Fairfax County's watchdog agency for consumer rights has been so poorly run that some top managers falsified records, spent public money lavishly, rewarded favored employees and intimidated others who complained about the mismanagement, records and interviews show.

Interviews with more than 20 current and former employees and county officials and a review of thousands of pages of documents obtained under Virginia's open records law reveal a department that in recent years has been in turmoil with little oversight. The agency's finance director, for example, was fired this spring for running a tax business out of her office and having an aide baby-sit her son during work hours -- allegations she denies.

The problems at the Department of Cable Communications and Consumer Protection so alarmed county officials that they ordered a criminal investigation and a top-to-bottom audit, which resulted in the sudden retirement of the department's director and demotions of two other top managers, in addition to the finance director's firing.

"We had a situation here where a hostile climate had been allowed to develop, with management by intimidation," said Board of Supervisors Chairman Gerald E. Connolly (D), who, with County Executive Anthony H. Griffin, has ordered reviews of county policies on travel, purchasing and ethics.

The problems developed even as Fairfax was winning national plaudits for management and county supervisors were slashing funds for human services, libraries and parks to balance the budget and provide relief from exploding property taxes.

It's not the first time that management failures have embarrassed Fairfax. Two embezzlements by county workers at other agencies went undetected for years and cost taxpayers more than $2.7 million.

Some supervisors said the latest failures reflect a bureaucracy grown unwieldy and hard to manage now that Fairfax has topped 1 million residents, its workforce has reached 11,500 and its budget exceeds $2.7 billion. Similar problems could become harder to prevent and detect as Washington's largest suburb continues to grow, some supervisors worry. County officials need to improve oversight and their methods of reporting problems, they said.

"You've got the problem of one county executive trying to oversee thousands of people," said Supervisor Elaine N. McConnell (R-Springfield), who went to Griffin about the consumer protection office after employees complained to her. "Department heads need to be more accountable. Something's wrong with the system when one department can go completely to pieces and nobody knew it."

McConnell said 18 employees told her independently of their concerns and said that agency managers and county personnel officials either ignored them or somehow retaliated against them. The climate was one of "total intimidation by managers whose motive was power," McConnell said. She called the problems symptomatic of a system where rank and file workers have nowhere to go to report mismanagement.

Indeed, with 120 employees and an annual budget of $31 million, the department is typical within the county bureaucracy. It has a high profile, however, overseeing such crucial services as the regulation of cable television. It is also where residents go to seek protection from high utility rates, gouging by landlords and contractors and poor cable service.

Griffin said he dealt with the problem immediately and forcefully. But he acknowledged that a bureaucracy as large as Fairfax's requires him to give managers latitude and discretion. "We try not to micromanage," he said. Rather than poor oversight, the problems "related to human relations" issues and could have occurred anywhere, he said. However, Griffin is updating the county's ethics code, unchanged since the 1960s, in part because of the audit.

He also said a regulation in the county's personnel code protects employees who complain about their bosses. But one manager in the department was demoted for violating that rule, he said.

'An Ugly Time'

As director of the cable and consumer protection department since 1978, Ronald B. Mallard, 58, led an agency whose public profile grew as the county's cable provider, Cox Communications, launched a rocky upgrade that prompted thousands of service complaints. Yet many on Mallard's staff and some county officials perceived him as a disengaged manager who often arrived at the office late and left early.

After the audit, Griffin forced Mallard to retire or face suspension, high-level county sources said. Mallard stepped down May 14 after 31 years with the county. He said that he wasn't forced out and that his departure "was purely my decision."

"It was kind of an ugly time to continue to be there," he said.

In the office and on the road, Mallard made time-consuming commitments to outside professional associations, representing Fairfax on the boards of several national and state organizations in the fast-changing telecommunications industry, his appointment calendar and internal files show.

He co-founded a Miami-based company eight months ago that mediates disputes between cable companies and regulators and conducted conference calls during the regular work day, his calendar shows. Griffin and Mallard's boss, Chief Information Officer David J. Molchany, said Mallard did not seek permission to help start and run his own business, as required by county policy. Mallard said that before his retirement, he was not yet on the payroll of Communications Dispute Resolutions.

Mallard, whose salary was $118,750, defended his record in an interview shortly before his retirement. His work for outside associations dealt with "issues critical to county and local government," he said, and did not detract from his job.

Griffin acknowledged that Mallard told him his commitments to outside groups would be time-consuming. "Certainly we can't have department heads gone every week . . . But it's helped us stay informed about a lot of issues," Griffin said.

Mallard said he always worked a full day. "What [didn't] get done during the day got done at the end of the day. . . . I never withdrew" from the management of the agency. He said he had trust in his managers and was not aware of any problems.

"No one said, "We're having ugly times down here in the [consumer] investigation division,' " Mallard said.

Work Hours Questioned

County auditors who interviewed more than 40 current and former employees found evidence of time and attendance fraud, some of which had been reported to Mallard but not investigated further, said county supervisors and other officials.

Carolyn Quetsch, director of consumer protection; chief of investigations Deborah I. Stern; and finance director Denise J. Gould hired several of their friends and neighbors and a relative of Stern's as temporary aides and consumer investigators, then allowed some of them to set their own hours, the county officials said.

Last June, Quetsch registered herself and four colleagues for a conference of consumer agency administrators in the District, a tab that reached $2,645, records show. She spent $545 more to stay downtown at the Renaissance Hotel for four nights instead of driving the 24 miles to her home in Chantilly, a violation of the county's travel policy.

"To be reimbursed for a hotel in downtown Washington is just bad judgment," Connolly said.

Quetsch and Stern, through the county's public affairs department, declined to comment. Molchany said Griffin demoted both to other departments and stripped them of their supervisory duties. Still, county policy requires that they continue to be paid the same salaries, despite the demotions. Quetsch's salary is $93,452 and Stern's $68,874.

Quetsch's travel vouchers were approved by Mallard, records show. Mallard, meanwhile, took 26 out-of-town trips himself from 1999 to 2003, records show, from information technology symposiums at Disney World to gatherings of cable administrators in Santa Fe, N.M., Los Angeles and other cities. He often stayed at resort hotels. For Mallard's four-day attendance at a conference last October, for example, the county paid $344 a night to the Walt Disney World Swan Resort.

Another manager, Johnny Hodge, spent almost $7,000 to replace his county-issued office furniture with leather chairs, a double-pedestal desk, a mahogany bookcase and a walnut credenza, records show, just weeks after he was hired. Hodge, who had been brought in to run the document services division, said the purchases were requested by an office assistant, but records show he requested and signed off on them.

"Whatever the county's standard was, that's what I wanted," he said. Hodge's division was not a subject of the audit, which focused on the consumer protection office, but he was demoted for poor management skills, county officials said, and is now in charge of the copier program.

Despite his demotion, Hodge continues to be paid $94,501.

Elsewhere in the department, some employees falsified their time sheets with their supervisors' approval, reporting hours never worked; others put in for compensatory time that was not properly authorized, the officials said. Meanwhile, some employees were not permitted to earn comp time, a coveted benefit that translates into cash and can be accrued until retirement.

Patricia Graninger, who was hired by Gould as her administrative assistant, said she found herself baby-sitting for her boss's son.

"Denise told me, 'I can get you a good job with good pay,' " said Graninger, who met Gould when they were employed by Washington Gas Co. Graninger said she was out of the office baby-sitting all day one day last July, but her time sheet shows she worked eight hours.

"What was going on there was definitely wrong," she said. "At Washington Gas, you work for the stockholders, but when you work for the county, you're working for the taxpayers." Graninger, who said she was hired without an interview, was fired last fall after nine months.

Gould was fired in April for using Graninger as her personal assistant and for running an outside tax business from her office.

Her attorney, Peter Maignan, denied that any of her staff performed personal duties on county time or that his client was preparing tax returns during work hours. Her performance reviews in recent years "said she walked on water," Maignan said.

The county's grievance board upheld Gould's firing this month. Maignan said he is considering a lawsuit to have her reinstated.

Complaints Ignored

McConnell asked county police to look into possible irregularities in the agency last fall. While that investigation did not lead to criminal charges, Griffin determined that the problems were serious enough to warrant an audit. The "special investigation" was conducted in December and January by two of 12 auditors who review county departments and probe allegations of fraud.

Among the former managers interviewed by the auditors was attorney Deirdre Hammer, who worked as deputy chief of consumer investigations. She said she told Mallard three times that Quetsch directed her to pad the time sheets of four employees. "She hired her friends and put them under my supervision," Hammer said. "She created the policy as she went." She also said she told Mallard and the auditors that Quetsch and other managers allowed their friends to set their own schedules, while they were abusive toward others under their supervision.

Hammer said Mallard ignored her complaints. She was fired for insubordination after receiving several reprimands for swearing and failing to close cases quickly. She says her firing was in retaliation. Mallard, however, denied that he "kicked Deirdre back to anyone in management." He said he asked her to "come back to me with more specifics." She was fired because of her own conduct toward Stern, her supervisor, Mallard said.

Griffin has declined to release the audit or its findings, calling the report a private "working paper" and not a public document.

Since the audit and Mallard's retirement, Molchany has appointed an acting director from inside the county, Gail Eskew, to lead the agency. He said he will conduct a national search to fill the job permanently.

"I want a department head that is extremely involved with the day-to-day . . . a more tactical leader," Molchany said. "That really is a change."

Griffin called the consumer protection division a "Peyton Place." But he said he is satisfied that the internal problems did not affect the way investigators responded to public complaints. Once he became aware of the problems, he quickly addressed them, he said.

"I don't condone hostile work environments," Griffin said. "As soon as the problems became apparent, we attempted to remedy them."

Board of Supervisors Chairman Gerald E. Connolly has ordered reviews of Fairfax County's policies on travel, purchasing and ethics.Ronald B. Mallard, former director of Fairfax's cable and consumer protection department, said that he wasn't forced out of the job he'd held since 1978 and that his departure "was purely my decision." County sources, however, said he was forced to retire or face suspension.Anthony H. Griffin is updating Fairfax's ethics code in part because of the audit of the watchdog agency for consumer rights.Supervisor Elaine N. McConnell said employees told her that they were ignored or retaliated against when they raised concerns.