A Stockton official accused former interim City Manager Steve Colangelo this week of failing to seek City Council approval for an investigations contract involving the city’s finances that’s now under scrutiny for lack of proper oversight.
Monday’s meeting of the City Council’s audit committee was the first time city HR Director Rosemary Rivas spoke about her role in putting the $100,000 contract together. Rivas had missed the committee’s discussion of the deal last week reportedly due to being ill.
Vice Mayor Jason Lee had called an initial special meeting last Tuesday to examine the deal after learning from city staff several weeks ago that the investigation the contract authorized hadn’t been done.
Rivas served as a deputy city manager under Colangelo for several months last year. As then-overseer of the city’s finance department, Rivas had helped the interim city manager create the contract, but was unable to answer the Audit Committee’s questions about it last week due to her absence.
But she was able to testify Monday at another committee hearing called by Lee.
“I have concerns about this contract,” the HR director recalled telling another official at this week’s meeting. “It can’t move forward.”
Later that day, Rivas recounted her hesitation to Stocktonia in a phone interview.
“All of it just seemed wrong,” Rivas said of Colangelo’s handling of the contract in a phone call with Stocktonia Monday evening. “All of it seemed wrong, because it didn’t seem like (our usual) practice.”
What’s more, Rivas says Colangelo changed the description of work sought under the contract — which was supposed to authorize a sweeping forensic audit of several years of Stockton’s finances — to exclude instructions to investigate fraud or abuse.
“I don’t know why he mentioned that he didn’t want those words in there,” Rivas told Stocktonia.
Colangelo didn’t respond to Stocktonia’s emails containing questions about the contract and seeking his comment on Rivas’ testimony.
Monday’s meeting marked the second time within a week that the Audit Committee has met to scrutinize the deal, which was signed in May between Colangelo and the Granite Bay-based company Ryland Strategic Business Consulting.
The agreement authorized a forensic examination of city finances from 2021 through 2025, as well as of sales tax funds meant to bolster public safety and New City Hall spending, a copy of the contract shows.
Councilmembers ordered a forensic audit early last year, though council minutes don’t say exactly when. Stockton’s city clerk also didn’t know the exact date. But after learning several weeks ago in a “hallway conversation” that the audit had never been started, Vice Mayor Jason Lee called for a special Audit Committee meeting.
Lee is chair of the Audit Committee, which also includes Councilmembers Michele Padilla and Michael Blower.
Documents show that the city had two contracts with Ryland, one in April for the company to provide Stockton a temporary CFO, and another in May for a forensic examination.
After requesting copies of the city’s contracts with Ryland, the vice mayor believed the May contract may have broken the city’s rules for government purchasing, he said. Both deals were for $99,000, and were signed roughly a month apart, copies of the contracts show.
Collectively worth $198,000, the two Ryland contracts ran afoul of a rule requiring purchases of $100,000 or more to get City Council approval, Stockton’s finance chief told the Audit Committee last week.
What’s more, the deals could’ve broken state law. Under California’s contract code, it’s “unlawful to split or separate into smaller work orders or projects any public project for the purpose of evading the provisions of this article requiring public projects to be done by contract after bidding.”
Stockton’s newly-minted city attorney, Marci Arredondo, didn’t immediately respond to a question about the city’s stance on the contracts’ legality.
At the Audit Committee on Monday, and later in a phone call with Stocktonia, Rivas described how Colangelo had instructed her and other city staffers to carry out various tasks to create and finalize the forensic examination contract.
In April 2025, Rivas claimed, he’d asked to remove wording from the scope of work that specifically asked consultants to investigate possible fraud and abuse.
The official responsible for the contract before Rivas “ had provided (Colangelo) with a scope of work that included the forensic audit … and included words such as fraud,” Rivas told Stocktonia. “I don’t know why he mentioned that he didn’t want those words in there.”
Rivas has no record of the details of that conversation with Colangelo, as it happened in-person in his office, she said. But ultimately, the instructions in the final contract didn’t mention fraud or abuse, a copy of the agreement shows. Rivas didn’t immediately respond to a request for a copy of the original scope of work.
Colangelo didn’t respond to a request for his response to Rivas’ claim.
What’s more, the contract ultimately ordered consultants to carry out a “forensic examination” rather than the forensic audit officials say the City Council ordered.
An examination has different standards than an audit, Ryland’s president told Stocktonia last year. The differences in this case aren’t immediately clear. Nor are Colangelo’s reasons for instructing the company to do a different type of investigation than the one council requested.
As for the $99,000 contract price — just $1,000 below the $100,000 cutoff that triggers City Council oversight — Rivas didn’t know how Colangelo and Ryland arrived at that figure, she told Stocktonia.
And while Colangelo and Rivas never explicitly discussed whether the contract would go to a council vote, Rivas claimed the interim city manager should’ve done so automatically, she told Stocktonia.
“The interim city manager should’ve recognized that he should’ve went to council,” she said. “I think it was his overall responsibility to know what he was doing.”.
Colangelo didn’t respond to a question about whether he told city staff to bring the deal to City Council for a vote.
Throughout Monday’s Audit Committee meeting, Lee pushed Rivas to explain why she didn’t tell councilmembers her concerns about the contract.
Rivas said she reported her worries to Stockton’s former city attorney and considered quitting, but didn’t want to worsen the existing vacuum in city leadership. Former City Attorney Lori Asuncion didn’t return a call for comment.
Ultimately, Rivas decided “my only control was to delay (the contract),” she told the Audit Committee. Rivas also stepped down from her role as a deputy city manager, she said.
She informed incoming Deputy City Manager Chad Reed — who has since left city employment — and Stockton’s new finance chief Gilbert Garcia, hired late last year, of her concerns, Rivas said.
In addition to leading Monday’s questioning of Rivas and other officials — who also faced questions from committee members Padilla and Blower — Lee reflected on the council’s share of the blame for how the contract played out.
“The reason why I’m doing this exercise is … for the council to understand its culpability in allowing the culture to exist that got us here,” the vice mayor said. “(But) that doesn’t absolve the interim city manager of what he did.”.
Lee was among the four councilmembers who voted to hire Colangelo as interim in February 2025, roughly a month after the new City Council took office and forced the prior city manager to resign. Following months of controversy and conflict within City Hall under his tenure, Colangelo’s contract was not renewed in August.
In the year since, Lee has become Colangelo’s most vocal critic on the council, raising questions about alleged financial misconduct during his tenure, from the repurposing of diversity, equity and inclusion funding to Colangelo’s promise of roughly $800,000 in funding without council approval to a local nonprofit. The vice mayor has also sent several concerns about Colangelo to the California State Controller’s Office, which is now investigating the city.
In an interview after the March 10 Audit Committee, Stocktonia asked Lee if he regretted voting for Colangelo. Lee said he’d done it out of trust in Mayor Christina Fugazi.
“Am I disappointed in my vote for him?” Lee said. “I’m not going to say I’m disappointed in my vote for him. Because my vote for him was a vote for the mayor.”
Lee has several times in the last year described Colangelo as the mayor’s pick.
Fugazi did not immediately respond to a question about whether she’s satisfied with having voted for Colangelo.