SINCE 2005 SAN ANTONIO, TEXAS CITY ATTORNEY MICHAEL BERNARD HAS USED THE

POWER OF HIS OFFICE, THE SAPD, CITY STAFF, ETC. AND TAX DOLLARS TO HIDE

DECADES OF CRIMINAL ACTIVITY INSIDE THE CITY AND HIS DIRECT INVOLVEMENT IN

THE ILLEGAL COVER-UP. HE HAS ISSUED ILLEGAL/UNCONSTITUTIONAL CRIMINAL

TRESPASS WARNINGS, CONFISCATED PROOF OF THE CRIMES AND INSTRUCTED CITY

COUNCIL/CITY STAFF TO IGNORE REPORTS OF THE CRIMINAL ACTIVITY. OUR MAYOR,

COUNCIL, POLICE DEPARTMENT, CITY MANAGER, OFFICE OF MUNICIPAL INTEGRITY,

ETC. GO ALONG WITH THE ILLEGAL COVER-UP.

CITY OF SAN ANTONIO, TEXAS’ FORMER CIO RICHARD VARN ( Richard J H Varn has been

allowed to quietly sneak out of the City back to Des Moines, Iowa) AND OTHER CITY WITNESSES

WITH THE ASSISTANCE/COACHING OF CITY ATTORNEY DEBORAH KLEIN COMMITTED

SUBORNATION OF PERJURY/AGGRAVATED PERJURY/OBSTRUCTION TO HIDE DECADES

OF PUBLIC CORRUPTION, THEFT AND BOND/ACCOUNTING FRAUD

Corrupt City of San Antonio, Texas employees have for most of the past three (3) decades secretly dumped invoices, bills,

fake statements , etc. into an internal telephone billing account called the “telephone variable” and fraudulently billed

individual city departments, grantors and others supposedly for overhead telephone expenses- grant funded, city funded

and alternately funded phones alike. These invoices and bills were not for telephone costs, were not associated with

state/federal grants, were not the responsibility of the department/entity billed, were altered to hide the true identity of the

user, contained known fraudulent accounting of hours worked, were for illegal contracts with unauthorized vendors

containing huge markups, were NEVER approved by Council/taxpayers, etc. Fraudulent use of the “variable” violated

City Administrative Directives, City ordinances, municipal/state open bidding regulations, state/federal grants rules, etc.

Internal City documents describe the magnitude of the fraud as “a bottomless pit of money” and “millions of dollars of

goods and services”. Up to $5.2 million a year for every year since 1982 was funneled thru the “variable”- most of the

money for illegal purposes. City Attorney Bernard, SAPD Chief McAnus,, Bexar County Sheriff Ortiz, Bexar County D

A Reed, Texas Rangers (especially Asst. Chief Whitman) and local FBI agents (especially agents Brown, Powers, Pratt,

Radcliff, Diaz and Nelson) ignore police reports (9.0471467/2009-081395) that were “ripped up”, sworn affidavits,

Municipal Integrity intake reports and documented evidence of the violations of law and the ensuing perjury/obstruction

committed to keep the crimes secret. All proof of the crimes was confiscated from City Council , instructions were issued

by City Attorney Bernard not to discuss the criminal activity and an unconstitutional “Criminal trespass Warning” letter

was issued by Bernard and SAPD Chief McAnus barring entry into City Hall, Main Plaza ( City Council chambers), and

other city sites. The “color of the law” is being used to hide the criminal activity. They violate the law to hide decades of

criminal activity including theft of public funds, bond fraud, accounting fraud, grant fraud, etc.

OMB circulars (especially A-87), individual grant guidelines, State of Texas rules/procedures (especially the

State of Texas Uniform Grant management Standards), City of SA Administrative Directives ( especially AD 8.10), etc.

detail how prior approval must be on file for any grant funds to be used to pay for such indirect costs as the “telephone

variable”. These regulations also detail how expenses incurred that provide no benefit to the grantee are prohibited. Texas

Local Government Codes and the City Charter detail procedures required by law that must be followed to spend public

funds. The City ADs detail how required funding is procured through submission, review and approval by Council. AD

6.12 provides clear and concise rules/regulations for the governance, administration and use of the” telephone variable”.

These documents prove that City Attorney Bernard, City Attorney Klein, CIO Varn, IT Director Miller, Chief McAnus

and others conspired to hide criminal activity inside the City. Texas Ranger Asst. Chief Whitman and local FBI agents

assist with the cover up by lying under oath and in official documents.

http://www.sanantonio.gov/hr/admin_directives/index.asp

http://governor.state.tx.us/files/state-grants/UGMS062004.doc

http://www.whitehouse.gov/omb/circulars/a087/a87_2004.pdf

http://www.statutes.legis.state.tx.us/

http://www.sanantonio.gov/clerk/charter/charter.htm

As early as October 2005 the Office of Municipal Integrity (Quinn and Harrison) issued a fraudulent statement that no

wrongdoing was found concerning reports of criminal violations including fraud/misappropriation of funds, threats to

keep quiet, falsification of government documents, contract fraud, etc. yet internal documents show that Budget Director

Peter Zanoni, CIO Michael Armstrong (currently the CIO for Corpus Christi, Tx), IT Director Hugh Miller, MI Manager

Virginia Quinn ( currently an employee of the Texas Department of Family and Protective Services) of and others were

aware of the criminal activity as early as October/November 2005. Virginia Quinn, Tom Schmidt, CIO Richard Varn (

RJV Consulting , a Senior Fellow with the Center for Digital Government ,Technology Policy Adviser to the National

Retail Federation, Director of the Coalition for Sensible Public Records Access, and serves on the Board of Trustees for

the Educational Testing Service), Aida Anguiano, Steve Harrison and others have declared (at times under oath in a court

of law) that no rules, laws or regulations were broken or that there were no rules regulating the “variable” yet

Administrative Directive 6.12 “Use of Telephone: Monthly Billing” published on 01-04-82 clearly “outlines the process

for the monthly billing to the departments for charges which the City incurs for telecommunications services”. CIO

Richard Varn’s and other employee’s courtroom testimonies concerning “investigations” finding the “variable” legal,

contact of Washington DC, reason’s why City created the “variable”, etc. are directly contradicted by 2007 depositions,

City records and published Administrative Directives on the books since 1982. City employees/attorneys lied to keep the

fraud secret. The AD clearly describes the make-up of the “Variable Base Charge” as the “pro rata share of the Centrex

common service and equipment costs, municipal tax, plus administrative overhead costs (simply the monthly telephone

phone bill, taxes and the cost to divide the bills up) .” NOT included in this list of allowable costs are trophy cases, office

painting, office remodeling, travel, radio goods/services, network goods/services, building cabling invoices, department

specific purchases, training, wireless invoices, SanTel /IG Communications/Laser Connect invoices, “padded” invoices,

illegal purchases from non-authorized vendors, “things that would pop up”, “software mandates”, “ things that would

come up that wouldn’t neatly fit into one of those things that still needed to be done”, a means “ to adjust the budgets”,

invoices that were “altered”, or many of the other costs secretly dumped into the “variable ”. These costs are not allowed

under Administrative Directive 6.12 and violate city policy, city budgets, city ordinances, bond issues, etc. A majority of

the $5.2 million a year funneled thru the “variable” was used illegally as far back as 1982 when the billing account was

created.

The siphoning of funds from telephone budgets under the guise of overhead telephone costs but in reality were for

anything but phones violated ordinance (law)/budget/bond mandates. Funds set aside by city ordinances/bonds but used

at the discretion of corrupt City employees violated the legally binding terms of the ordinances/bonds / laws. Funds

obtained thru bond issues mandating allocations for city telephones but used instead for anything corrupt city employees

cared to spend the money on violated the terms of the legally binding agreement between citizens and the City on how

their tax dollars were to be spent. Citizens thru action by City Council and only citizens can decide how their tax dollars

are to be spent. Every time corrupt city employees used funds for other than their intended purpose they broke the law,

violated grants, violated bond issues, violated ordinances/budgets and violated the trust of our citizens to protect their tax

dollars.

The pilfering of public funds violated City/State/Federal regulations, laws, etc. CIO Varn’s courtroom testimony is a total

fabrication concocted by ITSD and the City Attorney to hide decades of criminal activity. In 2007 he testified when

deposed that he didn’t even recognize the term “variable” ( “I don’t know what that is” , “if there is an account for that, I

just don’t know”, “I don’t have knowledge of that”) and knew little of City budget processes. In 2009 under oath in court

he falsely testified that in 2005 he became aware of the “variable”, investigated the bill-back process, contacted

Washington DC, found the variable usage legal, discovered that the City created the variable to help adjust the budgets,

pay for pop-up costs, pay for things that needed to be done, etc. yet FOIA requests reveal that the City has no records of

any “investigation” (deposition and trial testimony on record with City Clerk). Each of twenty-eight (28) state/federal

agencies or their governing agency contacted concerning the federal/state grant fraud have submitted documentation

declaring that they can not locate any “indirect cost rate proposal” or approvals of such proposals thus allowing the City

of SA to use grant funds to pay expenses commonly known as the “telephone variable”. The City of SA has submitted a

similar declaration stating that they can not locate any such approval. Numerous grants covering a wide range of years

awarded by 28 state/federal agencies have been investigated and NO approval can be located. Hence, the costs associated

with the “telephone variable” are not allowed under state/federal grant rules/regulations/guidelines. The magnitude of

costs not associated with grant programs but billed to grants via the “variable” is not allowed and is illegal. Grant Fraud is

a crime and each violation of law is subject to criminal prosecution, fines, restitution and civil penalties.

The City Attorney’s Office illegally denied open records access to documents beginning in 2005 in an effort to keep the

crimes secret. The City’s Office of Municipal Integrity published false reports covering up the violations of law. Fake

audits were published and city witnesses testified in court that they knew one audit was flawed but used it anyway.

Rather than adhere to City mandates or follow state/federal grant rules/regulations and immediately contact the grantors,

perform an audit and refund the misspent funds the City began a crusade to sweep all the criminal activity under the rug

compounding the fraudulent activity with additional crimes of aggravated perjury, obstruction, falsification of government

documents, fraud upon the court, whistle blowing violations, subornation of perjury, etc. Hundreds of thousands of public

funds have been used by corrupt persons to hide the crimes and ongoing illegal cover-up. City Attorney Michael Bernard

and Police Chief McAnus issued a criminal trespass warning barring entry into City Hall and Council meetings before

issuing instructions to City Council and staff to ignore reports from citizens. Councilperson Clamp was sent an email

from Bernard instructing him to not investigate reports of criminal activity, aggravated perjury and obstruction. In

September 2010 City Attorney Bernard informed Civil Rights Attorney Edward Pina that he would lift the criminal

trespass warning and thus avoid a lawsuit. As of February 2011 the criminal trespass warning is still in effect. City

Attorney Michael Bernard lied again.

Every citizen of every City and every State has been affected by the ongoing corruption and fraud. Corrupt City of San

Antonio employees pilfered public funds from every city department, city program, grant funded program, etc. via

fraudulent and illegal use of funds under the guise of a “telephone surcharge over the past three decides. City, State and

Federal taxes, fees, etc. collected from citizens across the State and our Nation were raided by this unscrupulous scheme

of fraud and arrogant disregard for published rules, ordinances and laws. Every citizen of San Antonio was affected as

funds were secretly and illegally pilfered from budgets of every City department including Police, Fire, Public Works,

Animal Care, Aviation, Convention Services, etc. Support and emergency services such as 311 and E911 were drained of

critical funding. Our Libraries and parks were denied funding via the fraud. Critical “safety-net” programs ( Senior

Services, Nutrition Programs, Healthy Start, WIC, Head Start, Childcare, Homeless assistance, Youth Programs, the

Carver Center, Job Training support, Financial Assistance, Health Immunizations, HIV/AIDA/STD Services, Bio-

terrorism/Emergency Preparedness, Food Inspections, the Public Center for Environmental Health, Air Quality

monitoring, the Lead Program, Project Worth, Steps to a healthier SA, Dept. of Education funded initiatives, etc. ) were

robbed of urgently needed funds designed to support our young/ elderly/ ill/ less fortunate citizens or all citizens in time of

emergency.

City of San Antonio, Texas’ Chief Information Officer Richard J H Varn of Des Moines, Iowa suddenly

disappeared from the City. With no public announcement his name has been removed from the City directory,

the City Org chart, the City web site, etc. Calls to City Hall reveal that Varn left “a few months ago” .Varn is

gone. Varn’s sudden departure has been kept secret. When other City officials retire, resign or take other

positions a public announcement is published. Health, Aviation, Convention/Visitor’s Bureau Director’s

accomplishments have been recently and very publically touted when they left their positions. City Manager

Sculley provided glowing accolades when interviewed about their departures and loss to our citizens. Details of

future plans are noted along with efforts to conduct a nationwide search for a replacement. Varn left with no

such announcement. Varn cleaned out his desk and snuck out of town back to his home in Des Moines, Iowa.

Participants (both inside and outside of the City) in the fraud who benefited via the “padded” invoices, illegal contracts,

“no-bid” awards, fake statements, etc. must be investigated. Public funds must be reimbursed. Safeguards must be

instituted to halt further abuses. Persons who participated in the fraud and ensuing cover-up including those guilty of

committing aggravated perjury, subornation of perjury and obstructing justice must be identified and punished as a

deterrent to future crime.

City employees and witnesses who assisted Varn in his illegal endeavor to hide criminal activity including theft,

fraud, falsification of documents, perjury, etc. inside the City’s IT Department cannot simply skip the state as

Varn has done because they reside here in Texas. Most of them remain on the City payroll (City Attorney

Michael Bernard, IT Director Hugh Miller, City Attorney Deborah Klein, IT Fiscal Manager Deborah Segovia,

IT Manager Diana Gonzalez, IT manager Kelly Gray, IT employee Aida Anguiano, IT employee Barbara

Moore, etc.) and continue to have access to our money in spite of the fact that they have conspired to hide

violations of law and cover up the theft of our money. If City employees and law enforcement officers are

willing to lie under oath in court to hide decades of criminal activity one must wonder what else they are willing

to do. If the City can hide decades of fraud, theft, corruption, perjury, etc. from auditors, banks, underwriters,

etc. then what else have they been able to conceal? Isn’t it time that we find out?

This CD contains numerous folders that are indexed for easy review. “Perjury of Varn/Klein” and “Theft of Public

Funds” are the most important files. Other folders provide supporting evidence of the criminal activity and ongoing illegal

cover-up. There are several audio recordings proving that State Auditor John Keel, Senators Wentworth and Van De Putte

and others are aware of the criminal activity and cover-up but; look away to assist with the cover-up. Much more

evidence is available upon request.

The time has come to put a stop to the public corruption, fraud, waste and abuse. The time has come to stop THE Illegal

cover-up. We ask for your help. Thank you.

The sworn affidavit notarized on March 23, 2011 is just one of the many documents delivered to the FBI, DPS,

SAPD, BCSO, the Courts and others.

Crooked SAPD

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