The former head of an Alameda County anti-poverty agency is suing the county and a slate of local government officials for $20 million, alleging they targeted her and her husband in a “politically motivated criminal prosecution” over misspent federal grant money.
Nanette Dillard, the former executive director of the now-defunct Alameda County Associated Community Action Program, and Paul Daniels, her husband who also worked for the agency, filed the federal lawsuit Monday.
In 2012, county prosecutors filed 10 criminal counts against Dillard and Daniels, alleging they inappropriately covered some operating expenses of their agency with more than $400,000 from a federal grant meant to help encourage people of limited means to save money.
By last spring, however, almost none of those criminal charges had stuck. A jury in 2014 found Dillard and Daniels not guilty of half the counts against them, and an appeals court last March tossed all but one of the remaining charges.
Dillard and Daniels’ lawsuit alleges the county’s Board of Supervisors pressured the district attorney’s office to prosecute them, forcing the couple into an expensive, years-long defense that “laid waste to their careers, reputations and lives.”
The lawsuit names the county as well as its board of supervisors, county administrator and auditor-controller as defendants, along with two former members of the Associated Community Action Program board.
Alameda County officials have not yet filed a response to Dillard and Daniels’ complaint. The county counsel did not respond to a request for comment on the lawsuit Tuesday, and the district attorney’s office declined to comment.
This isn’t the first time Dillard has sued Alameda County. She ran the anti-poverty Associated Community Action Program for seven years until she was fired in 2011. That same year, she filed her first lawsuit alleging that her termination by the agency’s governing board — made up of a county supervisor and representatives from every city of the county except for Berkeley and Oakland — involved a violation of the California Brown Act, which requires public government bodies to conduct their business in public, with few exceptions. She claimed Supervisor Nate Miley, named as a defendant in the latest lawsuit, introduced comments from a consultant hostile against her in a suddenly called closed session. The county agreed to settle her lawsuit for $300,000.
In the new lawsuit, Dillard and Daniels allege that prosecutors filed criminal charges against them in an effort to recoup the settlement money so the county could reimburse the federal government a portion of the misspent funds. The lawsuit also claims the county was angry at Dillard for suggesting the agency’s governing board should be restructured to limit supervisors’ political influence over its work.
Among other things, a county audit accused the couple of spending federal grant money for staff massages at the Claremont Hotel in Berkeley. The audit also found they tried to get rid of any incriminating documents by visiting the office at 1 a.m. but were caught on video surveillance.
The county shut down the agency in 2011 following 40 years of operation after Dillard and Daniels were fired.
The criminal case against Dillard and Daniels revolved around $500,000 worth of grants the agency received under the federal Assets for Independence program. The money was supposed to be given to people who needed a boost as they saved up for major expenses, such as college educations or buying homes.
The U.S. Department of Health and Human Services eventually demanded the agency repay about $435,000 of misused funds. The agency only had $117,000 in its reserves, potentially leaving the county on the hook for the remaining $317,000. Attorneys for Dillard and Daniels have alleged the county pushed for their prosecution to ensure that money would be covered by its insurance.
The public corruption trial against the couple lasted four months. In the end, a jury convicted Dillard in March 2014 of three felonies for stealing from the federal government and misleading the government agency that awarded the federal grant. Daniels also was found guilty of grand theft and false accounting by a public official.
They were acquitted of charges that they used grant money for personal profit and that they misappropriated grant funds to meet payroll for the agency staff.
Their defense attorneys called the charges against their clients “bogus” during the 2014 trial, claiming that the couple were scapegoats for top Alameda County officials and the fiscal and political problems that eventually led to the dissolution of the agency they worked for.
They were not sentenced to any prison time but were ordered to pay more than $300,000 in restitution and five years of probation each.
In March 2018, their theft convictions were overturned by the First District Court of Appeals, which ruled that the misuse of federal funds was a matter for federal authorities — not prosecutors in the state court system. The only upheld conviction was against Dillard, for falsifying documents.
Though they mostly prevailed in fighting the charges, Dillard and Daniels say their trial and subsequent appeal required them to spend $500,000 on attorney fees. They allege they were “rendered essentially unemployable” during the drawn-out criminal proceedings, which caused them to lose their home to foreclosure. Their lawsuit seeks $5 million in compensatory damages and $15 million in punitive damages.