Psychologist's report in Mendocino County wage fraud case criticized

Prosecutors want to interview a psychologist who wrote a report supporting the mental health diversion of the former Mendocino County payroll clerk, who and the suspended elected county auditor have been charged with a felony.

Special Prosecutor Traci Carillo, who was appointed by District Attorney David Eyster to prosecute the defendant couple, said during a hearing Thursday that she wanted to speak with Ukiah psychologist J. Holden about his conclusion that Paula June Kennedy met the criteria for transfer to a psychiatric treatment program.

“I'm not going to waste the court's time, but I have some questions I need to ask him,” Carillo told Judge Ann Moorman.

Moorman scheduled a follow-up hearing on the issue for Sept. 16. It was the latest delay in a case that even the judge publicly complained had dragged on for too long since the lawsuit was filed in October 2023.

A preliminary hearing, normally the first major step in a criminal case, has yet to be held. Moorman suggested Thursday that may not happen for several weeks, given the legal questions weighing on DA Eyster's decision to charge another elected official and the county's former payroll clerk, who he accused of using an obscure pay code to allow Kennedy to collect about $68,000 in extra pay over three years during the Covid pandemic.

Public defender Mary LeClair objected to a further delay on Thursday, arguing that prosecutors had two weeks to formally respond to her motion on Kennedy's behalf.

LeClair cited court cases supporting the transfer of defendants to mental health treatment programs without the need for formal trials to examine the reasoning behind expert opinions such as Holden's in the Kennedy case.

“You have discretion based on what is in front of you,” LeClair argued.

Thursday's hearing marked a new twist in an already confusing case.

On July 30, LeClair requested that Kennedy's case be diverted because, under Penal Code Section 1001.36, a defendant who has been diagnosed with a mental disorder by a qualified mental health professional within the past five years may be diverted to psychiatric treatment.

Kennedy, who has been in counseling since 2018, claims her mental health has deteriorated since she became embroiled in what she and her supporters believe is a political feud between District Attorney Eyster and Cubbison.

Kennedy said no one disputes that she was paid for her work during a difficult time that affected more than 1,100 county employees, but who approved the extra pay is at the heart of the case.

If the defense's motion is granted, Kennedy's plea of ​​not guilty will stand. If Kennedy successfully completes a mental health treatment program, she may eventually request that the charges be removed from her record.

However, Judge Moorman said Thursday that she was not prepared to rule on the motion until prosecutor Carillo had had the opportunity to discuss in detail with counsel the merits of the motion.

Moorman also said Thursday that even if she were inclined to grant Kennedy the diversion, she could order the repayment of the alleged overpayment.

Last October, District Attorney David Eyster filed a high-profile criminal case against Kennedy and suspended auditor Chamise Cubbison, accusing them of using an obscure pay code to allow Kennedy to collect extra pay over a three-year period during the Covid pandemic.

The case is intertwined with local politics, as Eyster clashed with Cubbison over his own office expenses and his attempts to block her appointment as interim auditor when former auditor Lloyd Weer retired early. Eyster then supported a controversial move by the county board to force the merger of the county's two main fiscal offices — the auditor and the treasurer and tax collector — despite objections from senior staff, including Cubbison.

Eyster fought early in the case against legal action to remove him from the case because of his alleged conflicts of interest, but he quietly resigned earlier this year after hiring Carillo, a former Sonoma County prosecutor, to oversee the case for $400 an hour.

In addition to the issue of psychiatric diversion, the case is also burdened by an ongoing dispute over thousands of emails involving Cubbison, Kennedy and their former boss, retired auditor Weer.

County officials initially rejected defense efforts to obtain copies, saying an outdated email archiving system had been corrupted and the copies were no longer available. Then the county backtracked, saying some but not all had been found.

Judge Moorman recently agreed to serve as a “Special Court Master” and review the contents of an estimated 279,000 emails for relevance to the pending criminal proceedings.

Moorman said Thursday that she and the county's IT director had agreed on a formula that would allow for judicial review of emails related to exchanges between Kennedy, Cubbison and Weer, but not employee matters identified by the county bar association as areas of concern.

Cubbison has insisted throughout the proceedings that there are emails to support her claim that the agreement for the additional compensation was between Weer and Kennedy and that is why she allowed the compensation to continue to be paid after she took office. Cubbison was appointed by the county supervisors as interim auditor before she is elected by voters in 2022 to officially lead the newly consolidated office. Kennedy and Weer, DA Eyster said, blamed Cubbison for the agreement, according to an affidavit he gave in court.

Despite oversight of Moorman's emails, Cubbison's attorney Chris Andrian of Santa Rosa again questioned how anyone would ever know whether all relevant documents to the case had been preserved and made available to defense attorneys.

“I don't want to be difficult, but I still don't think we're going to get a full transcript,” said Andrian, who attended Thursday's hearing via Zoom.