Allegations of financial impropriety made by Terri Velasquez, Colorado Springs’ former chief financial officer, have no merit, City Attorney Chris Melcher said Wednesday.

An investigation launched almost eight months ago by Mayor Steve Bach found that the multiple claims of wrongdoing were unfounded, he said. The investigation also found that Velasquez’s termination from the city was justifiable, Melcher said.

“We’ve carefully reviewed all the facts available and all the information provided by any witnesses or persons that have information,” Melcher said.

“From our careful review of the facts, we believe that there is no merit or factual basis to any of the allegations that have been brought by Ms. Velasquez and that the city acted appropriately with regard to her termination,” he said.

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Melcher declined to make public the investigative report, calling it attorney work product. He wouldn’t disclose the number of pages in the report.

“Since we are currently dealing with claims brought by Ms. Velasquez, we need to keep the investigation confidential until those claims are resolved,” he said.

“We’re not trying to hide this in any way,” Melcher added.

The Gazette on Wednesday filed an open-records request for the investigative report.

The Velasquez investigation, which cost taxpayers about $65,000, was led by the Denver firm of Kelly, Stacy and Rita LLC. The firm, selected by Bach in August to conduct a “thorough and neutral investigation,” calls itself on its website as an employment law and commercial litigation boutique.

In a statement, Velasquez attorney William Finger of Evergreen-based Frank & Finger, P.C., said his client has a discrimination charge against the city pending before the Equal Employment Opportunity Commission. When Melcher made a “personal request” to put the complaint on hold to try to resolve the matter through mediation, Velasquez accepted the request “based upon the perception that the City of Colorado Springs would act in good faith,” Finger said. But now those talks are at an impasse, he said.

“The matter will now move forward through the EEOC process and the filing of a lawsuit,” he wrote in the statement.

The mediation failed because “the City’s decision makers were unwilling to authorize an appropriate dollar figure for resolution,” Finger said.

“The actions of the City’s top officials will clearly be scrutinized and reviewed when litigation is filed and it is likely that the information gathered in litigation will be a matter of public record,” he said.

Velasquez filed a $1 million claim against the city after she was let go, claiming wrongful termination.

The city is in discussions with Velasquez’s attorney to try to resolve the claim but is prepared to fight it “in whatever forum necessary,” Melcher said.

“We’re still in discussions with Velasquez’s attorney to see if there is a way to resolve her claims or to persuade her to withdraw her claims since we believe they have no merit,” he said.

Velasquez worked for the city nearly 24 years before she was terminated in July. She started as a part-time employee making $7.31 an hour and climbed the ranks to become chief financial officer. Her title was financial administrative services director when she was fired.

“I have done nothing wrong, and the citizens of Colorado Springs have a right to know how their elected officials are functioning and also have a right to demand honesty and transparency in government,” Velasquez said in a statement in July.

Velasquez lodged more than a dozen allegations that rocked city government last year. Among them was “a cover up of facts relating to financial problems or mismanagement,” including an overpayment of $4,913 to former fire Chief Steve Cox, who is now the mayor’s chief of economic vitality and innovation.

Velasquez also alleged a “mishandling” of funds the city received from El Pomar Foundation as part of the deal to keep the U.S. Olympic Committee in Colorado Springs.

In February, the mayor launched a separate investigation into the oversight of those funds after the allegations reappeared in the arrest warrant of developer Ray Marshall, who was involved in the original USOC deal.

Melcher said that investigation got under way last month.

“Obviously, we want to be very thorough on that investigation as well,” he said.

—Contact Daniel Chacón: 476-1623Twitter @danieljchaconFacebook Daniel Chacon

Terri Velasquez Photo by