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Audit of Special Fund Finds Slew of Erroneous Charges

Once again, a V.I. government audit has turned up what appears to be a slew of erroneous charges against a public fund account, this time set up to pay for "special government events."

Set up in 1995 by then Gov. Roy L. Schneider, the Special Events Fund appears to be an undocumented checking account not provided for in the V.I. Code nor authorized by Finance. The account was closed in 2007 by Gov. John deJongh Jr. when he took office, but between 2004 to 2006 it was basically used for petty cash, covering a wide range of expenses in addition to special events, according to a report released over the weekend by the V.I. Inspector General’s Office.

"We found that the checking account was officially established by Finance and was used: for transactions other than its purported purpose of financing special events; to pay for professional services to an individual without a contract; and to inappropriately pay government employees outside of the government payroll system," the report says.

In his response to the audit, deJongh said he agrees with the findings and explained that Finance has "taken action" to address the handling of donations and payroll. In particular, the department has cleaned out all unauthorized bank accounts, made clear its policy on private donations and, according to a memo from Finance Commissioner Angel Dawson, has said that no form of payroll should come from petty cash, imprest or special funds.

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The Personnel Division has also issued a policy memorandum to the various departments and agencies about employee payments or reimbursements for government services, the governor wrote in a letter to V.I. Inspector General Steven van Beverhoudt.

The audit report makes clear that there was no finding of misappropriation, but says that the account wasn’t properly controlled. Along with Finance continuing to make reimbursements for payments made against the fund without any supporting documentation, the one person with unfettered access to the cash was not allowed by law to handle any of the public money.

During the 2004 to 2006 timeframe covered by the audit, former St. Thomas-Water Island Administrator James O’Bryan Jr. was the lone signatory on the account. And while he was able to handle things such as private donations, anything that had to go through Finance, such as government/employee contributions or reimbursements, was off-limits.

That job fell to former government aide Alric Simmonds, who at the time was the certifying officer for the government, but is now serving eight years in prison for embezzlement.

Special Events Fund

The account was a repository for hundreds of thousands in what’s described in the report as "comingled" funds — a total of $347,472 in both public and private funds that were mixed up together. Of that amount: $233,942 came from the government; $88,550 from private donations; $9,129 from employee reimbursements; and $15,851 from "other or unknown sources."

Auditors turned up $350,784 worth of expenses during the same two year period, with $148,111 appearing to go toward the "special events" the fund was set up for. But the rest of the money, according to the report, went to: the government’s Anti-litter and Abandoned Vehicle Task Force ($113,709), the Office of the Governor ($56,181), education/youth activities ($14,992) and the USO bathroom project ($1,435), along with another $16,355 in other or unknown expenses.

According to the report, Simmonds would submit miscellaneous disbursement vouchers — or, payment slips — to Finance to reimburse the account for expenses related to the Governor’s Office or Abandoned Vehicle Task Force.

"Finance repeatedly reimbursed this checking account," the report said. "Had Finance been more diligent in its review of the miscellaneous disbursement vouchers related to the checking account, it may have found that the account was not entitled to reimbursement."

The audit also turned up more than $7,000 in what was described as "unsupported expenditures," including a $5,522 check issued by O’Bryan to Simmonds in June 2005. The purpose was a "fund balance closure," but no documentation was found to back that up, the report said. Meanwhile, O’Bryan indicated that a $2,000 check made out to cash was used to make arrangements for a meeting held by the former governor at a national conference in Boston, but no supporting documentation was found for that either, according to the report.

Other Services and Charges

The audit repeatedly says money in the Special Events Fund was used for a litany of other purposes. Among those laid out in the report was $15,000 worth of payments to an unnamed individual for "part time administrative services" provided to the Abandoned Vehicle Task Force. According to the report, the individual did not have a government contract that went through the procurement process, nor were their payments taxed or processed through Finance.

Meanwhile, $8,523 worth of payments to 17 government employees were made from the account without going through the payroll system. According to V.I. law, Finance processes all payroll for the government, while businesses, such as government departments, are required to fill out a W-2 on all wages paid to employees, which are also subject to deductions including Social Security payments and federal income taxes.

But none of those deductions were made. Instead, the employees — from seven different departments and agencies — received gross wages and overtime payments for a variety of administrative, law enforcement, transportation and landscaping services provided to the government.

"The Governor’s Special Events and Task Force activities required these employees to perform duties after normal working hours and in some cases, on weekends and holidays," according to the report, which also cited the submittal of daily time and attendance documents, along with "memorandums of work performed" for overtime that, according to the audit, should not have been paid from the checking account.

Auditors additionally could not figure out how $14,008 worth of scholarships — part of a program set up through an agreement between the government and Florida-Caribbean Cruise Association — was spent.

Funds were also spent for the former governor’s birthday party, but auditors could not determine whether that falls under the purview of the fund, since no clear rules governing the use of the money were ever established, according to the report.

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Once again, a V.I. government audit has turned up what appears to be a slew of erroneous charges against a public fund account, this time set up to pay for "special government events."

Set up in 1995 by then Gov. Roy L. Schneider, the Special Events Fund appears to be an undocumented checking account not provided for in the V.I. Code nor authorized by Finance. The account was closed in 2007 by Gov. John deJongh Jr. when he took office, but between 2004 to 2006 it was basically used for petty cash, covering a wide range of expenses in addition to special events, according to a report released over the weekend by the V.I. Inspector General's Office.

"We found that the checking account was officially established by Finance and was used: for transactions other than its purported purpose of financing special events; to pay for professional services to an individual without a contract; and to inappropriately pay government employees outside of the government payroll system," the report says.

In his response to the audit, deJongh said he agrees with the findings and explained that Finance has "taken action" to address the handling of donations and payroll. In particular, the department has cleaned out all unauthorized bank accounts, made clear its policy on private donations and, according to a memo from Finance Commissioner Angel Dawson, has said that no form of payroll should come from petty cash, imprest or special funds.

The Personnel Division has also issued a policy memorandum to the various departments and agencies about employee payments or reimbursements for government services, the governor wrote in a letter to V.I. Inspector General Steven van Beverhoudt.

The audit report makes clear that there was no finding of misappropriation, but says that the account wasn't properly controlled. Along with Finance continuing to make reimbursements for payments made against the fund without any supporting documentation, the one person with unfettered access to the cash was not allowed by law to handle any of the public money.

During the 2004 to 2006 timeframe covered by the audit, former St. Thomas-Water Island Administrator James O'Bryan Jr. was the lone signatory on the account. And while he was able to handle things such as private donations, anything that had to go through Finance, such as government/employee contributions or reimbursements, was off-limits.

That job fell to former government aide Alric Simmonds, who at the time was the certifying officer for the government, but is now serving eight years in prison for embezzlement.

Special Events Fund

The account was a repository for hundreds of thousands in what's described in the report as "comingled" funds -- a total of $347,472 in both public and private funds that were mixed up together. Of that amount: $233,942 came from the government; $88,550 from private donations; $9,129 from employee reimbursements; and $15,851 from "other or unknown sources."

Auditors turned up $350,784 worth of expenses during the same two year period, with $148,111 appearing to go toward the "special events" the fund was set up for. But the rest of the money, according to the report, went to: the government's Anti-litter and Abandoned Vehicle Task Force ($113,709), the Office of the Governor ($56,181), education/youth activities ($14,992) and the USO bathroom project ($1,435), along with another $16,355 in other or unknown expenses.

According to the report, Simmonds would submit miscellaneous disbursement vouchers -- or, payment slips -- to Finance to reimburse the account for expenses related to the Governor's Office or Abandoned Vehicle Task Force.

"Finance repeatedly reimbursed this checking account," the report said. "Had Finance been more diligent in its review of the miscellaneous disbursement vouchers related to the checking account, it may have found that the account was not entitled to reimbursement."

The audit also turned up more than $7,000 in what was described as "unsupported expenditures," including a $5,522 check issued by O'Bryan to Simmonds in June 2005. The purpose was a "fund balance closure," but no documentation was found to back that up, the report said. Meanwhile, O'Bryan indicated that a $2,000 check made out to cash was used to make arrangements for a meeting held by the former governor at a national conference in Boston, but no supporting documentation was found for that either, according to the report.

Other Services and Charges

The audit repeatedly says money in the Special Events Fund was used for a litany of other purposes. Among those laid out in the report was $15,000 worth of payments to an unnamed individual for "part time administrative services" provided to the Abandoned Vehicle Task Force. According to the report, the individual did not have a government contract that went through the procurement process, nor were their payments taxed or processed through Finance.

Meanwhile, $8,523 worth of payments to 17 government employees were made from the account without going through the payroll system. According to V.I. law, Finance processes all payroll for the government, while businesses, such as government departments, are required to fill out a W-2 on all wages paid to employees, which are also subject to deductions including Social Security payments and federal income taxes.

But none of those deductions were made. Instead, the employees -- from seven different departments and agencies -- received gross wages and overtime payments for a variety of administrative, law enforcement, transportation and landscaping services provided to the government.

"The Governor's Special Events and Task Force activities required these employees to perform duties after normal working hours and in some cases, on weekends and holidays," according to the report, which also cited the submittal of daily time and attendance documents, along with "memorandums of work performed" for overtime that, according to the audit, should not have been paid from the checking account.

Auditors additionally could not figure out how $14,008 worth of scholarships -- part of a program set up through an agreement between the government and Florida-Caribbean Cruise Association -- was spent.

Funds were also spent for the former governor's birthday party, but auditors could not determine whether that falls under the purview of the fund, since no clear rules governing the use of the money were ever established, according to the report.