November 30, 2010
Audit: Deerfield Beach paid heavily for 'lavish' festivals
Taxpayer dollars spent with little accountability; some employees accused of hiding transactions
By Larry Barszewski
DEERFIELD BEACH —
An independent audit has determined that the city poured $1.7 million into the Mango, Brazilian and Founder's Day festivals between 2006 and 2008 with little accountability for how the money was spent or safeguards to prevent fraud.
Auditors go on to accuse high-ranking city employees at the time of doing transactions in such a way that kept the City Commission in the dark about how the money was spent. The city spent close to $1 million on the Mango Festival alone during the three-year period, the forensic audit said, not including money spent for in-kind services.
The findings in the audit, conducted by Kessler International, were dated Nov. 26. The 137-page document was ordered by the city earlier this year as part of a larger series of audits looking at past city funding practices.
The audit estimated the Mango Festival produced $1.7 million in revenue during the time period, but bank statements for the nonprofit group running the festival show only $216,000 in income. The rest of the money is unaccounted for, the audit said.
"What was observed during the investigation was outrageous spending by city employees and the city managers who were able to conceal and comingle transactions to keep the governing body of the city [the City Commission] unaware of the true costs of these lavish events," auditor Michael Kessler said in the report's cover letter.
"This independent audit documented the shameful exploitation and gross financial mismanagement of taxpayer funds occurring during the leadership of City Manager Larry Deetjen, Interim City Manager Ada Graham-Johnson and City Manager Michael Mahaney," Kessler wrote in the letter. Deetjen and Mahaney are no longer with the city and Graham-Johnson is the city clerk.
"It's very disturbing," Commissioner Bill Ganz said of the audit. "It looks like we were hemorrhaging cash when it comes to these festivals."
The commission, partly because of concerns about past practices and partly because of the city's tight budget, this year cut off all funds to the festivals after greatly reducing its contributions last year.
"We don't give anybody money without their going through hoops," Mayor Peggy Noland said. "This will never happen again."
The audit also raised concerns about Commissioner Sylvia Poitier, who was criticized in an earlier audit for voting on grants where she had a conflict of interest. This time, the audit questioned her connections to the festivals.
Among the audit's findings:
Poitier and former commissioners Steven Gonot and Pam Militello requested and received blocks of tickets to the Mango Festival for free and distributed them to garner political support.
Poitier, along with former parks manager George Edmunds and a few others, was on hand when beer and gate revenues from the 2008 Brazilian Festival were counted. Kessler estimates that $28,000 more than the $44,820 reported should have been collected and questions what happened to the missing money. Cash count documents from that meeting have been destroyed, Kessler said.
Kessler found 2,633 checks totaling $225,304 issued by the city to "miscellaneous vendors" during the three-year period. While city officials said this could include everything from utility overpayments to organizations that don't do business with the city on a regular basis, Kessler said the large volume of such checks creates an opportunity to embezzle funds from the city.
Kessler's audit also indicates the possibility of rampant fraud concerning the festivals, partly because the city's accounting system allows vendors' names to be changed retroactively.
"This weakness in the accounting system allows employees to issue checks to one payee and change the name on the check register to disguise it," the audit said.
The city plans to forward the audit to the Broward State Attorney's Office and the Broward Sheriff's Office to see if criminal proceedings are warranted, City Manager Burgess Hanson said. The city also plans changes based on the audit's findings, he said.
"I'm still going through the report," Hanson said. "We've already addressed many of these issues."
Hanson said most of the city employees mentioned in the audit are no longer with the city. Edmunds, who had been manager of the Parks Department, was laid off in September as part of a department reorganization, officials said.
The Brazilian Festival moved to Miami last year and the Mango Festival was canceled. This year's Mango Festival was shut down in June after one day because of financial problems resulting from poor attendance and unpaid vendors.
One of the purposes for the Mango Festival is to raise scholarship money. The festival reported $21,500 in scholarships over the three years audited, although auditors said the actual figure was $12,500.
The audit is one of three being done for the city by Kessler. An audit of the city's community development program was released earlier this year and Kessler is still working on an audit of the city's housing authority.
After the earlier audit came out, commissioners voted in October to seek legal advice about removing Poitier from the commission because of the voting conflicts exposed. The commission has not taken any action yet and Ganz said maybe the commission should rethink its position and just make sure the information gets to the proper authorities.
"I think this goes well beyond the commission," Ganz said. "If criminal activity has taken place, it needs to be looked at."
Poitier could not be reached for comment despite calls to her cell phone.
Larry Barszewski can be reached at lbarszewski@SunSentinel.com or 954-356-4556.