On Monday, Sacramento State released the findings of a long-awaited forensic examination of Capital Public Radio’s finances, shedding more light into years of mismanagement at the NPR member station.
The findings — released in a redacted summary — focused heavily on prior leadership, and found several instances of misuse of funds and conflicts of interest at CapRadio, which is an auxiliary of Sac State. The examination focused on the period of time between July 1, 2020 and June 30, 2023.
The examination also found over $700,000 in “unsupported” payments, or payments that could not be backed up by expense reports or receipts. Nearly $400,000 was paid out to one individual, whose name was redacted.
Sac State President Luke Wood said the results of the exam were “deeply concerning” in a Monday message to the campus community.
“It is absolutely unacceptable that any public organization — particularly one connected to our university — could be so poorly mismanaged,” he said.
Wood added that some information in the findings has been “redacted to avoid jeopardizing a related investigation by the Sacramento County Sheriff’s Office.” CapRadio has reached out to the sheriff’s office for more information about the investigation but has not gotten a response as of publication.
CapRadio management said they would not comment on the forensic examination due to “significant legal considerations.” But CapRadio Interim General Manager Frank Maranzino made a statement in a news release sent by station management on Monday.
“This has been a challenging journey for everyone at CapRadio — and everyone in the community who cares deeply about local public media,” he said. “With the support of our community, CapRadio is in the midst of an inspiring turnaround story that includes stabilizing our finances and operations, improving and expanding audience services and significantly growing listenership and engagement.”
CapRadio reporters reached out to multiple former staff and board members for comment on the report, but as of publication, have not heard back. We’ll continue updating this story as we learn more.
Background
The forensic examination was conducted by an independent accounting firm, Roseville-based CliftonLarsonAllen. It comes nearly a year after unprecedented layoffs at CapRadio and North State Public Radio — which CapRadio operates — including the cancellation of four longtime music programs.
Weeks after the layoffs, a damning CSU audit commissioned by the chancellor’s office detailed significant financial mismanagement at CapRadio, largely tied to a costly move downtown that outpaced funding. Days after the release of the audit, Sac State announced that it would commission a forensic examination.
At the time, former station General Manager Tom Karlo said the report would be released “in either January or February” during an appearance on CapRadio’s Insight.
While the 2023 audit was public, the months-overdue forensic examination was only released as a summary. CapRadio has made a public records request for the full, unredacted report and will provide details if the request yields new information.
Examination’s findings
- The forensic examination found CapRadio paid out roughly $774,700 in “unsupported payments” from its bank accounts. An estimated $370,000 of that went to one individual whose name was redacted, and was identified as Subject #1.
- The other portion of the $774,000 could also have been connected to purchases made by Subject #1.
“An additional $307,493.41 in unsupported payments made by [CapRadio] to AMEX may have been related to purchases incurred by Subject #1,” reads the report, “however, the statements and supporting documentation were not available or could not be located,” examiners wrote.
- The report also found several instances of possible conflicts of interest, all of which concerned then-active board members and their spouses or personal businesses.
“It appears the spouse of a board member at the time held an ownership interest in the [new CapRadio headquarters building at 730 I Street], which, at a minimum, demonstrates at least the appearance of a potential conflict of interest,” examiners wrote.
This points out that the spousal relationship was not mentioned in meeting notes, and that meeting notes failed to mention if the board member was recused from discussion about the building lease.
- The report also lists possible conflicts of interest regarding a then-active board member over furniture that CapRadio purchased for the new building.
‘Nothing was communicated to the board’
Roger Dreyer served on CapRadio’s board of directors from 2018 until October 2023, he said in an interview last fall. He was among the 14 board members who resigned last October days after the initial audit was released. He recently declined to talk about the forensic examination.
But last October, Dreyer told CapRadio the board only became aware of the severity of CapRadio’s financial troubles “when the [CSU] audit was published. That’s the first time the board knew. Nothing was communicated to the board.”
Asked whether the board asked enough questions, Dreyer responded: “The board had its responsibility and did its job. We’re dependent on staff and the general manager. We depend on what they’re telling us to be accurate.”
Dreyer said Sacramento State officials, including those who served on CapRadio’s board, “never brought [the financial troubles] to the board’s attention." He noted that Bena Arao, CapRadio’s former board treasurer who recently retired from his position as a Sacramento State senior manager, never brought up the severity of the station’s financial troubles, either.
Dreyer noted that Jonathan Bowman, Sacramento State’s chief financial officer, was also silent about the station’s financial problems, despite being appointed administrator in charge to CapRadio last September. Bowman resigned from Sac State on July 23.
How did the member station get here?
2019
- CapRadio announces a $10 million relocation to downtown Sacramento. Jun Reina, the station’s chief operating officer and chief financial officer, says CapRadio leadership has considered making the move since 2017. He adds that the station is launching a $10 million “capital campaign” with the specific goal of fundraising for the relocation.
2020
March 2023
June 2023
- Reina leaves CapRadio, and Eytcheson steps down as president emeritus.
August 2023
September 2023
- The California State University releases an audit of CapRadio on Sept. 27 which finds numerous instances of financial mismanagement and questions the station’s ability to move to its downtown office.
- Sac State announces that it will commission its own forensic examination to determine the origins and causes of CapRadio’s operational and financial problems.
- Sac State officials announce Jonathan Bowman, the university’s chief financial officer, will oversee operations at CapRadio.
October 2023
- In a letter sent to Sac State President Luke Wood, 14 CapRadio board members resign, citing “a failure of Sac State to inform and engage with the board in a good faith effort to resolve CapRadio's financial issues.” Four more board members resign later that week.
November 2023
February 2024
- Karlo steps down from his role as the station’s interim general manager but remains on CapRadio’s board of directors as an advisor.
- Frank Maranzino, the station’s former director of technology, replaces Karlo as general manager.
March 2024
July 2024
- Sac State announces Jonathan Bowman, vice president for Administration and Business Affairs and chief financial officer, is resigning.
- Sac State’s director of academic affairs resources Bena Arao, who served as CapRadio board treasurer until October 2023, retires the same week. His departure was announced via internal memo.
August 2024
- Sac State releases a forensic analysis of the cause of CapRadio’s financial problems.
Disclosure: This story was reported and written by CapRadio’s Digital Editor Claire Morgan and Insight Host Vicki Gonzalez, and edited by Politics Editor Chris Nichols, with assistance from the California Newsroom.
CapRadio Producer Sarit Laschinsky and Reporters Laura Fitzgerald and Megan Myscofski contributed reporting. You can follow our ongoing coverage here.
Following NPR’s protocol for reporting on itself, no CapRadio corporate official or news executive reviewed this story before it was posted or broadcast.
Editor’s note: CapRadio is licensed to Sacramento State, which is also an underwriter.
Follow us for more stories like this
CapRadio provides a trusted source of news because of you. As a nonprofit organization, donations from people like you sustain the journalism that allows us to discover stories that are important to our audience. If you believe in what we do and support our mission, please donate today.
Donate Today
