Since 1998, county auditors have found more than $9 million in unallowable or questionable expenses by the private foster-care agencies that have contracts with Los Angeles County.

The audits revealed taxpayer funds were used to pay off Las Vegas gambling debts and call psychic hot lines, and to pay for jewelry, parties, lottery tickets, alcohol, vacations, antiques, artwork and even a cremation.

"They have abused both children and taxpayers,' said Jon Coupal, president of the Howard Jarvis Taxpayers Association. "Particularly in these tough economic times, the fact that money is being misspent this way is absolutely appalling. Local governments are screaming for more revenues, yet they are grossly misspending these funds, frittering away this money without any accountability at all.'

Supervisor Michael Antonovich said the county should be reimbursed for those misappropriated funds.

"There is no excuse for using money intended for foster children to cremate one's father-in- law or to use those funds at Victoria's Secret,' he said.

Some of the executives of the private foster- care agencies that oversee the children receive up to $310,000 a year in salaries and benefits, enjoy extravagant lifestyles and drive luxury cars provided to them at public expense, the county audits reveal.

Some directors of foster-family agencies and group homes drive around in head-turning vehicles Jaguars, a Land Rover, a Cadillac Escalade SUV, Mercedes and Lexus provided to them at public expense, audits reveal.

One official billed the taxpayers more than $12,000 for membership dues and a banquet party at the Beverly Hills Country Club.

"I think it suggests Los Angeles County is a national scandal,' said Richard Wexler, an author, former university professor and executive director of the National Coalition For Child Protection Reform in Alexandria, Va. "There are lots of troubled foster- care systems in the United States. But Los Angeles County is always on people's lists.'

Department of Children and Family Services Director David Sanders, who earns $175,000 a year and is among the nation's highest-paid public child- welfare agency directors, said taxpayer dollars should be spent ensuring the safety of children.

"When we have that kind of credibility issue, it's little wonder people can raise questions about our ability to get the work done,' said Sanders, who took over the department in March. Since 1985, the four previous DCFS directors have resigned under pressure from top county officials.

As private foster- care agencies made millions of dollars off the children under their care, critics say the Board of Supervisors looked the other way. From 1995 to 2002, foster- family agencies, group homes and others spent more than $262,000 lobbying and making campaign contributions to the supervisors, including more than $67,000 in campaign contributions.

"I think it's clear that foster care has become an industry in some parts of Los Angeles County,' said child advocate Nancy Daly Riordan, founder of United Friends of Children and wife of former Los Angeles Mayor Richard Riordan. "There is definitely a financial incentive to keep kids in foster homes way beyond what is necessary.'

-- Troy Anderson can be reached at (213) 974-8985 or by e-mail at troy.anderson@dailynews.com