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Corruption Alleged in Modoc County, Calif.

ALTURAS, Calif. (CN) - Modoc County fired its director of social services for trying to clean up rampant corruption, she claims in Federal Court.

Sarah Holshouser sued Modoc County, its Board of Supervisors, and Modoc County Administrative Officer Chester Robertson, claiming retaliation, whistleblower retaliation, False Claims Act violations, failure to provide accurate itemized wage statements and failure to timely provide personnel records.

Modoc County, in northeast California bordering Oregon and Nevada, has about 9,500 residents.

About 20 percent of Modoc County residents live below the poverty line, Holshouser says. The Department of Social Services (DSS) administers public benefit programs, including the CalFresh food stamp program, Medi-Cal, Medicaid, General Assistance, the Cash Aid Program, and Adult and Child Protective Services.

When Holshouser was hired as director of DSS in April 2012, she "inherited a department in turmoil," the complaint states. "The County of Modoc had narrowly escaped declaring bankruptcy in 2010 as a result of unlawful misappropriation of DSS funds for other purposes. The DSS had been without a permanent director for approximately 11 months and the office was in disarray."

In her first week on the job, Holshouser says, she "learned of what she reasonably believed to be illegal activity within the DSS. She learned that some DSS eligibility workers were apparently falsifying or manipulating information regarding eligibility in order to ensure that certain county residents would either be approved or denied benefits regardless of their actual eligibility. She also learned about a Child Protective Services worker who appeared to have tipped off an acquaintance that the police were about to conduct a drug raid on his residence. Ms. Holshouser began to meet with members of the CPS and Eligibility Program Staff to try to determine who was involved in the corruption and who could be trusted, and to determine the nature and extent of the wrongdoing."

The eligibility program manager and the CPS supervisor immediately "demanded that she stop meeting independently with their subordinates," Holshouser says. She claims that though she was their supervisor, "she was forbidden to speak with members of her own staff without first clearing it with them and permitting them to be present. This reaction caused Ms. Holshouser to form reasonable suspicion that the two program managers were themselves complicit in the fraudulent and other illegal activities or were attempting to cover it up," according to the complaint.

When she refused their demands, they retaliated by filing grievances against her and launching a letter writing campaign among the staff to oust her from her position, she says.

As months wore on, Holshouser says, she uncovered more misconduct, including eligibility workers processing their own friends' and relatives' benefit applications, a neglected child being left in his father's custody because of his social worker's personal relationship with the father, misuse of travel money and misrepresentations in federal grant applications.

In her second month on the job, May 2012, Holshouser says, she learned that "although the County had applied for and received federal and private grants to create and maintain Drug Court programs, there were virtually no treatment programs or other anti-recidivist services in existence to justify any significant budget. Over time, Ms. Holshouser observed that money was being spent on travel by multiple members of the County's Drug Steering Committee, including the administrator who worked for her. She was repeatedly rebuffed by County officials when she asked for financial statements to document how restricted grant funds were being used by the program and the Drug Steering Committee."

During the summer of 2012, Holshouser says, she informed County Administrative Officer Chester Robertson and the Board of Supervisors about the corruption, fired misbehaving staff members and reported her findings to the state.

"In September of 2012, in response to Ms. Holshouser's complaints and reports, auditors from the California DSS came to Modoc County to perform an audit," the complaint states. "Many of the staff members who Ms. Holshouser had identified as engaging in wrongdoing called in sick or left early during the time the auditors were there."

Although the Mental Health Department was not under Holshouser's supervision, she says, she objected when she learned that restricted county funds were being used to pay off the student loan debt of an employee in that department.

"In response, defendant Mr. Robertson told Ms. Holshouser to 'keep your nose out of other peoples' departments,'" the complaint states.

About two weeks after the last time she brought that up, Holshouser says, Modoc County fired her.

The Modoc County Board of Supervisors and the County Administrator's Office did not respond to requests for comment.

Holshouser seeks lost wages, doubled, front pay, and punitive damages for retaliation, and pain and suffering.

She is represented by Leslie F. Levy, with Levy, Vinick, Burrell, Hyams of Oakland.

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