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Sun Sentinel
October 13, 2010

Pompano Beach audit finds favoritism, potentially fraudulent activity in housing programs

By Larry Barszewski


An audit of the city's Department of Housing and Urban Improvement has uncovered poorly administered programs, favoritism in the distribution of state and federal grants, and possible fraudulent activity by former employees and grant recipients.

City Manager Dennis Beach said he will refer the audit released Wednesday to the U.S. Department of Housing and Urban Development's Office of Inspector General and to the Broward Sheriff's Office for further investigation. The city also plans to hire a compliance manager to ensure proper monitoring of state and federally funded programs in the future.

"The information I gleaned from the audit is a regurgitation of what I've been told by existing staff since I came here 10 months ago," Beach said.

The audit, which covers from 2005 to the present, concluded that "state and federal monies were handled carelessly and haphazardly."

There has been a complete turnover of department staff over the past two years, officials said, but commissioners in June authorized the $45,000 forensic audit by Michael Kessler of Kessler International to identify irregularities and to deal with allegations that continued to surface regarding department programs.

Kessler came to the city's attention after completing a critical audit of Deerfield Beach's Community Development Division. He said his Pompano Beach findings were "at least equal to, if not greater than" what he found in Deerfield Beach.

The audit found:

Some members of the Community Development Advisory Committee, which makes recommendations on grant awards, benefited along with family members from home loans and housing rehabilitation grants.

Many grants had missing or conflicting documentation that raised questions about whether income eligibility requirements were met, if the true cost of work done was reported and whether proper precautions were taken to ensure grants would be repaid as required if the property sold within 10 years of the work being done.

Values of homes sold in Ortanique Estates were artificially reduced because HUD settlement statements did not include the value of land provided by the Community Redevelopment Agency. Those reductions resulted in lower property taxes. If the land values had been included, the audit found the base sale prices for seven of the homes sold would have exceeded the $250,000 maximum allowed in the project's development agreement.

Possible conflict-of-interest violations existed.

Collier City Pompano Beach Community Development Center received a grant in February for an aquaculture project and paid the site's manager, Michael Adderley, $4,050 in wages, although he is the grandson of Dorothy Jones, a director of the Collier City CDC.

The project was also paid $5,761 for the purchase of two wind turbines, using a quote as a supporting document, but Kessler contacted the vendor who said only one turbine was purchased.

The entire report is available at http://mypompanobeach.org/directory/housing/index.html

Larry Barszewski can be reached at lbarszewski@SunSentinel.com or 954-356-4556.

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