Fresno staff report alleged $1.5 million embezzlement by Arts Council, commission recommends $1.5M appropriation

City staff told commissioners on Feb. 23 that an employee of the Fresno Arts Council allegedly embezzled approximately $1,500,000 in Measure P Expanded Access to Arts and Culture grant funds and that the city had begun a forensic reconciliation and law‑enforcement referrals.

The city manager, Georganne White, and Shelby McNabb, assistant parks director, outlined steps taken since the matter came to light: the city was informed on Feb. 5, met with the Fresno Arts Council on Feb. 6, the Fresno Police Department opened a criminal investigation that same day, and the city terminated its contract with the Arts Council effective Feb. 20 and requested return of related documents. Staff said they have begun financial reconciliation and will pursue legal remedies and insurance claims as appropriate.

Why this matters: the alleged loss affects dozens of nonprofit arts organizations that had been awarded Measure P grants. Staff told the commission that reconciling contracts, bank statements and grant paperwork is the top priority so the city can identify who is owed payments and how much must be recovered before funds are reissued.

Shelby McNabb said the city received a spreadsheet from the Arts Council on Feb. 6 and is verifying its contents. "We received documentation from the Arts Council on Friday, and we need to verify that," McNabb said. She reported that the spreadsheet showed 96 grantees had received their upfront 90% payment and 33 were listed as unpaid for first payments; she cautioned the commission that those figures were provided by the Arts Council and remain subject to forensic verification.

Tu Zhong, business manager for the parks department, presented an annual appropriation resolution (AAR) the administration will ask City Council to adopt that would appropriate up to $1,500,000 into the Parks budget contingent on funds returned by the Fresno Arts Council. "The funds will only be made available and expended by the parks department up to the amount of funds received," Tu Zhong said.

At the meeting the commission moved and seconded a recommendation to City Council to adopt the AAR (first amendment to AAR no. 2025‑179, appropriating $1,500,000 contingent on return by the Fresno Arts Council). Commissioner Collier moved the recommendation; Commissioner Dolan seconded. The commission approved the recommendation by voice vote.

Staff emphasized uncertainties: Georganne White said the $1.5 million figure was what was reported to the city and that staff had not independently validated it. "We can't vouch for the accuracy," White said. Staff also cautioned that law enforcement and forensic accounting work could change the total and that some recovered funds may take time to flow through insurance or litigation recoveries.

Next steps: staff said they are reconciling Cycle 1 and Cycle 2 records, contacting grantees via a dedicated phone line and email, evaluating insurance and indemnity options, and considering short‑term general‑fund coverage if recovered Measure P dollars are not available immediately (with reimbursement when Measure P funds are returned). The commission directed staff to continue monthly updates to PRAC and asked that the city prioritize getting owed Cycle 2 grantees paid as reconciliation proceeds.

Ending: The commission approved recommending the AAR to council; City Council action and the outcome of the forensic and law‑enforcement inquiries will determine timing and amounts of any payments to grantees.