The Association of Bay Area Governments official suspected of embezzling $1.3 million has resigned from the agency, an ABAG spokesman has confirmed, although it’s unclear where he was when the resignation was tendered or whether he intends to cooperate with an investigation.
Clarke Howatt, now ABAG’s former director of financial services, is wanted for questioning in the disappearance of $1.3 million from a South of Market fund meant for parks and other public improvements. He has not been indicted and no warrant for his arrest has been issued.
“It appears that Clarke Howatt ... executed a sophisticated scheme to defraud the agency by creating illegitimate documents, creating false identities, and deceiving (ABAG’s Finance Authority for Nonprofits) board and bank trustees to wire these funds,” ABAG Deputy Executive Director Brad Paul said in a statement.
Howatt, who was scheduled to be in New York at a conference this week, has hired a defense attorney, Mary McNamara. She could not be reached for comment. His daughter, reached by telephone Friday, would not comment on Howatt or where he might be.
Paul said Howatt wrote in his resignation letter that “I will make every attempt to get the funds restored” and “I’ll try my best to get the money replaced as soon as I can.”
The money was discovered missing last month during a routine audit of the South of Market Stabilization Fund, a pool of bond money and developer contributions used for neighborhood improvements.
Staff members in the Mayor’s Office of Housing and Community Development contacted ABAG, which acted as a fund trustee along with Union Bank, and discovered that just under $1.3 million had been wired to a Citibank account in La Jolla (San Diego County) controlled by an entity called Urban West for Rincon Developers.
City Attorney Dennis Herrera’s office has demanded the return of the money and referred the matter to an unnamed law enforcement agency. Because wire fraud may be involved, it would most likely be a federal investigation.
Paul said ABAG has called an emergency meeting for Monday to identify how the missing funds will be replaced.
Howatt’s offices at ABAG, a regional government agency that provides planning and public monetary services to Bay Area cities, were sealed off Friday, and staff members struggled to reconcile the image of a cautious former investment banker with that of an embezzlement suspect.
They described him as a Wall Street Journal-reading economics geek whose interest in topics like affordable housing financing programs went beyond his official role at ABAG. The ABAG Finance Authority for Nonprofit Corporations, which Howatt oversaw, helps nonprofits and other borrowers gain access to tax-exempt debt financing.
“He has been a reliable financier of thousands of deals,” an ABAG employee said. “He has been very cautious with public money — anything he felt was not fully indemnified he sent to somebody else.”
Howatt joined ABAG in 1995 from the San Francisco office of Rauscher Pierce Refsnes, a financial services company. Before coming to San Francisco, he was vice president of the health and education finance group at Kidder, Peabody & Co. in New York.
He lived in a town house in Dublin until September, when he sold the property, according to the current owner.
Update (2/13/2015): Howatt has now been indicted on federal wire fraud charges. Read an update of the story here.