into city government maleficence.

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Too bad he wasn’t around 10 years ago when the LOCSD should have been subjected to the same audit.

You can thank former Grove Beach Mayor Debbie Peterson for making this happen. She pushed for this audit for two years. She is a person of unparalleled integrity who will make a great 3rd District Supervisor!

It literally “takes a village” in this case.

Debbie certainly played an important part, but without the change of Mayor in AG this would not have happened.

In fact, to agendize an audit was the first action made by Mayor Hill once seated back on the SSLOCSD Board on December 3.

(You’ll recall Hill served as the rep on SSLOCSD from Oceano years earlier and was instrumental in bifurcating

the Wallace Administrator contract from the Wallace Group District Engineer contract).

Hill, backed by public support, pushed for an audit, Mayor Shoals concurred and Guerrero caved.

An audit is a win-win for the tri-communities!

Good work all!

It was more like Mayor hill pushed, pushed and pushed and Mayor Shoals and Mr. Guerrero fought hard to stop it by they both finally gave it, hopefully seeing that the public would not let up.

An audit was also the first thing Peterson put on the agenda in 2012 when she joined the board. She picked up on the same issues that Mayor Hill had seen in 2010. Fortunately after she succeeded in reorganizing to save millions, Mayor Hill was then able to succeed in getting the audit. This kind of shift to effective governance takes a few principled leaders and a lot of principled citizens willing to speak out. Kudos to all of them.

Government contracts are a license to steal, you just have to learn not to steal so much that the entity goes bankrupt. That’s too much.

You can check out Knudson’s qualifications at – then go to:

April 15, 2015 Proposal Review Committee

You may see it differently once you do that.

Mr. Knudson’s Professional Experience:

Consultation and expert testifying services related to government law enforcement

and white-collar investigations, both criminal and civil matters. Former IRS special agent

experienced in the investigation and prosecution of complex white-collar crime violations.

Served as summary fact witness and as expert witness in federal and state court proceedings

regarding criminal and civil matters.

Areas of expertise include: Tax fraud, federal and state money laundering schemes,

federal money structuring schemes, wire fraud schemes, mail fraud schemes,

mortgage banking fraud, narcotics trafficking, Ponzi scheme, Pyramid scheme,

Telemarketing schemes, Political Corruption schemes, and embezzlement schemes.

Sounds like the right guy for the job. Can’t wait to see what is discovered.

Maybe he’ll uncover another tryst.

What could be more romantic than sex at the sewer plant?

Your wife is one lucky gal.

I wonder if Knudson is one of the 1.5 millions IRS agents who lied when filing their taxes, or one of the agents who illegally blocked conservative groups from gaining tax-exempt status due to party affiliation, or one of the agents who said Lois Learner’s e-mails were lost forever, (until they were found). But i’m sure they will do a great job because they were trained by the government , for the government and only care what is best for the taxpayers.

If you are wondering why there are so many thumbs down for your comment, check the link in analyticone’s comment above. To answer some of your concerns, I don’t think that Knudson was with the IRS when most of the problems you listed occurred.

I know he is probably very adept at his job, but how often does an article present itself in here that allows me to complain about the IRS? In life one must take advantage of opportunities when they present themselves.

Yes, complain about the IRS but fling an unsubstantiated accusation about a person just because he once worked for them?

Did I say anything about him personally?

Yeah, indirectly, you did. You’d fit right in with the Morro Bay pro-Irons crowd.