News Release News Release The City of Palo Alto
Communications Department
250 Hamilton Ave
Palo Alto, CA 94301


PRESS RELEASE 05/15/2008
Subject :

Criminal Investigation of Financial Irregularities at Children’s Theatre Ends
Contact : Lynne Johnson, Palo Alto Police Chief    650-329-2115
Steve Lowney, Office of the District Attorney    408-792-2751
Palo Alto, CA - For the last 11 months, the Palo Alto Police Department has conducted a criminal investigation into financial irregularities at the Children’s Theatre and maintained ongoing communication with the Office of the District Attorney on the status of the case. Although there is some evidence of personal use of City funds, as well as more than 150 duplicate reimbursements from the City and the Friends of the Children’s Theatre organization, and City funds being transferred to personal accounts, the Police Chief, in consultation with the District Attorney’s Office, has determined that there is not sufficient evidence to prove criminal activity beyond a reasonable doubt at this time. 
The investigation was initiated based upon probable cause that included inconsistent and conflicting statements made to police investigators by the Theatre staff regarding a burglary at the theater on June 18, 2007. As part of the investigation, search warrants were served on 12 bank accounts, three homes and four storage spaces of the staff, as well as Theatre offices. Numerous interviews have been conducted and over several hundred boxes of financial records, tax returns, email messages and other documents have been reviewed. The investigation has revealed significant instances of serious financial misconduct and other possible criminal activity, as well as violations of City ordinances and Policies and Procedures.

While the investigators have not yet completed review of all of the evidence, the statute of limitations has expired for some of the activity.  Due to the statute of limitations issue together with the reduced likelihood of reaching the high burden of proving criminal activity beyond a reasonable doubt, the City’s investigation into financial irregularities will be closed. The City’s Administration investigation, however, will continue and staffing at the Theatre will remain the same until further notice. 

"I know that this investigation has been very difficult for many, the staff involved, the Police officers conducting the investigation, the children involved in theater programs, and the Palo Alto community; however, we had no choice other than to do the thorough job that the public demands and expects from its police force, even when an investigation pertains to a beloved community institution," stated Lynne Johnson, Police Chief. "It is the obligation of this Department to conduct thorough investigations into alleged criminal activity of any person, without regard to the person’s popularity or position in the community."