“They purchased equipment and things that we felt were beyond what they needed.” - Kristina Picciotti
“I'm not going to turn down jobs, especially when I thought I was helping the Indian tribes.” - Philip Picciotti
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Philip and Kristina Picciotti know how it looks.
The couple admits that audits and court filings make it appear they bilked the Torres-Martinez Tribal Temporary Assistance for Needy Families program out of millions of dollars in ineffective, incomplete, non-working computer hardware and software.
And that they lived the high life on the taxpayer-provided funds they received.
But there's more to the story, the Picciottis contend.
The couple said they did what they were hired to do, as tribal officials hurriedly purchased an array of expensive technology for the welfare program — more than it needed, the Picciottis said.
“Literally they drove us into bankruptcy,” Kristina Picciotti said of the Torres-Martinez program.
She and her husband, an American Indian of the Mandan-Hidatsa-Arikara affiliated tribes in North Dakota, operated Bird Above, an IT company they formed in Phoenix in 2000. Phillip Picciotti designed and installed the IT products; Kristina Picciotti handled bookkeeping.
Bird Above's first job for the Torres-Martinez tribal welfare program was small — wiring a new trailer the tribe was installing, Philip Picciotti said.
Soon thereafter program officials wanted much more, the Picciottis said.
“They just wanted to spend their money,” Kristina Picciotti said.
The couple said they warned officials that the program faced big costs when equipment later might need to be replaced, repaired or maintained.
“They purchased equipment and things that we felt were beyond what they needed,” Kristina Picciotti said.
“It was more, more, more.”
Added Philip Picciotti, “I'm not going to turn down jobs, especially when I thought I was helping the Indian tribes.”
The couple wrote a proposal for the tribal program that included many different things on program officials' wish list: a video conferencing system between up to 10 locations, servers, data backup, case-tracking software and more.
“They saw the proposal, accepted the proposal and gave us a check for all of those jobs,” he said.
“They had to spend the money before a certain time, I think it was the end of the year.”
“I remember they were really antsy to cut us those checks,” Kristina Picciotti said. “They didn't want them in their hands and they wanted us to cash them as soon as possible.”
It was after receiving the tribal windfall that the Picciottis put together detailed specifications for the project, they said.
The couple's version is supported by the Torres-Martinez tribe's 2002 audit.
“A single vendor received multiple contracts to design and install nearly all components of the networking hardware and software at all sites,” stated auditors from The Sells Group.
“There was no documentation of any competitive bidding of this networking project. In some cases, payments to the vendor were dated prior to the quote being received, with invoices dated much later. The same vendor defined the specs and then submitted a quote for the project.”
Auditors added, “The former TANF program management appears to have been ill-prepared to negotiate large-scale business transactions, or was very careless with federal and state taxpayer money.”
The Picciottis were sued in 2002 by an Arizona business partner. A Maricopa County, Ariz., Superior Court judge later found that “from January through September of 2002, Bird Above had sales of over $4 million” and that the majority “was generated from contracts between Bird Above and the Torres-Martinez Tribe.”
Auditors question work
As Raymond Torres took over as chairman of the Torres-Martinez tribe in 2002, Bird Above, and the tribal welfare program officials they had worked with, came under fire.
Auditors found many issues with Bird Above's work in the fiscal year 2002 audit:
• Auditors saw no evidence a nearly $1 million case-managing software program was ever implemented.
“The whole question of being able to monitor who is in the program, do you have a person registered in L.A. and the same person is also receiving assistance in Riverside? The system was supposed to be able to track all of that stuff, but couldn't,” Ronald Sells, president of The Sells Group, told The Desert Sun.
“We also had errors that the system should have caught, but didn't.”
• The program had paid Bird Above about $150,000 to develop a Web site “but when we examined it, it told us nothing about the TANF program, what the eligibility criteria are, the area served, where to go to apply or other information that would promote the TANF program,” auditors stated.
• The program paid nearly $600,000 for a two-year extended service parts agreement. “Considering the amount the program paid for the equipment, why was it not already covered by manufacturers' and the installer's warrantees?” auditors asked.
• Costs charged to the Torres-Martinez welfare program by Bird Above for hardware “were estimated to exceed fair value by $176,132,” the audit stated.
“They certainly took that program for millions,” Sells said of Bird Above.
The Picciottis denied that they overcharged the program for hardware.
And their case-tracking software was functional, and dozens of employees were trained to operate it, they said.
“The people that were trained were fired,” Kristina Picciotti said. “The auditor comes in and the new people say, ‘No, we don't know how to work this. It's useless.'”
Tribal welfare program executive director Virginia Hill, who resigned under pressure in the spring of 2003, concurred about the case-tracking system.
“The software did work; it worked perfectly,” she said.
The $600,000 warranty “covered every piece of equipment, every service provided. It was call us anytime, day or night, with any problem. It was an all-encompassing warranty,” Philip Picciotti said.
“They stopped using me. They never contacted me.”
Said Kristina Picciotti, “We sent letters to the tribe, e-mails, week after week for a long time — ‘Look, what we did had value. If you don't understand the software for some reason, we're willing to train you. If the Web site doesn't work, provide us with content. Let's sort this out.'
“We were just cut off at the knees.”
The tribe scrapped the case-tracking software.
“It was a lot of money that they just let go,” Philip Picciotti said.
Their exclusive client having cut them off, with bills mounting for projects already started and legal fees piling up from the Arizona lawsuit, Bird Above folded in September 2002.
The Picciottis said they considered filing a lawsuit against the Torres-Martinez, but were told by an attorney that it was virtually impossible because of the tribe's sovereign immunity.
By December 2004, the Picciottis had filed for Chapter 7 liquidation bankruptcy.
Witnesses to waste?
During more than a year working on-site at the Torres-Martinez tribal welfare program's offices in Los Angeles, Thermal and elsewhere, Philip Picciotti said he saw numerous examples of waste and extravagant spending.
“Every day we saw it,” he said. “Every employee was bought a car.”
Sells found in his audit that the program bought approximately 45 cars for its 90 employees in 2002.
“They were basically given too much money,” Philip Picciotti said.
“You just can't give a tribe that much money with no guidelines. Is it their fault? I don't know — You give them all those millions and say, ‘Here's a program and here's three paragraphs of guidelines,' and they're going to do whatever they want.”
Added Kristina Picciotti, “It's an entitlement. They're entitled to the money whether they break the rules or not. They're allowed to run amok with our funds.”
Looking back, the couple said, they'd change everything.
“To do it over again, I'd tell them to take their jobs and shove them,” Kristina Picciotti said.
In June, Torres-Martinez Temporary Assistance for Needy Families program had apparently gone back to the drawing board. Program officials published a request for proposals seeking bids from companies to provide the program with a new, high-definition, video conferencing system.
