RICHMOND -- Days after an independent report found that the city's Human Resources director misused staff and public funds, Mayor Gayle McLaughlin says she is "deeply concerned" and will meet with City Manager Bill Lindsay on Thursday to learn more.

"I have asked the city manager for the full report," McLaughlin said. "What was provided in the news release was very concerning and raises more questions."

The questions stem from a news release Lindsay issued Friday announcing the completion of an independent investigation into allegations that Leslie Knight, the city's second-ranked administrator, ran a personal business using city staff, enriched herself with financial perks she was not entitled to and retaliated against subordinates.

Richmond Mayor Gayle McLaughlin, seen in a Thursday, Aug. 9, 2012 file photo. (Susan Tripp Pollard/Staff)
Richmond Mayor Gayle McLaughlin, seen in a Thursday, Aug. 9, 2012 file photo. (Susan Tripp Pollard/Staff) (SUSAN TRIPP POLLARD)

Lindsay confirmed Tuesday he will meet with McLaughlin and added that he will work out a plan in the coming days to determine how much money Knight owes the city and set a repayment plan.

"I don't know the amount until I go through the records," Lindsay said. "But (Knight) will make the city whole financially."

The investigation found that Knight did not use public resources to make profits with a trinket business but that she did improperly receive at least $400 monthly in car allowance -- while also using a city vehicle -- and directed a subordinate to search the computer of her accuser, a city finance manager named Stacie Plummer. The city paid a Sacramento law firm at least $30,000 to conduct theinquiry.

The investigation, which included dozens of interviews and sifting through thousands of documents, determined that Knight used paid staff time, equipment and city storage rooms to "create free gift items ... for city employees." Knight also advertised a trinket business during that time called "Little Luxuries" but Lindsay said the report concluded that Knight "did not receive any financial gain" by making the free gift items while on duty.

Knight holds a law degree and has been the city's assistant city manager and human resources director since 2006.

Asked whether using city vehicles while also receiving a car allowance -- meant to offset the cost of using a personal vehicle instead -- amounted to theft, Lindsay said no.

"I would clarify it as poor judgment," Lindsay said.

Lindsay declined to say what, if any, discipline Knight might face, citing privacy laws. Misappropriation of public funds is a felony punishable by prison time and loss of public pension.

Contra Costa County deputy district attorney Steve Moawad on Monday declined to comment on whether his office would conduct an investigation into Knight's actions.

Knight issued a statement Wednesday through her attorney, Thomas Bertrand of the firm Bertrand, Fox & Elliot in San Francisco. Bertrand noted that "the bulk of the numerous allegations made against Ms. Knight have not been sustained."

"To the extent that any such allegation was sustained against Ms. Knight, she acknowledges that she did make certain mistakes, she has apologized for them, and she will take corrective action," the statement said, adding that Knight looks forward to moving on and serving the residents of Richmond.

On Tuesday, Plummer accused Knight of willingly stealing from the public and said that a lower-level employee would have been fired for similar offenses. Plummer said she kept meticulous records as finance director and estimates that Knight reportedly misused about $600,000 in public money since 2006.

Plummer said she arrived at the total by adding the monthly car allowance to the salaries for time Knight and her staff of five worked on making, storing and distributing trinkets.

"I expect there will be a criminal prosecution," Plummer said.

Lindsay said Knight, who remained on the job throughout the investigation, will continue to operate in her post as the city's second in command.

"Every situation of misconduct is evaluated based on the specific facts of the case," Lindsay said, adding that "there have been lower-level employees that have been involved in misuse of city vehicles and they have not resulted in termination."

Knight's base salary in 2011 was $220,000, with total compensation of $281,507, according to this newspaper's public employee salary database.

Contact Robert Rogers at 510-262-2726 or rrogers@bayareanewsgroup.com and follow Twitter.com/roberthrogers.