January 26, 2010
Audit: Fort Pierce department is "corrupt"
By Alexi Howk
FORT PIERCE - An international firm hired to audit the city's Community Services Department is recommending the city turn over its findings to the U.S. Attorney's Office to determine whether criminal charges should be filed.
Kessler International of New York City, a firm that specializes in uncovering white-collar crimes and corruption, called the Community Services Department "a corrupt organization" used to benefit city employees, their friends and relatives and cites "fraud, misappropriation of public funds, bribery and bid rigging."
City Manager David Recor ordered the audit after questions arose whether two city employees received preferential treatment when they got city-backed mortgages over other applicants.
It's unclear whether anyone in the Community Services Department will be fired or whether the city will refer Kessler's findings to the U.S. Attorney's Office. Recor could not be reached for comment Monday.
The Community Services Department assists low-to-moderate-income families and first-time home buyers with obtaining affordable housing and administers the State Housing Initiatives Partnership, Community Development Block Grant and Hurricane Housing Recovery programs.
"The Kessler audit disclosed favoritism to other city workers and other individuals including relatives of city staff, which in some cases the actions appear to indicate theft," the 194-page report states. The audit also found the Community Services Department failed to have adequate controls in place "to guard against fraud, abuse and conflicts of interest by the contractors and the programs it was administering."
Interviews with employees in the Community Services Department revealed contractors had to provide kickbacks in order to do business with the city. One employee said he did not accept any kickbacks. It's unclear whether others did, the report noted. However, a rehabilitation specialist in the department claimed that one of his former coworkers routinely bragged about an income of more than $100,000 per year. A rehab specialist's income is limited to $55,972.
Serena Knight, a former community services program specialist, received a 30-year, $250,000 mortgage in August 2008 to buy a 2,766-square-foot, two-story home in the Bent Creek neighborhood. Linda Whalen, a grant coordinator for the FPRA, received a $133,000 loan to purchase a three-bedroom, 1,480-square-foot town house in Longwood Village. Others who applied for assistance were put on a waiting list.
Even though assistance was supposed to be given out on a "first come, first serve" basis, "there are instances of cronyism where the 'first come, first serve' mantra was not followed," the report states.
The audit noted that Knight and her supervisor, Assistant Community Services Director Dorina Jenkins, were friends and went to high school together. Knight also received money from the very same program she helped implement.
The audit also found files in the department missing and in disarray. It also noted documents riddled with redactions and inaccuracies. Applicants in some cases had their applications filled out by Community Services staff and did not have to provide income tax returns to prove their income, even though it was required to receive financial assistance.
"The discrepancies Kessler uncovered during its review equates the manner (Community Services Department) was operated with the actions of individuals running a corrupt organization," the report states.
The report also found employees were affiliated with corporations that received grant money and those employees failed to disclose their interest to the city. Many disbursements, some of which exceeded $100,000 over a four-year period, were paid to entities that were listed as inactive with the Florida Department of State for more than 20 years and had connections with individuals associated with the city, the report noted.
Kessler suggests a complete review of every mortgage issued by the city be conducted by a legal team to determine if they were prepared correctly and that an anti-fraud and code of ethics policy be established, as well as an ethics training program be provided to all city workers.
"It is unclear why (the Community Services Department) employees were drafting mortgage documents, and how, unless by design, almost every mortgage reviewed contained errors," the report states. "Since the city has access to the city's legal team, it is unclear why this resource was not utilized."
A reporting system should also be established similar to Kessler's "Fraudbusters" tip reporting service so that employees can anonymously report instances of fraud and mismanagement," the report states.