ABAG manager admits to embezzling millions

A former financial services director for the Association of Bay Area Governments pleaded guilty to a fraud charge in federal court in San Francisco Tuesday and admitted to embezzling nearly $3.9 million from the agency.

Clarke Howatt, 56, formerly of Oakland, entered the plea before U.S. District Judge Charles Breyer and will be sentenced by Breyer on March 23.

He pleaded guilty to one count of wire fraud in the electronic transfer in 2014 of $1.3 million in stolen funds slated for public improvements related to a San Francisco development project.

At the same time, he admitted during the plea that he stole an additional nearly $2.6 million related to a San Ramon project between 2011 and January of this year, making the total theft close to $3.9 million.

The conviction carries a possible maximum sentence of 20 years in prison.

Howatt, who resigned in late January when the embezzlement began to be discovered, was in charge of bonds issued by an ABAG affiliate, the ABAG Finance Authority for Nonprofit Corporations, known as FAN.

The bond proceeds were to be used for public works such as streets, sidewalks and schools to offset the impacts of building developments. ABAG, based in Oakland, is a regional planning agency for nine Bay Area counties.

The first embezzlement to be discovered was the theft of $1.3 million intended for improvements related to the highrise Rincon Hill development in the South of Market district of San Francisco.

Howatt admitted in the plea agreement that he submitted a fraudulent request to FAN in Aug. 12, 2014, for reimbursement of $1.3 million for improvements supposedly made by the developer. He admitted that in fact, the actual developer had never submitted such a request and that he had the money sent to a bank account he controlled.

Howatt also acknowledged in the plea agreement that he took three similar fraudulent actions to embezzle bond proceeds intended for capital improvements related to the Windemere Ranch housing development in San Ramon.

The amounts fraudulently transferred to Howatt’s bank accounts were $1,098,712 in 2011; $1,225,000 in 2014; and $256,082 on Jan. 26, 2015, according to the agreement.

ABAG said in a statement that it has obtained financial restitution from Howatt to restore the funds in all the affected accounts, and is now in the process of making the reimbursements.

The agency has also taken measures to reduce the risk of theft, it said.

ABAG Executive Director Ezra Rapport said in the statement.

“The accounts embezzled by a former employee will be restored in full. …¬†We are committed to protecting and preserving public funds and we will be working to put measures into place that will enhance our ability to detect and avert any future malfeasance.”

After the San Francisco-related theft was discovered in late January, Howatt cooperated with ABAG, the U.S. Attorney’s Office and the FBI in the investigation, ABAG said.

Howatt has been free on $500,000 bail since he was charged with the wire fraud count in February.