Association of Bay Area Governments (ABAG) / ABAG Finance Authority for Nonprofit Corporations
Outcome
Clarke Howatt, 56, former Financial Services Director of the ABAG Finance Authority for Nonprofit Corporations (FAN), was sentenced to one year and one day in federal prison plus six months of home confinement for embezzling nearly $3.9 million in bond proceeds intended for public infrastructure improvements associated with Bay Area development projects.
Details
Association of Bay Area Governments (ABAG) — Bond Fund Director Embezzlement (2011–2015)
Outcome: Clarke Howatt, 56, formerly of the San Francisco Bay Area (later of Portland, Oregon), former Financial Services Director overseeing bonds issued by the ABAG Finance Authority for Nonprofit Corporations (FAN), was sentenced on March 23, 2016 to one year and one day in federal prison plus six months of home confinement for embezzling nearly $3.9 million in bond proceeds between June 2011 and January 2015.
ABAG is the Association of Bay Area Governments — the regional planning agency for nine Bay Area counties. The ABAG Finance Authority for Nonprofit Corporations (FAN) issues tax-exempt bonds to finance public infrastructure improvements. Howatt served as the Financial Services Director in charge of bonds issued by FAN.
Between June 2011 and January 2015, Howatt embezzled bond proceeds related to two development projects: the Rincon Hill highrise development in San Francisco's South of Market District, and the Windemere Ranch housing development in San Ramon. These bond funds were intended to finance public works — streets, sidewalks, and schools to offset the impacts of building development.
Howatt pleaded guilty in December 2015 before U.S. District Judge Charles Breyer to one count of wire fraud, admitting to the electronic transfer of $1.3 million in stolen funds and acknowledging total embezzlement of nearly $3.9 million. Howatt and his parents had repaid ABAG approximately $3.5 million by the time of sentencing, which was considered in the sentence determination. Judge Breyer sentenced him to one year and one day in prison plus six months of home confinement.
Primary Source: Former ABAG official sentenced in $3.9 million embezzlement
How Crucible Prevents This
Howatt exploited his role as Financial Services Director — the single point of authority over bond fund disbursement — to divert nearly $4 million in public infrastructure bond proceeds over four years. Crucible's bond fund segregation hook ensures that bond issuance proceeds are deposited into escrow accounts with independent trustee oversight, and no disbursement is possible without co-authorization by an independent trustee and the issuing agency. A project expenditure cross-reference control confirms all bond fund disbursements against documented infrastructure project invoices and approved project budgets before release.
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