Philadelphia IG Releases Report Calling For Strengthening City's Oversight In Contracting
Oct 25, 2013
The City of Philadelphia Office of the Inspector General (OIG) released a policy recommendation report for improving the City’s risk management in contracting. The City worked with the OIG’s new Contract Compliance Unit in crafting improvements to the procurement process and has already begun implementing changes in response to the report.
“I thank Inspector General Amy Kurland and her Contract Compliance Unit for their detailed work done in exposing wrongdoing by a general contracting firm doing work at the Philadelphia International Airport,” said Mayor Michael Nutter. “But the IG went far beyond catching one contractor’s wrongdoing. She exposed long-standing weaknesses in the City’s oversight of our contracting processes and made specific recommendations to reduce the chances of unscrupulous contractors taking advantage of city contracting and damaging taxpayers’ interests. On the basis of her work, we are now strengthening our oversight protocols, which will save taxpayer dollars and ensure that quality work is done on all city contracts.”
The policy recommendation report follows an investigation by the OIG of Hart Enterprises & Associates, a general contracting firm owned and managed by John Hart. The OIG found that the company made numerous material misrepresentations in paperwork submitted to the City for five construction and demolition contracts awarded between 2011 and 2012. The City did not properly screen the paperwork for potential fraud, awarded the contracts to Hart, and lost along with Hart’s workers approximately $297,000.
Hart forged and submitted ten surety bonds to the City. Valid surety bonds protect the City from losing funds if a contractor is unable to complete a City bid or project. But Hart successfully deceived the City, obtained the contracts, and passed on significant financial harm and risk. The company also misrepresented its financial history and City tax status.
Despite these facts, the company was paid more than $275,000 in City contract funds.
The company caused approximately $153,000 in losses that the City was left to address with limited remedies. Additionally, Hart Enterprises & Associates failed to pay its workforce more than $123,000 in minimum wages and owed more than $21,000 in taxes to the City.
OIG has already helped the City and Hart’s workers recoup more than $97,000 from Hart and his company, and OIG will continue to work with other City departments to pursue more than $200,000 in additional recovery.
As a result of the OIG’s investigation, John Hart was arrested on Wednesday and is awaiting prosecution by the District Attorney’s Office for ten felony counts of forgery and four misdemeanor counts of unsworn falsifications to authorities. OIG has also recommended that the City initiate debarment proceedings against Hart.
The OIG investigation highlighted several weaknesses in the City’s contracting process. Most notably, the report points out that many of the representations made by potential contractors are never independently verified by City officials, providing ample opportunity for dishonest companies to hide negative information and secure valuable City contracts. The report found communication and coordination problems across City departments, which prevent the City from recouping money from contractors for their outstanding wage or tax obligations.
The policy recommendation report outlines several ways to improve the process, including more stringent contractor qualification review, better communication in the payment hold process, and independent verification of supporting documentation, like surety bonds. With improved screening and communication, the City can better identify and avoid risky contractors like Hart Enterprises & Associates. The City has begun to implement the report’s recommendations including: bond verification protocols; increased information access and sharing; and improved communications between City departments.
This investigation and accompanying policy report is the most recent work of the OIG’s new Contract Compliance Unit, an ongoing OIG initiative focused on protecting the integrity of the City’s contracting process.
“Our Contract Compliance Unit approaches cases by detecting and analyzing what went wrong, helping to recover funds for the City, and identifying steps the City can take to prevent similar problems in the future,” Inspector General Amy Kurland said. “We expect the impact of this approach to be invaluable to the City and its taxpayers.”
So far, the Contract Compliance Unit has seen great success. In June 2013, an investigation by the Unit led to the first involuntary debarment of a City contractor, JHK Inc. The OIG investigation revealed that JHK received City money from a prime contractor, now known as Corizon Health Inc., only for the use of JHK’s name and woman-owned business certification in order to make it appear as if JHK was performing work on the contract when, in fact, it was not.
The Contract Compliance Unit also helped the City negotiate a settlement with Corizon. The company paid the City $1.85 million and adopted new corporate procedures to ensure compliance with the City’s antidiscrimination policies in the future. The Unit has also spearheaded similar settlement agreements concerning violations of the City’s anti-discrimination policies with more than a dozen companies, including Aramark Correctional Services, UGI HVAC Inc., and William Betz Jr. Inc.
“The OIG Contract Compliance Unit is focused on prevention,” said Inspector General Kurland. “We hope our successful investigations will deter people from violating City policies and defrauding the City, and we can prevent fraud from the ground-up.”
More information about the work of the Contract Compliance Unit and the OIG’s policy recommendation report can be found on the OIG’s website at: http://www.phila.gov/ig/contractcompliance
City of Philadelphia Debars JHK, Inc. After OIG Investigation
Jun 25, 2013
The City of Philadelphia issued a notice of debarment on June 21, 2013 to Jamie Kovacs and her company, JHK. Inc., for falsely representing its role as a women-owned subcontractor in an agreement with Corizon Health Services, Inc., a prime health care contractor with the City's Prison System. This is the first involuntary debarment in the City's history.[-]
"Our Administration will continue to seek qualified minority, women and disable-owned businesses to play a significant role in all of its contracts but we will not stand for companies or individuals trying to cheat the system," said Mayor Michael A. Nutter. "I am incredibly proud of the work that Amy Kurland and the entire Office of the Inspector General have done to end sham contracting in the City of Philadelphia. Their work is a prime example of the City's commitment to fair business practices and anti-discrimination policies."
After a lengthy investigation, the Office of the Inspector General found that prime contractor Prison Health Services, now known as Corizon Health, Inc., subcontracted with JHK Inc. to make it appear that JHK — a City-certified, woman-owned business — had provided pharmaceutical supplies to the Philadelphia Prison System when JHK was paid only for the use of its name and its woman-owned business certification.
"This debarment sends a strong and definitive message: The City of Philadelphia will not tolerate businesses that circumvent the City's antidiscrimination policies," said Inspector General Amy L. Kurland. "We will continue working with Procurement, Finance and the Law Department to ensure that legitimate M/W/DSBEs have a fair shot at the contracting opportunities they deserve."
Catherine Paster, First Deputy Director of Finance stated in the debarment notice that JHK, Inc. had provided no credible evidence to dispute the facts established by the OIG. Paster noted that in addition to appearing as a sham woman-owned subcontractor, JHK admitted to the City's Debarment Panel that the company had done nothing to provide services to PHS other than placing its name on paperwork submitted to the City.
To comply with the City's anti-discrimination policies, M/W/DSBEs must perform a commercially acceptable function under any subcontracting agreement. OEO defines a commercially acceptable function as performing, managing or supervising meaningful work or supply efforts that are distinct from other parts of the contract and consistent with the anticipated cost of business.
In July 2012, Corizon entered into a $1.85 million settlement with the City and agreed to strengthen its corporate compliance program by reviewing all of its subcontracting agreements to ensure compliance with City anti-discrimination policies.
Corizon also appointed an M/W/DSBE Compliance Team Member to ensure that M/W/DSBE requirements are fully understood by Corizon personnel. Corizon has also developed a corporate-level vendor diversity program.
Prime Contractors Used Sham Minority Subcontractor on 19 City Contracts
May 06, 2013
A Philadelphia Office of the Inspector General investigation of 19 Philadelphia Housing Development Corporation contracts has found that 11 prime contractors used JHS and Sons Supply Company to circumvent the City’s antidiscrimination requirements by paying JHS only for its name and its minority-owned business certification. So far, the City has signed a no-fault settlement agreement with one prime contractor and has hammered out compliance agreements
with eight other prime contractors.
“It was clear from the beginning that this problem was widespread,” said Inspector General Amy L. Kurland. “These settlements meet our goal of ensuring that companies comply with our antidiscrimination requirements. Our mission is to bring companies into compliance, not to put them out of business.”
Investigators first discovered that prime contractors were using JHS to circumvent the City’s antidiscrimination requirements in PHDC’s weatherization contract with UGI HVAC Inc. In that case, the OIG established that William Betz Jr. Inc. had colluded with JHS and UGI to make it appear that JHS had provided equipment and supplies when Betz was in fact the supplier.
In January 2012, the City signed a no-fault settlement agreement with UGI, which agreed to pay the City $100,000, increase minority-business participation in future contracts and adopt new policies and procedures to comply with the City’s antidiscrimination requirements. The City also removed JHS from the Office of Economic Opportunity’s registry of certified minority-owned businesses.
In October 2012, the City signed a no-fault settlement agreement with Betz, which agreed to pay the City $128,000, comply with the provisions of an Equal Opportunity Procedures Policy and voluntarily declare itself ineligible to participate in City contracts for two years.
The case led to the adoption of Executive Order 03-12, which strengthened the City’s previous antidiscrimination policies and made it more difficult for companies to hire sham minority-, woman- and disabled-owned businesses (M/W/DSBEs) as subcontractors. All of the contracts in which JHS posed as a working minority subcontractor were signed before JHS was removed from the OEO registry.
After concluding the UGI case, the OIG continued investigating contracts involving JHS and Betz, and found that JHS provided no services to the 10 other prime contractors that had identified it as a subcontractor for 18 PHDC contracts. Those contractors are Burke Plumbing & Heating, Inc.; Clements Brothers and Sister, Inc.; DMC Environmental Group, Inc.; Buzz Duzz Plumbing, Heating, & Air Conditioning, Inc.; Edward Hughes and Sons, Inc.; Martin Johnson Plumbing and Heating, Inc.; Paragon Contracting; J.J. Magnatta, Inc.; John Stevenson, Inc.; and S. Murawski & Sons. The contracts
ranged in value from $100,000 to $350,000.
In most cases, Betz facilitated the arrangement between JHS and the prime contractor, providing JHS’ minority business certification and the supplies necessary to complete the job. As a result, Betz received more than $640,000 worth of business that was intended for legitimate minority-owned companies. JHS received at least $70,000 for acting as a pass-through.
Most of the prime contractors that used JHS as a minority pass-through were small businesses that did not fully understand the City’s antidiscrimination requirements. The companies reached out to other contractors or suppliers for advice on how to comply with the requirements when they should have sought help from the Office of Economic Opportunity.
While the settlement agreement with UGI references a specific instance in which the City believed UGI had violated the City’s antidiscrimination policies, the compliance agreement with the remaining prime contractors is general in scope and does not include a payment to the City.
The purpose of the compliance agreement is to clarify the contractors’ legal obligation to provide meaningful opportunities for M/W/DSBEs and to educate the contractors about the assistance that the Office of Economic Opportunity can provide when searching for a qualified M/W/DSBE. Moving forward, these prime contractors now understand what is required under Executive Order 03-12 and are expected to follow the City’s policies on M/W/DSBE participation.
Bounced Checks Cost City More Than $347,000, OIG Finds
Apr 04, 2013
Inadequate revenue collections and a severe breakdown in communications among City departments about how to process bounced checks cost the City nearly $347,000 in uncollected revenue between June 2011 and June 2012, according to a report released today by the Philadelphia Office of the Inspector General, which called for an overhaul of the City’s check-processing procedures.
“If stronger procedures had been in place, the City would have been able to collect significant revenue at a time when every penny matters,” said Inspector General Amy Kurland. “It is clear that the City needs to rethink its approach to accepting checks for payment.”
Correcting the bounced check problem is one of the initial projects for the City’s first ever Chief Revenue Collections Officer Thomas Knudsen, who is slated to begin work at mid-month. Mayor Michael A. Nutter named Knudsen to the new post on Wednesday.
“I want to thank the Inspector General for her office’s excellent work and diligence with which her team investigated this issue. Inspector General Kurland has highlighted a very serious problem all across City government, a problem which must be addressed immediately.
“The Chief Revenue Collections Officer and the new Revenue Commissioner, Clarena I.W. Tolson but also every department head in City government must fully support these greatly needed reforms while sending a message to individuals and business owners that we won’t tolerate bounced checks. We will collect what is owed to us just like any other business or government entity. For some a bounced check is an unfortunate mistake, for others it’s a way of doing business. We will not accept this behavior any longer,” Mayor Nutter said.
The OIG analyzed the City’s procedures for processing bounced checks at the request of the Revenue Department, which had identified numerous payments to the Department of Licenses and Inspections that banks returned to the City due to insufficient funds. Upon discovering significant discrepancies, the OIG expanded its inquiry to 10 additional departments and agencies, including the Health, Public Property, Streets, Records and Law departments.
From June 2011 to June 2012, the City failed to adequately address almost $574,000 in returned checks that Revenue forwarded to those City agencies for further action. As a result of miscommunication and ineffective collections efforts, the OIG has estimated that the City lost between $347,000 and $511,000 in revenue in those 12 months.
In addition to miscommunication and ineffective collection procedures, the OIG identified several more factors that contributed to the problem. Miscommunication among departments led to accounting deficiencies, making it appear that some debts remained outstanding when the departments had in fact received payment. Additionally, it took at least three months for departments to receive bounced checks, leaving them unaware that they had not been paid for services already provided.
Delays and a lack of communication among departments also allowed individuals and businesses to pass bad checks to the City repeatedly while continuing to receive City services. In the past six years, 13 individuals or companies have passed 692 bad checks to the City totaling $390,318.
L&I accounted for the majority of the loss, with more than $346,000 in unaddressed debt. In one case, a Delaware-based company presented 197 bad checks to purchase licenses and permits from L&I valued at more than $38,000. Because L&I processed the documents before the checks cleared and did not follow up to make sure the funds were transferred, the company received the licenses and permits at no cost.
The OIG has recommended that the City improve every phase of the payment-collections process by strengthening its procedures:
- Departments should scrutinize checks before they are processed to reduce the risk of accepting bad checks. Specifically, the OIG recommends that departments purchase electronic check scanners that can instantaneously determine whether the account has sufficient funds.
- Departments should put a fixed procedure in place to ensure consistent and effective collections. By implementing debt collection and recovery software, the City can increase revenue collection dramatically. The Philadelphia Parking Authority uses such a program to independently monitor delinquent checking accounts and automatically retrieve the outstanding funds when they are available.
- The City should take stronger enforcement action against individuals who have repeatedly submitted bad checks, including criminal prosecution when warranted.
- The Chief Collections Officer should foster greater cooperation among departments and ensure that all bounced checks are addressed appropriately.
“While the findings of this investigation are concerning, we are confident that the City’s new Chief Collections Officer, Thomas Knudsen, will correct these deficiencies by implementing an effective and efficient collections process,” Kurland said.
The full policy recommendation report can be found on the OIG’s website: www.phila.gov/ig/reports.
Former City Pharmacist Pleads Guilty To Drug Trafficking Charges
Apr 03, 2013
Arlene Gerson, 46, of Philadelphia, pleaded guilty today to conspiracy to distribute oxycodone and attempted distribution of oxycodone, announced United States Attorney Zane David Memeger. Sentencing has been set for July 12, 2013 before the Honorable Stewart Dalzell of the United States District Court for the Eastern District of Pennsylvania. Gerson faces an advisory sentencing guideline range of 57 to 71 months in prison.[-]
Gerson was working as a pharmacist at various locations, including a health clinic run by the City of Philadelphia known as Health Center #5. Gerson used that position to access blank prescription pads, doctors’ identification information, patient identification information, and patient health insurance information in creating phony prescriptions. Gerson or one of their associates then took the false prescription to a pharmacy to be filled. Gerson and her associates then allegedly sold a portion of the controlled substances for a profit.
The case was investigated by FBI, the Philadelphia Office of Inspector General, the Drug Enforcement Administration, and the Philadelphia District Attorney’s Office. It is being prosecuted by Assistant United States Attorney Robert Livermore.
Judge Orders $1.2 Million Restitution to the City in Billing-Fraud Case
Mar 18, 2013
Barry Jones, 67, of Philadelphia, was sentenced today to 21 months in prison for devising and executing a scheme to defraud the City of Philadelphia out of more than $1.2 million. Jones, who was charged with one count of mail fraud, was the president of Mara Management Services Inc. ("Mara") when he knowingly submitted false bills in connection with a series of computer services contracts that Mara had entered into with City agencies. [-]
Between July 2004 and June 2008, Mara had contracts to provide computer programming, maintenance, and consulting services to multiple agencies, including the City's revenue and water departments, and Community Behavioral Health ("CBH"), a charitable corporation contracted by the City to provide mental health and substance abuse services for Philadelphia County Medicaid recipients. Mara hired subcontractors to perform much of the work on these contracts, repeatedly overstating the number of hours that these subcontractors worked on the projects in order to get inflated monthly payments from the City’s agencies and CBH.
Jones also overstated the number of hours that he was working on the contracted-for projects and between 2006 and 2008, he even sought and received compensation from the City for work by a subcontractor who had stopped working on the projects in 2005. In total, Jones caused the City to make payments to Mara totaling more than $5.9 million between January 1, 2005 and June 30, 2008, in connection with Mara's contracts with the Revenue Department, the Water Department, and CBH. Jones admitted that he kept approximately $2.7 million for himself, which greatly exceeded the amount he was entitled to receive from the City.
In addition to the prison term, U.S. District Court Judge Robert F. Kelly ordered Jones to pay restitution in the amount of $1.2 million and ordered three years of supervised release.
"By defrauding the City, Mr. Jones stole more than government funds," said Philadelphia Inspector General Amy Kurland. "He deprived Philadelphians of critical government services and undermined the City's ability to efficiently serve the taxpayers.
"But fraud causes far more damage than that," Kurland said. "It erodes the citizens' trust in their government and harms the reputation of honest city employees and contractors. By ordering full restitution in this case, the Court has sent a strong message: Those who break the law will pay their debts to society—both criminal and financial—in full."
The case was investigated by the United States Postal Inspection Service and the City of Philadelphia's Office of the Inspector General. It was prosecuted by Assistant United States Attorney Mark B. Dubnoff.
Philadelphia Office of the Inspector General Releases 2012 Annual Report
Mar 18, 2013
The City of Philadelphia released the Office of the Inspector General’s 2012 Annual Report, which shows that during 2012, the OIG saved or recovered $9.2 million for the City and that OIG investigations have also led to the termination or resignation of 44 City employees and the arrest or indictment of five individuals.[-]
“The Office of the Inspector General is an integral part of our effort to maintain the highest standards in City government and to ensure tax dollars are spent properly,” said Mayor Michael A. Nutter.
The $9.2 million in savings and recovery comes from City employees via pension disqualifications, demotions, suspensions and DROP program forfeitures, through fines, assessments and recoveries from business that violated minority-business requirements, and from funds returned to the City through restitution.
“The investment of Philadelphia tax dollars into good government practices has paid off many times over,” said Inspector General Amy Kurland. “The OIG will continue working hard to ensure that City departments, agencies and employees are doing the right things and that businesses are abiding by City contracts.”
Over the last five years, the Philadelphia Office of the Inspector General has helped the City save or recover a total of $34.9 million while working with an annual budget of $1.3 million or less. According to the OIG Annual Report, investigations since 2008 have led to the termination or resignation of 166 total City employees and the arrest or indictment of 44 individuals.
In the last two years, OIG investigations of companies that circumvented the City’s minority, women and disabled-owned business entity (M/W/DSBE) requirements has generated more than $2 million in settlement revenue for the City.
Since January 2008, the OIG’s collaboration with the Law Department and the Board of Pensions and Retirement to identify and disqualify City employees convicted of felonies related to their jobs has saved the City almost $15.5 million, including more than $5.7 million in 2012.
“Collaboration has played a key role in our success,” said Kurland. “It has allowed our small office to have a big impact on how the City operates, and it has helped change the culture that has damaged the reputation of so many honest City employees.”
The report is available online at the OIG’s website at http://ph.ly/_ONVF.
Martinez Sentenced in PPA Extortion Case
Mar 07, 2013
Rocco Martinez was sentenced in federal court yesterday to two days in prison, one year of probation and $500 restitution for admittedly extorting the Philadelphia Parking Authority (PPA). [-]
“Those who try to extort or bribe public officials in Philadelphia should expect to be held accountable,” said Inspector General Amy L. Kurland. “With our partners in law enforcement, we will continue to bring these cases to light. We will continue to show that our officials are not for sale. The culture of Philadelphia continues to change for the better.”
The U.S. Attorney’s Office for the Eastern District of Pennsylvania prosecuted Martinez following a joint investigation conducted by the Philadelphia Office of the Inspector General (OIG) and the Federal Bureau of Investigation (FBI). PPA Executive Director Vincent Fenerty brought the allegations to the OIG and cooperated with the investigation from the beginning.
Martinez, 31, extorted $500 from the PPA in exchange for a video that, according to Martinez, showed a PPA officer offering to dismiss parking tickets in exchange for two bootleg DVDs.
Philadelphia Office of the Inspector General Wins National Public Integrity Award
Feb 14, 2013
The Philadelphia Office of the Inspector General is the recipient of the 2013 Public Integrity Award by the American Society for Public Administration. [-]
“We are honored to receive this award, and we will continue working hard on behalf of all Philadelphians to ensure that our government is fair, honest and transparent,” said Inspector General Amy L. Kurland.
The OIG received the award for its “outstanding contributions to responsible conduct in public service.” Previous winners include the State of Wisconsin Ethics Board, the City of Los Angeles Ethics Commission and the Texas Comptroller of Public Accounts.
Mayor Michael A. Nutter said, “The Office of the Inspector General is the epitome of a public service agency working diligently to ensure every City department, agency and City employee is doing the right thing and that companies that contract with the City abide by City rules. The tireless efforts of Amy Kurland and her team are truly deserving of this honor.”
Government and nonprofit agencies at the local, state, federal and international level are eligible for the award when they have executed “significant programs or projects benefiting the general public,” according to the ASPA.
The award will be presented at the ASPA’s national conference in New Orleans on March 19, 2013.
Indictment Charges Former Prison Guard With Smuggling Drugs
Feb 05, 2013
Dion Reid, 35, of Philadelphia, PA, was charged by indictment with two counts of honest services fraud and two counts of possession with intent to distribute a controlled substance, announced United States Attorney Zane David Memeger. The indictment alleges that Reid, a former corrections officers employed by the Philadelphia Prison System, conspired and agreed with a prisoner inside the prison to smuggle in marijuana, Xanax pills, tobacco, and cellular telephones. [-]
If convicted the defendant faces a maximum possible sentence of 50 years imprisonment, three years supervised release, a $1 million fine, and a $400 special assessment.
The case was investigated by the Federal Bureau of Investigation, the Philadelphia Police Department and the City Office of Inspector General. It is being prosecuted by Assistant United States Attorney David L. Axelrod.
City of Philadelphia Signs Settlement Agreement with Aramark and Strother Enterprises
Dec 13, 2012
The City of Philadelphia has signed a no-fault settlement agreement with Aramark Correctional Services (ACS) and Strother Enterprises, Inc. (Strother) to conclude a dispute over allegations that the companies circumvented the City’s minority-business requirements and anti-discrimination policies by submitting inaccurate invoices to the City for payment under ACS’ food-services contracts with the Philadelphia Prison System (PPS). [-]
According to the settlement, the companies will pay the City a total of $400,000 and incorporate new internal policies to ensure their compliance with anti-discrimination policies on future contracts with the City and/or City-related agencies.
The settlement was the result of a Philadelphia Office of the Inspector General investigation into allegations that ACS had inaccurately reported payments made to Strother in documentation submitted to the City. Although Strother, a City-certified minority-business entity, performed actual work in connection with PPS food-services contracts, the OIG found that the company had engaged in a circular billing arrangement with ACS, which made it appear that Strother had performed a larger percentage of the contracted work than it had actually performed.
“We take our anti-discrimination policies very seriously because it is our mission to ensure fairness and equality for all who do business with the City,” said Inspector General Amy Kurland. “Everyone deserves a fair shot to compete for contracts in Philadelphia, and ACS’ scheme denied opportunities to legitimate M/W/DBEs. We will continue to pursue companies that circumvent the City’s anti-discrimination policies.”
ACS was required by contract to meet a minority-, women- and disabled-owned business entity (M/W/DBE) participation range of 20 to 25 percent, established by the Office of Economic Opportunity pursuant to Executive Order 02-05, which has since been replaced by Executive Order 03-12. If ACS had made a good faith effort to fulfill the requirement but could not do so, the City could have granted a reduction in the participation range. However, ACS did not attempt to demonstrate a good faith showing, according to the OIG’s investigation, nor did the company apply for a participation reduction. Instead, the OIG found, ACS used a circular billing arrangement to create the appearance of compliance.
Evidence of the circular billing arrangement between ACS and Strother was first discovered by the City Controller’s Office, which prompted an investigation by the OIG. The OIG established that Strother, at ACS’ direction, invoiced ACS for food-service and food-product costs. However, ACS provided the food for the contract, and Strother received a net payment for only the food service portion of the contract.
The billing arrangement did not increase the amount of money that the City paid to ACS because Strother’s purportedly larger participation did not affect how much ACS charged PPS for food. Instead of paying Strother at least 20 percent of the contract proceeds, ACS passed on only 4 percent of the total contract value to Strother, overstating Strother’s revenue by more than $2 million.
ACS and Strother deny any wrongdoing. ACS maintains that Strother purchased food from the company. ACS also maintains that the method by which it calculated its payments to Strother was consistent with its legal and contractual obligations.
The OIG maintains that its evidence is well-founded.
“The Office of Economic Opportunity concurs with the findings of the Inspector General’s Office,” said OEO Executive Director Angela Dowd-Burton. “M/W/DSBEs should represent arms-length relations with prime contractors on City contracts. OEO will work with the Philadelphia Prison System and ACS to insure good faith efforts are used to meet their M/W/DBE goals.”
ACS has agreed to change its minority participation-reporting procedures to more clearly explain its financial relationship with Strother to the City. ACS has also implemented a comprehensive compliance program related to the identification, retention and payment of M/W/DBEs.
Among the key provisions is a requirement that ACS executives certify that all contractual documents and invoices submitted to the City or City-related agencies are true and accurate. Similarly, Strother executives must certify the truth and accuracy of all contractual documents and invoices submitted to prime contractors performing work for the City or City-related agencies. Both companies have pledged to provide compliance training to employees involved in bidding, contract negotiation and invoicing.
The compliance programs will remain in effect for as long as ACS and Strother perform work under City contracts that contain participation requirements for M/W/DBEs.
City Employee charged in million dollar scam
Nov 28, 2012
An indictment was unsealed today charging three people, including a city employee, in a scheme to defraud the City of Philadelphia of more than $1 million, announced United States Attorney Zane David Memeger, FBI Special Agent-in-Charge George C. Venizelos, and City of Philadelphia Inspector General Amy Kurland. Calvin Duncan, 61, of Philadelphia, worked for the Philadelphia Water Department as a mailroom clerk. As part of his responsibilities, Duncan was responsible for mail deliveries and purchasing supplies, including printer ink and toner cartridges, for the administrative offices of PWD. Today, agents of the Federal Bureau of Investigation in Arkansas arrested Derek and Danita Willis. [-]
According to the indictment, Duncan submitted requests for approval to purchase printer ink and toner cartridges, falsely claiming that the cartridges were for PWD employees. After receiving the printer ink and toner cartridges from the approved vendors at the City of Philadelphia's expense, Duncan sold the printer ink and toner cartridges to Laser Cartridge Plus, Inc. ("LCP"), a business located in Russellville, Arkansas, owned by co-defendants Derek Willis, 48, and Danita Willis, 34, both of Russellville, Arkansas. Derek and Danita Willis sought to obtain thousands of ink and toner cartridges at prices significantly below the prices usually charged by ink and toner cartridge vendors.
In order to accomplish this, the indictment alleges that they purchased cartridges from Duncan knowing that the cartridges had been stolen. Derek Willis dealt directly with Duncan prior to 2005 when he tasked Danita Willis with arranging to buy the illegally obtained printer ink and toner cartridges from Duncan. Duncan mailed the illegally obtained printer ink and toner cartridges to LCP using United Parcel Service ("UPS").
The alleged scheme was carried out between January 1, 2006 and January 5, 2012 and caused the City of Philadelphia to pay approximately $1,368,091.19 on purchase orders and shipping costs for printer ink and toner cartridges never intended to be used by PWD employees. Additionally, Derek and Danita Willis allegedly paid Duncan approximately $545,412.79, which was not due to him, for the printer ink and toner cartridges purchased with the City of Philadelphia funds and shipped to LCP using PWD's UPS shipping account.
"The fraud alleged in this indictment cost the city crucial funds that might have benefitted the taxpayers in other ways," said Memeger. "This office will work with our partners in federal, state and local government to pursue people who steal from their municipal employers."
"The case against Duncan was initiated by the Philadelphia Office of the Inspector General in September 2011 after investigators received a tip from a city employee. The OIG then teamed up with the FBI to conduct a joint investigation," said Inspector General Amy Kurland. "Collaboration is the key to fighting public corruption in Philadelphia. Oftentimes, cases like this start with tips from City employees who have the courage to do the right thing. Together, we're changing the culture of corruption that has damaged the reputation of too many good public servants."
"The FBI, with the United States Attorney's Office, and the Inspector General's Office, is committed to pursuing individuals who blatantly steal from the City for personal gain," said Venizelos. "Today's indictment illustrates law enforcement partners working together to send a message that these types of actions will not be tolerated, but prosecuted to the fullest extent of the law."
Duncan, Derek and Danita Willis are charged in five counts of mail fraud and aiding and abetting. Derek and Danita Willis also are charged with obstruction of justice for the destruction of documents related to the fraud scheme. They also are charged with perjury for knowingly making false statements to the grand jury on May 8, 2012.
If convicted of all charges, Duncan faces a maximum possible sentence of 100 years imprisonment, a maximum fine of $1.25 million, a $500 special assessment, and supervised release; Derek Willis faces a maximum possible sentence of 120 years imprisonment, a maximum fine of $2.25 million, $900 special assessment, and supervised release; Danita Willis faces a maximum possible sentence of 110 years imprisonment, a maximum fine of $1.75 million, a $700 special assessment, and supervised release.
The case was investigated by the Federal Bureau of Investigation and the City of Philadelphia Office of the Inspector General. It is being prosecuted by Assistant United States Attorney Tomika N. Stevens.
City of Philadelphia reaches no-fault agreement with William Betz Jr. Inc.
Oct 24, 2012
The City of Philadelphia signed a no-fault settlement agreement with William Betz Jr. Inc., a local heating and plumbing supply company, for its involvement in circumventing minority-business requirements and anti-discrimination policies for at least 15 City contracts. According to the settlement, William Betz Jr. Inc. will not participate in any contracting with the City for 24 months, will pay the City $128,000 and will comply with the provisions of an Equal Opportunity Procedures Policy.
"The agreement between the City and Betz achieves the objectives my office wanted from this case," Kurland said. "Betz has voluntarily accepted the sanctions that would have been imposed on the company if it had not made a good faith effort to resolve this matter. We appreciate their cooperation."
According to the agreement, Betz will pay the City $128,000, in full, within a 90-day period. The agreement also stipulated the following:
- Betz and all related entities will refrain from performing work for the City and bidding on City contracts for 24 months, effective October 23, 2012.
- On storefront signage and on key sales-related documents distributed to its customers, Betz must disclose that it is prohibited from selling supplies to companies that plan to use those goods in work performed under contract with the City.
- On October 23, 2014, Betz will again be eligible to participate in City contracts but must comply with the terms of an Equal Opportunity Procedures Policy (EOPP).
Under the EOPP, all of Betz's sales transactions must be "arms length." This provision prohibits Betz from negotiating arrangements between prime contractors and disadvantaged subcontractors that are certified by the Office of Economic Opportunity (OEO) as minority-, women- or disabled-owned business entities (M/W/DBEs). Betz may direct customers to the OEO Registry of M/W/DBEs if they are seeking a certified subcontractor to perform a Commercially Acceptable Function, as defined in the City’s anti-discrimination policies.
Additionally, the EOPP contains the following provisions:
- Within 30 days of the EOPP's adoption, Betz must provide at least one hour of training to all of its sales employees to ensure compliance with both the EOPP and the City's antidiscrimination policies. Betz must review the program annually and update its training to reflect any changes in the City’s anti-discrimination policies.
- Within 90 days of the EOPP's adoption, Betz is required to issue a report to OEO summarizing the implementation process of the agreement.
A compliance manager at Betz will be responsible for communicating the terms of the EOPP to sales staff on a monthly basis. The manager will also be responsible for reporting noncompliance to the OIG, the Procurement Department and the OEO.
If Betz does not fulfill the terms of the agreement, the City reserves the right to pursue civil action to ensure compliance.
In a case summary released in January, the Office of the Inspector General established that William Betz Jr. Inc., JHS and Sons Supply Company and UGI HVAC Inc. colluded to make it appear that JHS, a City-certified minority vendor, had provided equipment and supplies for a government-funded weatherization project when JHS was paid only for the use of its name and minority certification.
As a result, the City entered into a $100,000 settlement agreement with UGI HVAC, Inc. and removed JHS and Sons from its list of certified minority businesses on January 12, 2012. The City also began debarment proceedings against William Betz Jr. Inc. but has withdrawn the notice after further negotiations and agreeing to the earlier mentioned terms.
OIG investigation leads $1.85 million settlement with Prison Health Services, Inc.
Jul 25, 2012
Following a Philadelphia Office of the Inspector General investigation into a woman-owned subcontractor arrangement, the City of Philadelphia has entered into a $1.85 million settlement with a prime city contractor and will initiate debarment proceedings against the subcontractor. [-]
Philadelphia Inspector General Amy Kurland today released a summary of the OIG's investigation, which found that prime contractor Prison Health Services, Inc. ("PHS"), now known as Corizon Health, Inc., subcontracted with JHK Inc. to make it appear that JHK—a City-registered, woman-owned business — had provided pharmaceutical supplies to the Philadelphia Prison System. In fact, JHK was paid only for the use of its name and its woman owned business certification.
"For more than four years now, the Philadelphia Inspector General has been aggressively rooting out fraud and corruption in city government and among those who do business with the city," said Mayor Michael A. Nutter. "I applaud Amy Kurland and her hard-working staff who have saved or recovered millions of dollars on behalf of taxpayers. Regarding this case, the City will not tolerate any business that fraudulently circumvents the our anti-discrimination policies."
The Inspector General said, "Many disadvantaged yet qualified small businesses are still struggling to keep people on the payroll. We’re committed to leveling the playing field here in Philadelphia so all businesses can compete for City contracts and create jobs for talented minority-, women- and disabled-owned businesses."
In documents provided to the City, PHS represented that it had entered into a subcontract with JHK worth 40 percent of its $196 million health-care contract with the Philadelphia Prison System. Instead, from 2007 to 2011, Secure Pharmacy Plus LLC and Maxor National Pharmacy Services Corporation actually provided pharmaceuticals to the Philadelphia Prison System while PHS paid JHK more than $410,000, about 1 percent of the total contract value, to make it appear that JHK was supplying pharmaceuticals.
PHS took the position that it fully disclosed its subcontractor arrangement with JHK to the City. However, while PHS did request and receive approval from an employee at the Philadelphia Prison System who oversaw the City's contract with PHS, PHS never notified the Office of Economic Opportunity ("OEO"), which oversees compliance with the City's anti-discrimination policies, or its predecessor, the Minority Business Enterprise Council ("MBEC") of the arrangement, as it was required to do.
The City seeks qualified minority, woman and disabled-owned businesses to play a significant role in all of its contracts, but prime contractors can seek a reduced participation goal when they have made a good faith effort to find certified minority-, women- or disabled-owned vendors (M/W/DSBEs) but are not able to meet the participation goals.
To comply with the City’s anti-discrimination policies, M/W/DSBEs must perform a commercially acceptable function under any subcontracting agreement. OEO defines a commercially acceptable function as performing, managing or supervising meaningful work or supply efforts that are distinct from other parts of the contract and consistent with the anticipated cost of business.
JHK admittedly failed to provide any services to the Philadelphia Prison System other than placing its name on paperwork PHS submitted to the City.
In addition to the settlement with PHS, Kurland recommended that the City remove JHK from the OEO registry of certified M/W/DSBEs and initiate debarment of JHK and its owner from participation in any City contract for two years. Acting on the IG's recommendation, the City has removed JHK from its registry and begun the debarment process.
Upon learning of the OIG’s investigation, PHS worked cooperatively with the OIG and made good-faith efforts to comply with the City’s policies relating to M/W/DSBE participation, including promptly replacing JHK with another certified WBE engaged in the provision of pharmaceutical services.
As part of the settlement, PHS agreed to strengthen its corporate compliance program by reviewing all of its subcontracting agreements to ensure compliance with City anti-discrimination policies. PHS has appointed an M/W/DSBE Compliance Team Member, who ensures that M/W/DSBE requirements are fully understood by PHS personnel and who, along with PHS's in-house counsel, must approve the M/W/DSBE portion of any bid or contract submitted to the City or any City-related agency. PHS will also provide training to its employees about these requirements.
Additionally, PHS is developing a corporate-level vendor diversity program and will join the National Minority Supplier Development Council and the Women’s Business Enterprise National Council in order to continue to promote diversity among its vendors nationwide.
Kurland noted that "the OIG is pleased with the way PHS responded to its investigation by taking responsibility for using a pass-through subcontractor arrangement and taking aggressive measures to ensure compliance with City policies going forward."
The OIG will continue its ongoing probe into companies paying M/W/DSBEs to act as pass-throughs on City contracts and into companies that allow prime contractors to use their name and M/W/DSBE certification without performing any real work.
"We hope this investigation sends a message that compliance with the City’s anti-discrimination policies is essential," Kurland said.
Philadelphia OIG uncovers sham minority contractor scheme
Jan 12, 2012
In the wake of a Philadelphia Office of the Inspector General investigation into a sham minority contracting scheme, the City of Philadelphia has begun debarment proceedings against one contractor, removed a second from its list of certified minority businesses and reached a no-fault settlement with a third contractor, which has agreed to pay the City $100,000. [-]
In a case summary released today by Philadelphia Inspector General Amy Kurland, the OIG established that William Betz Jr. Inc., JHS and Sons Supply Company and UGI HVAC Inc. colluded to make it appear that JHS, a City-certified minority vendor, had provided equipment and supplies for a government-funded weatherization project when JHS was paid only for the use of its name and minority certification.
The vendors falsely represented their compliance with anti-discrimination and economic-opportunity policies designed to help disadvantaged businesses compete for City contracts, Kurland said.
When apprised of the OIG's findings, the Office of Economic Opportunity removed JHS from its list of certified minority vendors and the Law and Procurement departments began debarment proceedings against Betz. The OIG and the Law Department finalized the settlement agreement with UGI earlier today.
"This city is committed to doing business fairly and transparently," Kurland said. "Companies that flout the rules need not apply."
Angela Dowd-Burton, executive director of the City's Office of Economic Development, echoed Kurland's sentiments and emphasized the important role that minority- and women-owned businesses play in creating jobs, spreading prosperity and spurring entrepreneurship in Philadelphia.
"The goal of this Administration is to have minority-owned businesses provide a commercially acceptable function and to be compensated accordingly," said Dowd-Burton. "We cannot afford the displacement of legitimate minority contractors with business owners that are willing to sell their good name, nor can we tolerate contractors that create schemes to circumvent our inclusion strategy."
In June 2010, UGI signed a $1 million contract with the Philadelphia Housing Development Corporation to make houses more energy-efficient for low-income residents of Philadelphia.
UGI pledged to hire a subcontractor certified by the City as a Minority, Women or Disadvantaged Business Entity and later informed the City that JHS would provide boilers, hot-air furnaces and chimney liners for the weatherization project. However, investigators discovered that UGI had purchased those products from Betz, who paid JHS 3 percent of the contract proceeds from UGI to pretend JHS was the supplier.
Rudy Betz, president of William Betz Jr., brokered the deal among the three companies, Kurland said.
Investigators also found that UGI and Betz had generated false invoices to cover their tracks, and discovered that Betz had used JHS as a sham minority contractor on at least 14 other city contracts.
If debarred, William Betz Jr. Inc. would be banned from conducting business with the city for up to three years, the maximum penalty.
The City has not initiated debarment proceedings against a company since 2007, but Kurland said the sanction was warranted in this case because Betz completely disregarded the interests of the City and of legitimate minority businesses.
"Debarment is rare for a reason," Kurland said. "The city saves it for the most egregious breaches of contract."
The Office of Economic Opportunity and the Office of Housing and Community Development provided invaluable assistance in the investigation, Kurland said.
In particular, Kurland and Dowd-Burton commended the efforts of the Office of Housing and Community Development's compliance unit, which first identified evidence of the scheme and referred the matter to the OIG.
As part of its settlement agreement with the City, UGI has promised to raise minority-owned business participation to 50 percent on a future weatherization contract with PHDC.
UGI has also created new policies and procedures to ensure that its employees comply with the City's anti-discrimination and economic-opportunity policies.
Villanova man indicted for allegedly bribing a City of Philadelphia employee
Oct 04, 2011
A joint investigation conducted by the Philadelphia Office of the Inspector General (OIG) and the Federal Bureau of Investigation (FBI) has led to the indictment of a 61 year-old Villanova man on suspicion of bribing a City official. [-]
In an attempt to expedite and guarantee the acquisition of a property on the 7100 block of James Street, in the Tacony section of Philadelphia, Daniel Apokorin and several co-conspirators allegedly presented $5,000 cash to a City official, according to the indictment. The City official immediately reported the alleged bribery attempt, spurring an OIG-FBI investigation.
Apokorin and his co-conspirators continued to pursue the property and allegedly gave an additional $5,000 to an undercover federal agent posing as a City official, the indictment said.
Cooperation among the OIG, the FBI and City officials made the case successful, said Inspector General Amy Kurland.
"City employees have provided crucial assistance in many of our cases," Kurland said. "We should celebrate these honest public servants for standing up against corruption."
Kurland said the case represented another important step on the road to good government.
"When City employees refuse to sell their integrity, they cast light on a dying stereotype," Kurland said. "Most City employees are honest and hard-working. They want to earn only what they deserve."
Division of Technology deputy fired for exploiting City’s Verizon contract
Jul 20, 2011
Managing Director Richard Negrin has accepted the findings of an Office of the Inspector General (OIG) investigation into City employees who exploited the City's Verizon contract for personal gain, and has terminated one high-level Division of Technology employee and demoted another. [-]
An OIG investigation found that Joseph James Sr., the Deputy Chief Information Officer for Communications and Operations, and Concetta D. Lilly-Pearson, an Information System Operations Manager, had accepted meals and gifts from vendors with City contracts, violating a mayoral executive order and provisions of the Philadelphia Home Rule Charter.
Today, James was terminated; Lilly-Pearson was demoted and given a 20-day suspension.
In addition, Francis G. Punzo, a former deputy commissioner of the Department of Public Property, was implicated in the actions conducted by James and others while he worked for the City of Philadelphia.
Verizon has taken "significant disciplinary measures" against those employees who provided meals and/or entertainment to City employees, according to Verizon's corporate counsel. One employee was terminated and five received final written warnings, "which is the most serious form of discipline short of termination."
James accepted 39 business-related meals — a personal benefit of $1,300 — from representatives of Verizon, Comcast, Shared Technologies, Motorola and RCC Consultants between January 2006 and December 2009.
Verizon representatives provided 18 of those meals — a $733 benefit to James — including a dinner at Morton's steakhouse in December 2007 to thank James, Lilly-Pearson and Punzo for helping to renew the City's Verizon contract for telephone and data services. Verizon representatives also provided a Philadelphia Flyers game ticket to James and sent him a $77 cheesesteak delivery.
Lilly-Pearson accepted two meals from Verizon for a personal benefit of $151. Punzo accepted 122 business-related meals from the five vendors — a personal benefit of $3,153 — for the years 2006 to 2009. Verizon representatives provided 80 of those meals — a personal benefit of $2,255 for Punzo — as well as four golf outings and tickets to six sporting events.
With few exceptions, Executive Order 002-04 prohibits employees in the executive branch of City government from soliciting or accepting, directly or indirectly, anything of value, including any gift, gratuity, favor, entertainment or loan, from vendors with City contracts. It also prohibits vendors from providing anything of value to City employees.
James and Punzo also used City resources to set up an unauthorized Verizon Business Link Rewards account, through which they improperly procured more than $48,000 worth of rewards — including iPods, gift cards, televisions and Tumi tote bags — from December 2005 to September 2009.
James and Punzo hid the rewards from the City’s property inventory and distributed items at their own discretion. James kept an iPod for his own personal use. Lilly-Pearson kept one iPod for her personal use and gave one to a family friend.
To date, most of the rewards items have not been located, including $2,300 worth of gift cards to Best Buy, Macy's and Barnes & Noble. Kurland noted that this was not surprising given James and Punzo's efforts to shield the rewards program from scrutiny.
"This case proves yet again that corruption spreads in the absence of oversight," Kurland said. "We have to be vigilant. We have to hold our employees accountable at every level of government."
Kurland said that the Managing Director's Office (MDO) would redeem the remaining $107,600 worth of rewards points for Lowe's and Best Buy gift cards, which the MDO's PhillyRising program will use for community beautification projects throughout the fiscal year.
PhillyRising targets neighborhoods throughout Philadelphia that are plagued by chronic crime and quality of life concerns, and establishes partnerships with community members to address these issues. The PhillyRising Team coordinates the actions of City agencies to help neighbors realize their vision for their community through sustainable, responsive, and cost-effective solutions.
Before joining the City as Deputy Commissioner of the Department of Public Property's Communications Division in February 1995, James was the Bell Atlantic account manager responsible for the City's telephone and data services. In June 2000, Bell Atlantic merged with GTE to become Verizon.
Punzo was the Verizon account manager responsible for the City's telephone and data services before he joined the Department of Public Property as a Communications Superintendent in January 2004. Punzo reported directly to James until February 2007, when James transferred to the Mayor's Office of Information Services — now known as the Division of Technology — to become Deputy Chief Information Officer.
Punzo replaced James as Deputy Commissioner and held that position until he resigned in September 2009. Punzo then returned to Verizon, but did not work on the City's account.
Public Property Commissioner Joan Schlotterbeck and Verizon's legal compliance team have cooperated fully with the OIG's investigation.
Verizon employees who received final warnings were taken off the City account and warned that any further misconduct would result in further discipline, including possible termination, according to Verizon’s corporate counsel. "All the employees who received a final written warning (except for one employee whose conduct was deemed less serious) were denied a 2011 salary increase and were personally counseled by Verizon Legal to reinforce their understanding of the rules."
Representatives of Comcast, Shared Technologies, Motorola and RCC Consultants also cooperated with the OIG's investigation.
The OIG has referred its ongoing investigation to the City Board of Ethics to determine if the parties involved have violated ethics rules. The OIG has also referred the matter to the U.S. Attorney's Office to determine if there were any violations of federal law.
Contractor allegedly overbilled the City for $1.2 million
Jul 19, 2011
The principal owner of a Haddonfield, NJ-based information-technology firm allegedly defrauded the City of more than $1 million by billing the City for work that had not been performed, announced Inspector General Amy L. Kurland, U.S. Postal Service Inspector-in-Charge Karen Higgins and U.S. Attorney Zane David Memeger. [-]
A federal information alleges that Barry Jones, owner of Mara Management Services Inc. (Mara) and Management and Technology Services Inc. (MTS), violated federal law by inflating the number of hours worked by himself and several of his subcontractors on invoices that he submitted to the City for payment.
From July 2004 to June 2008, Jones knowingly and intentionally submitted false time sheets to City agencies, according to the federal authorities. The Information alleges that Jones repeatedly submitted documents to the Revenue Department claiming that a subcontractor had worked 160 hours per month when Jones knew the subcontractor had only worked 20 hours per month. Jones claimed that another subcontractor had worked 160 hours per month when he knew that the subcontractor had worked between 75 and 115 hours per month. From about 2006 to April 2008, Jones also billed the City monthly for 160 hours of subcontractor work that had not been performed.
In all, Jones is alleged to have fraudulently billed the City for 17,000 subcontractor hours and for hundreds of hours of work he claimed to have performed himself.
The City paid Jones $5.9 million in connection with contracts that Mara and MTS had with the Revenue Department, the Water Department and Community Behavioral Health (a not-for-profit corporation that provides mental health and substance abuse services to Philadelphia County Medicaid recipients on the City’s behalf). Jones himself allegedly pocketed $2.7 million from his contracts with the City.
The federal government is seeking $1.2 million in restitution from Jones on the City's behalf.
Kurland urged City departments to review all of their contracts for evidence of overbilling and to report any discrepancies to the Inspector General’s Office.
Former City employee sentenced to two years for fraud scheme
Aug 02, 2010
Former City employee Ramon Pabon, 62, of Philadelphia, was sentenced today to 24 months in prison for accepting money to prepare fraudulent deeds and deeds not authorized by the Records Department, and for filing false tax returns, announced United States Attorney Zane David Memeger. [-]
Pabon was a former Title Registration Aide for the City of Philadelphia Records Department, Recorder of Deeds, who, between 2003 and 2008, received money, outside his City employment, from various individuals for preparing and recording fraudulent deeds and deeds that were not authorized by the Department of Records, as well as at least one fraudulent mortgage.
With the fraudulent deeds, the true property owners were unaware that their properties had been sold. Pabon received more than $46,295 in fees from these fraudulently and unlawfully prepared deeds. Pabon further failed to report the income from these fraudulently and unlawfully prepared deeds on his federal tax returns for the years 2006 through 2008.
In addition to the prison terms, U.S. District Court Judge Joel H. Slomsky ordered Pabon to pay restitution to the IRS in the amount of $20,968.
This case was investigated by the City of Philadelphia Office of Inspector General, the Federal Bureau of Investigation and the Internal Revenue Service, with assistance from the Philadelphia District Attorney’s Office. It is being prosecuted by Assistant United States Attorney Sarah L. Grieb and Special Assistant United States Attorney Lisa Caulfield.
OIG Recommendations for Change at the Bureau of Administrative Adjudication
Jun 08, 2010
The investigation shows how crucial good management is to any department. Clorise Wynn created a workplace that was devoid of clear rules, isolated line staff, and left gaps in supervision that compromised the integrity of her department. This left Wynn’s staff to learn office practice from her example alone, which provided a lesson only in what not to do. [-]
The BAA therefore must have clear, unambiguous rules that govern ethical issues, and management must lead by example. Our recommendations are as follows:
Finance Department officials responsible for overseeing the BAA should ensure that comprehensive ethical and operational standards are put in place and maintained, and that the BAA director and supervisors fully implement those policies and practices on a daily basis.
The BAA must develop overall operational policies and procedures for hearing examiners, including policies for holding hearings for family members, friends, acquaintances and BAA and PPA employees.
The fleet account system must also have clear rules that are easily referenced. All vehicles allowed in the fleet system should be registered to the business specifically, and the rules governing bulk dispositions of fleet tickets should be uniform. In order to deter abuse, employees or business owners who use their personal cars for work purposes should be required to dispute their tickets in the same manner as all other individuals.
Accurate records of hearings must be diligently kept to provide the public with the confidence of open proceedings that are easily referenced in case of further dispute, and to protect employees against false allegations of misconduct. Also, written explanations of discretionary dismissals should be required to protect employees from allegations of misconduct and deter abuse.