The Council Audit Committee voted Tuesday to refer questions about two consulting contracts signed by former Stockton Interim City Manager Steve Colangelo to the California State Controller’s Office after members raised concerns the agreements may have bypassed council approval and a planned forensic audit never began.
During Tuesday’s committee meeting, Vice Mayor Jason Lee said the discussion reflected broader concerns about fiscal oversight and transparency raised by residents during the election.
“When we ran for office, the thing that I heard most from the community was lack of transparency,” Lee said. “Everybody that is paying into this organization, our taxpayers, have the right to know.”
At issue were two agreements with the Granite Bay-based consulting firm Ryland Strategic Business Consulting Group totaling nearly $200,000 signed a month apart in 2025. City policy allows the city manager to approve contracts up to $100,000 without council approval, but larger amounts require a vote of the council.
The first contract, signed by Colangelo on April 1, 2025, was for the group to provide financial consulting services for the city’s administrative services department.
In a memo to Human Resources Director Rosemary Rivas, Colangelo wrote that the agreement would “provide the administrative services department with the necessary expertise to meet current workload demands and ensure continued high-quality financial management.”
It was set to expire on April 30, 2026, with a value not to exceed $99,000.
The second contract, signed by Colangelo on May 1, 2025, called for the group to conduct a forensic examination of city finances for fiscal years 2021-22, 2022-23, 2023-24 and 2024-25, with a focus on internal controls, segregation of duties, policy compliance and state, federal and local regulations.
In addition, the group was tasked with conducting a forensic examination and identifying all transactions and allocations associated with the city’s Measure A fund, a voter-approved local sales tax measure, to ensure compliance with voter intent and financial transparency.
The contract also called for a review of the Waterfront Towers, the new location of city hall, including all transactions related to the buildings from the initial purchase through construction, any rental income collected before construction and all construction expenditures.
Colangelo’s memo to Rivas said the forensic examination of city finances would take about eight months and cost less than $99,000.
Chief Financial Officer Gilbert Garcia told the committee both contracts were for $100,000. He said the first contract, for interim chief financial officer services, had been fully spent. The second contract, for the forensic audit, was canceled before work began because the combined value of the two contracts exceeded the city manager’s spending authority.
“Because the two contract values exceed the $100,000 council limit, I directed staff to cancel the one for which no work had been completed so that we did not authorize work that exceeded council limit without going to council,” Garcia said.
Committee members questioned why the second contract was issued without council approval and why the forensic audit, which the council had directed city staff to conduct, never started.
Acting Procurement Manager Stephanie Link told the committee the forensic audit agreement followed an informal request-for-proposals process typically used for contracts under $100,000.
But she acknowledged that issuing two contracts with the same consultant could have effectively bypassed the approval threshold.
“Technically, yeah,” Link said when asked whether the second agreement should have gone to the council. “They saw one as a CPA and one as forensic audit, but it’s still the same vendors, kind of the same scope.”
Asked whether city staff knew the agreement required council approval, Link said, “They’re all aware.”
Link also said the audit project never moved forward after the agreement was created, adding that procurement staff do not manage project timelines once contracts are executed.
“I wasn’t pushing for the second contract so I kind of just let that one go to the side because I knew it was wrong and I wanted to cancel it, close it, the whole bit,” Link said, emphasizing there was a lack of communication between city officials and the vendor. “Nobody really reached out to them to force the forensic audit to happen. Like, the vendor never said, ‘Hey, are we doing this?'”
Some committee members said they were surprised to learn the forensic audit had not begun, noting that updates previously suggested the work was underway.
“I saw there were reports in the media about the forensic audit underway, and it looks like it never even got off the ground,” Lee said. “That is concerning to me.”
District 3 Councilmember Michael Blower called the second contract being signed and then falling through “kind of a head-scratcher.”
“It just doesn’t make sense to me that you have a contract for $99,000 and you wouldn’t do what you could to get it,” Blower said.
The committee ultimately voted to refer the potential “split contract” issue to the California State Controller’s Office, which is already conducting an audit of Stockton’s financial controls. Members also agreed to revisit the matter at a future meeting once additional information is provided by city staff involved in the contracts.
Committee members said the goal was to determine how the situation occurred and ensure it does not happen again.
“This is less of a ‘Gotcha’ and more of a ‘How did we get here?'” Lee said. “When council gives authority or gives direction, we’re expecting that what we say happens and is actually followed through.”
The committee adjourned after directing city staff to bring the issue back for further discussion at the committee’s Monday, March 16, meeting while the state audit continues.
Record reporter Hannah Workman covers news in Stockton and San Joaquin County. She can be reached at hworkman@recordnet.com or on Twitter @byhannahworkman. Support local news, subscribe to The Stockton Record at https://www.recordnet.com/subscribenow.
This article originally appeared on The Record: Committee refers Stockton contracts to state controller as forensic audit canceled
Reporting by Hannah Workman, The Stockton Record / The Record
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