Fresno city officials are threatening litigation to recover the $1.5 million in Measure P funding that was embezzled by a former employee of the Fresno Arts Council.
Fresno Mayor Jerry Dyer, City Council President Mike Karbassi, and City Council Vice President Nelson Esparza released a statement on Tuesday addressing the embezzlement, saying they are appalled with the Arts Council for not having the safeguards in place to prevent the fraud.
The backstory: The Arts Council received a five-year contract from the city in 2023 to administer and distribute grant funds for Measure P.
The Arts Council has been responsible for the 12% Measure P allocation that is set aside for competitive grants to nonprofits for expanding access to arts.
Driving the news: Fresno police confirmed on Monday that the city launched an investigation into the $1.5 million embezzlement, and the city council scheduled a special closed session meeting for Tuesday to discuss potential litigation regarding the embezzlement.
The city revealed Tuesday that city officials were notified by a Fresno Arts Council board member on Feb. 5 that an employee had embezzled around $1.5 million in Measure P funding.
The big picture: Per the city, the Arts Council received $9.7 million in funding for the first two years of Measure P. All of those funds were distributed by the Arts Council to the community.
In 2024, the Arts Council received $5.7 million in its second cycle of funding and distributed the vast majority of that funding to the community. Some of that funding is still owed to the community due to the embezzlement.
Last October, the city denied the requested $6.6 million payment to the Arts Council because the council did not provide sufficient documentation to justify prior expenditures.
The city has since cancelled the contract with the Arts Council.
What we’re watching: The city will administer funding for the third cycle of Measure P grant funding itself.
City officials will also determine how to provide the funding to the organizations that did not receive their grants because of the embezzlement.
What they’re saying: “The Mayor and members of the City Council are appalled by the lack of safeguards put in place by the Fresno Arts Council, which ultimately allowed this embezzlement to occur,” the city said in a statement.
The statement continued, “The loss of $1.5 million of taxpayer dollars is unacceptable. The City of Fresno will pursue every available avenue to recover these hard-earned taxpayer funds up to and to include litigation.”