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High Yield Investment Scheme

Sanger, CA |

Was just wondering....

Is it lawful for a local public agency to requires fees for its services which it then deposits into an "investment account" in order to obtain yields on the collected fees before disbursing it to the state treasury?

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Attorney answers 3


The authority or prohibition to do what they do probably comes from the county or city government codes or the California government code. Check that, or call a lawyer who knows government law.

David Mallen

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That is not an "investment scheme." It is earning income from the float on payments the agency receives, which is a common practice. As my colleague correctly notes, the statutory authority under which this agency operates either allows or prohibits the agency from doing this.

Legal Information is Not Legal Advice My answer provides information about the law based on the limited information provided in the questions asked and is not intended to provide legal advice or opinions, and does not constitute an attorney-client relationship. The answer to the question is for educational and informational purposes only. The law differs in each jurisdiction and may be interpreted or applied differently depending on the jurisdiction or situation. Accordingly, I highly recommend that you consult with an attorney to discuss the details of your problem so you can get legal advice tailored to your particular circumstances.



Mr. Lechtzin, I found it curious that you state it is "earning income". Was just wondering where you arrive at that description from? Are you saying that income is interest on corporate profits?


Probably so unfortunately; as pointed out by other counsel already! I find it difficult to believe that a public agency would engage in such conduct UNLESS authorized to do so by either statute, or other applicable authority!



I found it remarkable too, especially where the statute was Cal. Gov. Code sec. 68085.9 and it boasts no "interest bearing" account provisions. Personally, I believe I have caught the agency skimming; however, I am inclined to agree with Mr. Lechtzin that there may be some other "public investment" regulations that may allow this obvious high yield interest program. My friends and I have calculated that the agency is making approximately a million dollars a quarter just on interest collected and we've also noted that the agency manipulates the public to pay extensive fees so there is an obvious investment scheme going on. Just have to wrap up some loose ends with some more documents and we are going to take this to other authorities. We just are not sure who to approach with this as yet. Thank you to everyone for your input. Appreciated.

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