AFFIDAVIT
TERRITORY OF THE VIRGIN ISLANDS )
DIVISION OF ST. THOMAS & ST. JOHN )
1, Nicholas P. Peru after being duely sworn, depose and say:
1. That I am employed by the Virgin Islands Department of Justice, Office of The Attorney General as a Special Agent and assigned to the Division of White Collar Crime in St.Thomas.
2. That, during the course of the past year, the White Collar Crime Unit has become increasingly aware of fraudulent financial claims made by individuals against VI Government funds. An audit of government spending was performed by the Office of the VI Inspector General (formally the VI Bureau of Audit and Control) and evidence of questionable practices and serious fiscal mismanagement was uncovered.
3. That, as part of the follow up investigation, I was assigned to work in conjunction with the Office of the VI Inspector General, in reviewing expenditures from the Office of the Governor under the Schneider/Mapp administration.
4. That this affidavit focuses on a payment made to the Marriott's Frenchman's Reef, with public funds by the Office of the Governor based upon a fraudulent Miscellaneous Disbursement Voucher (MDV).
5. That based upon information received, any government agency wishing to pay certain expense (excluding payroll) with government funds has to prepare a document called an MDV. The MDV is forwarded to the Department of Finance for processing and either payment or rejection.
6. That some of the normal features of an MDV are as follows:-
• the nature of the payment
• the amount of funds to be expended
• the purpose of the payment
• the account codes
• the proper calculation
• the funding source (general or federal)
• the name of the payee
• the date prepared
• the requisition number
• the signature of the certifying officer, etc.
Any and all documents supporting the total payment represented on the MDV must be attached. If any of the normal features or document are missing, the payment is rejected and an audit memo is prepared and returned together with the MDV to the agency that submitted it. (A blank M[DV marked void is attached as exhibit I for reference).
7. That all MIDVs are submitted with original and six (6) copies. The lower section of an MIDV contains a section "FOR USE BY FINANCE DEPARTMENT ONLY." In this section of the MIDV, an examiner in the Pre Audit Section at the Department of Finance reviews the MDV for all of the above, including the availability of funds, and additionally for "Propriety and Legality"; "Account Code"; and "Computation." The examiner then initials and signs the MDV as
verifying that the document is in order and can be processed for payment by way of a check being issued to the payee/vendor. Should the examiner find anything wrong with the documents submitted, the audit memo is prepared and sent with the MIDV back to the agency submitting it.
MDV #0020-99
8. That, the specific MDV that is the subject of this investigation, MDV #0020-99, was submitted for a payment of $67,076.48 to -the Frenchman's Reef Hotel by Government House on October 29, 1998. It carried the identifier "DEPT. VOU./REQN. NO. 0020-99."
The payment was for the lodging of Government employees at the Frenchman's Reef following Hurricane Marilyn in 1995. Under the section headed "EXPLANATION AND/OR REFERENCES," on the left portion states "Payment for Room accommodation for the following as per supporting documents attached:" it goes on to list the following:-
"Robert McDowall . . $5,716.98
Bob McDowell 6,224.62
Mike Janelli ..6,400.54
John Greaux 29,402.55
Maureen Bryan 19,265.39
Steven Benjamin 21.40
Janice Webb-Blanc 10.00
Eleanor Thraen 35.00
TAX ID #22-2624831$67,076.48"
The right portion of MDV 0020-99 states:
"NOTE: CHECK TO BE PICKED UP BY GOVERNMENT HOUSE
Approval is requested to pay this charge from F.Y. '99 Funds pursuant to provisions in Title 2 See. 28E, V.I. Code.
Approved:
Roy L. Schneider
Governor"
9. That, Alvin Battiste is the Director of Budget and Financial Management for the Office of the Governor. Mr. Battiste is also a certi~ing officer for Government
House. Mr. Battiste authored a memorandum dated December 21, 1998 addressed to Dean M. Wallace, Acting Commissioner, Department of Finance, through the Governor (Schneider) on the subject of MDV #0020-99. The memorandum was intended as a justification for the payment of the MDV number 0020-99. Mr. Battiste in his memorandum ofjustification stated:
"The payment requested represents charges incurredfor eight (8) essential government employees who, as a result of catastrophic damages to their personal residences, in the aftermath of Hurricane Marilyn stayed at the Marriot Frenchman's Reef Hotel."
"'In certain cases, the employees were on call on a 24-hour basis. Yet at the same time, the employees had no home and needed a place to live so that they couldperform their regular duties during the emergency.
"The need for a continued operation of the Government, particularly at Government House, was essential where even a minimal disruption would have had a devastating and crippling effect in the ongoing territorial recovery efforts."
10. That, no submission to seek Legislative approval was made by then Governor Schneider. Further, on MDV #0020-99, there is a circle around "'99" and a line with an arrow leading to "F.Y. 98" with the signature of Dean M. Wallace (see exhibit 2)
11. That, Paulette Rabsatt was interviewed and stated that from October 1992 to November 20, 1998, she was the Director of Accounting at the Department of Finance. When shown MDV 0020-99, Ms. Rabsatt recalled that a day or two following the 1998 election, she met with Acting Commissioner of Finance Dean Wallace. Present at that meeting was Bernice Turnbull, currently the Commissioner of Finance.
The meeting was for all senior staff to attend. Ms. Rabsatt and Ms. Turnbull arrived before the other invitees arrived and Ms. Rabsatt used that opportunity to bring to Mr. Wallace's attention the fact that the payment to Frenchman's Reef was previously rejected because it was inappropriate. Mr. Wallace took the MDV and said that he will take care of it.
Ms. Rabsatt recalled that there were no supporting documents attached and informed Mr. Wallace that even though the MDV was being sent again, the supporting documents will have to be resubmitted. When shown a copy of the MDV 0020-99, Ms. Rabsatt indicated that she was aware of not only this document, but also the first one which Mr. Bonilli brought to her for payment. The first MDV (0511-96) she rejected and it was returned with a memo to Government House. Ms. Rabsatt could not recall exactly what was written in the audit memo, but knew that the payment for the lodging of Government employees who were not in travel status was inappropriate. Ms. Rabsatt stated that she informed then Commissioner of Finance, Gwendolyn Adams of these events. Ms. Rabsatt was terminated on November 20, 1998.
12. That, following the termination of Ms. Paulette Rabsatt, Ms. Shirley Brown was appointed Acting Director of Accounting. On December 18, she appointed her sister, Ms. Delores Hodge to be Acting Chief of Pre Audit. The effective date of the appointment was December 21, 1998. The memorandum from Ms. Brown was copied to "Juan Centeno, Commissioner of Finance and "Deno" Wallace, Acting Commissioner.
13. That, on MDV 0020-99, the signature of Ms. Delores Hodge appears as the examiner who checked and verified the document for "Propriety and Legality; "Account Code"; Computations." The hand written date next to the verification of Ms. Hodge is dated December 29, 1998.
14. That, Ms. Delores Hodge was interviewed at the Bureau of Audit and Control and informed the interviewing team that she has been in the Pre Audit
Section at the Department of Finance for about thirteen (13) years. During that time, she has never been appointed as acting chief in the absence of her supervisor. That she was not consulted or was there any discussion about the appointment other than her sister, Acting Director Shirley Brown told her of the appointment.
Ms. Hodge recalled that on December 29, 1998, she was called by Dean Wallace to the Commissioner's office and told to process the subject MDV for payment. Relying on the fact that this was her boss instructing her to process the MDV, Ms. Hodge simply checked the calculation and account codes to ensure that they were correct. Additionally, seeing that the document was "APPROVED FOR PAYMENT" by Roy L. Schneider, Governor, made it apparent to her that she was doing the right thing.
MDV 0511-96
15. That as previously stated, the payment for lodging to Marriott's Frenchman's Reef following Hurricane Marilyn was requested and denied in a prior MDV. On or about July 11, 1996, MDV 0511-96 (Attached as exhibit 3) was certified by then Governor Schneider and submitted by Government House to the Department of Finance for review and payment to Frenchman's Reef in the amount of $68,388.68. The purpose of the payment was for "Room accommodations."
16. That, the reviewer assigned to handle all payments on behalf of Government House was Angel Bonelli who has been an examiner for 12 to 13 years. His assignment to review Government House payment requests has been for approximately 10 of his 26 years with the Department of Finance. Mr. Bonelli stated that upon receiving the MDV dated July 11, 1996, he realized that it was an inappropriate payment and promptly informed his supervisor, Veronica Lake, Chief of Pre Audit. Ms. Lake agreed and informed her supervisor Paulette Rabsatt, Director of Accounting. Mr. Bonelli stated that Ms. Rabsatt agreed that it was inappropriate to pay Frenchman's Reef for lodging of Government employees following Hurricane Marilyn and stated that she will do the audit memo and return the MDV to Government House. This was the last that Mr. Bonelli saw of that MDV, numbered 0511-96.
17. That, the payment of both MDVs was for the lodging of Government employees at the Frenchman's Reef following Hurricane Marilyn in 1995. Under the section headed "EXPLANATION AND/OR REFERENCES," on the left portion states "Payment for Room accommodation for the following as per supporting documents attached:"
"Robert McDowall . $5,716.98
Bob McDowell …. 6,224.62
Mike Janelli 6,400.54
John Greaux 29,402.55
Maureen Bryan 19,265.39
Steven Benjamin 21.40
Janice Webb-Blanc 10.00
Eleanor Thraen 35.00
TAX ID #22-2624831 $67,076,48"
As stated above, Mr. Battiste stated:
"The payment requested represents charges incurred for eight (8) essential government employees who, as a result of catastrophic damages to their personal residences, in the aftermath of Hurricane Marilyn stayed at the Marriot Frenchman's Reef Hotel."
It is to be noted that the figures quoted for Steven Benjamin, Janice Webb-Blanc and Eleanor Thrane are not and cannot be room charges.
18. That, John (actually Jean) Greaux was interviewed at the Bureau of Audit and Control and informed the interviewing team that he was in fact employed by the Office of the Governor as an Electronic Media Specialist for the period June 1995 to July 1996. Mr. Greaux stated that neither following Hurricane Marilyn, nor at any time did he ever stay at the Frenchman's Reef at the Government's expense.
Mr. Greaux was questioned about his name appearing on the MDV indicating that accommodations were paid for him for approximately six (6) months. He stated that following Hurricane Marilyn, Governor Schneider had a room assigned as a so called "press room" and he (Greaux) never signed a guest register or any document for the room and did not sleep there. In fact, stated Mr. Greaux it was Walter Brunner who stayed in the room.
According to Greaux, up until Hurricane Marilyn, Mr. Brunner lived at room 204 Magen's Point Resort. Mr. Brunner actually moved his personal effects including foodstuff out of Magen's Point hotel and into the Frenchman's Reef. Mr. Brunner was/is a close personal friend of then Governor Schneider and held contracts with the Government, but was not an employee of the Government. Mr. Greaux recalled that he was assigned to work with Mr. Brunner by the Governor, which he did for about a month, then on or about October 18, 1995 a memorandum was circulated from then Commissioner Alvin Davis of the Department of Property and Procurement that all employees should return to their normal duties and work stations. Mr. Greaux returned to Government House on a permanent basis.
19. That the following information was confirmed:
• Walter Brunner did hold contracts to perform various services for the Government during the Schneider/Mapp administration
• None of the contracts reviewed covered accommodations unless in travel status
• Unit 204 at Magen's Point Resort is owned by former Governor Roy L. Schneider, M.D.
• Walter Brunner occupied that room for three to four years during the Schneider/Mapp administration
• The section of the resort where unit 204 is located suffered extensive, damage as a result of Hurricane Marilyn
• Mr. Walter Brunner moved out of unit 204 in January 1999, the end of the Schneider administration.
20. That Robert Mc Dowall, Bob Mc Dowell and Mike Janelli are no employees of the Virgin Islands Government. In fact, investigation has revealed that Robert Mc Dowall and Bob Mc Dowell are one and the same, and the correct name is Robert Mc Dowall. Both Mc Dowall and Janilli are pilots from Priester Aviation who flew a charter plane to the territory at the request of then Governor Schneider through Medical Air Services Association (M.A.S.A.). On September 28, 1995, then Governor Schneider by letter informed Frenchman's Reef that those two pilots were assigned to his office and all bills were to be forwarded to Government House. Further, both pilots were in the territory for one month from September 21, 1995 to October 20, 1995, however a review of their room bills showed some discrepancies with respect to the actual date of departure from their respective rooms.
21. That, as stated above, the right portion of MDV 0020-99 states:
"NOTE: CHECK TO BE PICKED UP BY GOVERNMENT HOUSE
Approval is requested to pay this charge from F.Y. '99 Funds pursuant to provisions in Title 2 See. 28E, VJ. Code.
Approved:
Roy L. Schneider
Governor"
The signature of then Governor Schneider appears on the signatory line and the signature of the "Certifying Officer" is that of then Governor Schneider, and the date is 10/29/98. (See exhibit I attached.)
That, Title 2, Sec. 28 (e) can be summarized that the Governor (or his designee) can only authorize payments up to $5,000.00 from current year finances for a prior fiscal year's obligation. Any funds to be expended from current years' finances for a prior year's obligation above $5,000.00 must be submitted to the Legislature for consideration. It is to be noted that this MDV (0020-99) was submitted on October 29h, 1998, which was actually fiscal year 1999 making this payment three (3) fiscal years old. Additionally, no legislative approval was sought.
22. That, had Mr. Alvin Battiste in fact reviewed the MDV, he would have noted that the last thee charges ($21,40, $10.00 & $35.00) could not have been for room accommodations. Mr. Baptist was interviewed at his office on Government Hill.
Mr. Battiste was asked about the justification memorandum and responded that all justification memorandums are done from his office. When asked why MDV #0020-99 was not certified by him, Mr. Battiste responded that although the document was prepared by his staff at his direction, the instructions to prepare it came from his supervisor Ms. Maureen Bryan, Executive Assist
ant to the Governor. Mr. Battiste stated that all instructions came from Ms. Bryan directly. Mr. Battiste further stated that Government House was up and running within a week and did not suffer much damage. Although he did not agree with the Government paying for the housing of employees, he was instructed by his boss (Ms. Bryan) to prepare the justification memorandum because as he stated "all justifications come from him". He stated that he reported to and took instructions from Ms. Maureen Bryan. Mr. Battiste stated that in addition to himself as certifying officer, Ms. Maureen Bryan and Governor Schneider were also certifying officers.
23. That, Mr. Battiste was again interviewed at his office on Government Hill a second time, on Tuesday, February 1", 2000, by affiant and Steven van Beverhoudt, V.I. Inspector General. In that interview, Mr. Battiste stated that:
• Dean Wallace had requested the justification memorandum and he wrote it as a normal course of business.
• He was not pressured by any one to do the memo
When shown and questioned about the MDV used to pay Frenchman's Reef, and why he did not certify that document nor the previous one, Mr. Battiste stated:
• His division prepared that and all MDVs
• He saw nothing wrong with that payment
– The Governor was his boss and if he said to pay, he paid
– His function was to certify that funds were available to make payment and not to question if the payment was proper
– He did not certify that MDV or the previous one because he did not recognize the names Janalli and Mc Dowell/Mc Dowall, so the MDV was sent for the Governor (Schneider) to review
– He was aware that previous Finance Commissioners had refused to process the payment to Frenchman's Reef
– The MDV in question was on Ms. Bryan's desk for months before being forwarded to Finance for payment
Mr. Baptiste was also shown and questioned about MDVs certified by him and not the Governor to pay Frenchman's Reef for room accommodations for Maureen Bryan and Jean Greaux. Mr. Baptiste stated:
– This was a part of his normal duties
– He saw nothing wrong with these payments
– Maureen Bryan was his boss and Jean Greaux worked with the Media/Public Relations Division
– The first time he knew that it was not Jean Greaux, but Walter Brunner staying at the Reef at Government expense was in the previous interview when Mr. Jerry Vidibor of the Inspector General's office told him so
When asked if he was or felt pressured or intimidated in any way to facilitate the payment to Frenchman's Reef? Mr. Baptiste stated no.
24. That, affiant and Steven van Beverhoudt, V.I. Inspector General interviewed Mrs. Juel Molloy on February 1, 2000, at her office at Government House. Mrs. Molloy in 1996 was the Assistant to Governor Schneider, she is currently the chief of staff to Governor Turnbull.
Ms. Molloy was questioned about her knowledge of the payment/s to Frenchman's Reef to house Government employees following Hurricane Marilyn. Ms. Molloy stated that:
– Former Governor Schneider offered her and her husband the opportunity to also stay at the Reef at the expense of the Government
– Both she and her husband refused the offer
– During the early part of 1996, Alvin Battiste called her and told her that he wanted to speak with her
– Mr. Battiste came to her office which was located on the ground floor and informed her that Government funds was being used to pay to house employees at the Reef
– It was from Mr. Battiste during that meeting that she learnt that it was Walter Brunner and not Jean Greaux staying at the Reef at Government expense
– She advised Mr. Battiste not to sign anything that he felt was wrong
25. That, upon further investigation based on information receiver from the Office of the V.I. Inspector General, in addition to MDV #0020-99, the following MDV's were submitted and paid by the Department of Finance to Frenchman's Reef
Req. No. Date Reason/Purpose
1) 0122-96 12/28/95 Payment for room accommodation for Ms. Maureen Bryan, Executive Assistant Director to the Governor from 12/07/95 – 12/19/95
Amount.- $2,922.88
2) 0146-96 01/08/96 Payment for room accommodation for Ms. Maureen Bryan, Executive Assistant Director to the Governor from 12/19/95 – 12/25/95
Amount. $1,381.15
3) 0192-96 01/29/96 Payment for room accommodation for Ms. Maureen Bryan, Executive Assistant Director to the Governor from 01/15/96 – 01/22/96
Amount. $1,764.19
4) 0298-96 03/14/96 Payment for room accommodation for Mr. John Greaux, Electronic Media Specialist. Period: 02/13/96 – 03/02/96
Amount. $3,435.20
5) 0324-96 03/28/96 Payment for room accommodation for Mr. John Greaux, Electronic Media Specialist. Period: 03/03/96 – 03/14/96
Amount. $3,435.20
This means that an additional $12,938.62 was paid to Frenchman's Reef for alleged accommodation of two (2) Government employees.
This would mean that an overall total of $25,333.61 was paid for Ms. Bryan and an overall total of $36,272.95 paid for Mr. Greaux/Mr. Brunner.
A review of the bills for these accommodations obtained indicated that Ms. Bryan's duration was from September 17, 1995 to February 4, 1996 and Mr. Greaux's/Brunner's alleged duration was from September 19, 1995 to March 14, 1996. The room assigned (according to the statements from the Frenchman's Reef) to Mr. Greaux/Brunner was 582.
26. That, Roy L. Schneider, M.D. in his capacity as Governor of the United States Virgin Islands, submitted a false claim to the Government by certifying and submitting MDV # 0020-99 dated 10/29/98 for the payment of $67,076.48 to Frenchman's Reef; (having said payment rejected before) in that John (Jean) Greaux was not the individual staying at the Frenchman's Reef, but rather his tenant/guest, Walter Brunner.
27. That, Alvin Battiste in his capacity as a certifying officer, became a co-conspirator to submit a fraudulent claim upon the Government and compounded the crime. This was accomplished by certifying MDV 0298-96 dated 03/14/96 for the payment for room accommodation for Mr. John Greaux, Electronic Media Specialist, for the period 02/13/96 – 03/02/96 in the amount of $3,435.20. Also by certifying MDV 0324-96 dated 03/28/96 for the payment for room accommodation for Mr. John Greaux, Electronic Media Specialist, for the period: 03/03/96 – 03/14/96 in the amount of $3,435.20. And by issuing memorandum dated December 21, 1998 as a justification for the payment of $67,076.48 to Frenchman's Reef.
28. That, Dean M. Wallace in his capacity of Acting Commissioner, Department of Finance, by allowing the payment of $67,076.48 to be processed and paid, bypassing established Finance and Legislative procedures, became a co conspirator to Roy L. Schneider, M.D.
29. That, Maureen Bryan in her capacity as Executive Assistant to the Governor (Schneider) caused MDV #0020-99 dated 10/29/98 to be prepared and signed by Schneider and caused Alvin Battiste to issue justification memorandum dated December 21, 1998, for the payment of $67,076.48 to Frenchman's Reef.
30. That, affiant believes that there exists Probable Cause to charge the following individuals with the respective crimes as detailed hereunder:
ROY L. SCHNEIDER, M.D.
1. Conspiracy and Embezzlement or Falsification of Public Accounts in violation of T14 §551 (1) and T14 §1662 (1)
2. Submitting Fraudulent Claims Upon the Government in violation of T14 §843 (1)
3. Submitting Fraudulent Claims Upon the Government in violation of T14 §843 (2)
4. False Certificates by Public Officers in violation of T14 § 1664
MAUREEN BRYAN
1. Conspiracy and Embezzlement or Falsification of Public Accounts in violation of T14 §551 (1) and T14 §1662 (1)
2. Submitting Fraudulent Claims Upon the Government in violation of T14 §843 (1)
3. Submitting Fraudulent Claims Upon the Government in violation of T14 §843 (2)
4. False Certificates by Public Officers in violation of T14 § 1664
ALVIN BATTISTE
1. Conspiracy and Embezzlement or Falsification of Public Accounts in violation of T14 §551 (1) and T14 §1662 (1)
2. Submitting Fraudulent Claims Upon the Government in violation of T14 §843 (1)
3. Submitting Fraudulent Claims Upon the Government in violation of T14 §843 (2)
4. False Certificates by Public Officers in violation of T14 § 1664
DEAN M. WALLACE
1. Conspiracy in violation of T14 §551(l)
2. Embezzlement or Falsification of Public Accounts in violation of T14 §1662 (1)
3. False Certificates by Public Officers in violation of T14 § 1664
