By William Gjebre, BrowardBulldog.org 

The Broward Inspector General’s final report on the “gross mismanagement” of millions in tax dollars by Hallandale Beach is sharply critical of city leaders it says have shown a “basic misunderstanding” of what’s gone wrong.

Hallandale Beach city managers past and present, the city attorney, the mayor and other city officials defended the handling of funds of the city’s Community Redevelopment Agency in formal responses included in the 56-page report released last week.

The Inspector General, after a year investigating, determined that from 2007 to 2012 city leaders used the CRA like a piggybank to improperly pay for the city’s general expenses and other pet projects, including donations to favored charities and loans to local businesses.

By law, CRA is a limited purpose special district whose funds are only to be spent to address slum and blight conditions within a defined area. It receives 95 percent of the taxes collected on the appreciated value of properties within its boundaries, or about $70 million since it began in 1996

Some of the report’s bluntest words rebut claims by Mayor Joy Cooper and City Attorney V. Lynn Whitfield that the Inspector General had no authority to investigate the CRA’s activities.

Hallandale Beach City Attorney V. Lynn Whitfield

Whitfield’s “assertions ignore the fact that the OIG (Office of Inspector General) has authority over all municipal officials in identifying mismanagement of public resources,” the report says. “A municipality cannot avoid OIG oversight by spending taxpayer funds through an agency that is independent in name only.”

Likewise, the report ripped “another common theme” of the city’s defenders that the Inspector General mistakenly relied on a Florida Attorney General’s advisory opinion that the Inspector General said precluded the city from spending CRA funds as it had.

City Attorney Whitfield’s arguments “reflect the basic misunderstanding that is at the core of the gross mismanagement identified in this report: the city has failed to comprehend that the CRA has a limited purpose and that the powers of the CRA to expend CRA…funds is not equal to the power of the municipality to expend general funds.”

The report urged Hallandale Beach’s leaders to ask the Attorney General for another opinion if they don’t like the original one.

CITY MANAGER MILLER CRITICIZED

The report also criticized City Manager Renee Crichton Miller, who it said made “unsupported” arguments to support Cooper and Whitfield’s erroneous claims that the Inspector General had incorrectly determined that CRA funds were improperly used to repay city bond obligations for park improvements in other parts of the city.

City officials contended that it was always the city’s intention to repay any CRA funds spent on parks outside the CRA boundaries,  The report, however, says those arguments failed to “address the plain fact that $416,365 in CRA funds – deemed ‘negligible’ by (Miller) – have already been expended on parks outside the CRA boundaries” without any repayments or any plan for repayment.

Miller, hired last summer and not identified in the report as being responsible for past mismanagement, stuck by her arguments in an interview after the report’s release, saying the city has every intention to repay funds owed the CRA. She said it does not have to do so now because those projects have yet to get underway.

“We have a difference of opinion with the Inspector General,” said Miller. “I would not disparage their view.”

Hallandale Beach Mayor Joy Cooper

Asked for comment, Mayor Cooper referred a reporter to her statements in the Inspector General’s report.

Said former City Commissioner Keith London, who lost a race for mayor to Cooper last November, “I hope the State Attorney’s office will look into this further.”

BrowardBulldog.org first reported the Inspector General’s preliminary findings last month. Last week’s final report incorporated the responses of city leaders.

Investigators found at least $2.2 million in questionable CRA expenditures, including inappropriate loans to local business and grants to local non-profits. The city improperly also spent $416,000 in CRA money for parks outside the CRA boundaries, the report said.

The report also said there is “probable cause” to believe that Dr. Deborah Brown, the founder and director of the Palm Center for the Arts engaged in criminal misconduct. In one case, the center allegedly spent nearly $5,000 to make a payment on Brown’s timeshare at the Westgate Resort in Orlando, and make payments to Brown and her brother. The matter was referred to the Broward State Attorney’s Office for criminal prosecution.

In her response to the Inspector General, Brown provided a document of expenditures and details of youth activities that she said provided “positive, measurable results” at her Palm Center for the Arts. The report, however, said there was a lack of supporting documentation for those expenditures.

“Her submission does not alter our determination that there is probable cause to believe that Dr. Brown may have engaged in criminal misconduct,” the report says.

Brown could not be reached for comment.

CITY LOANS DEFENDED

In their responses, Cooper and former city manager Mike Good defended various CRA loans to local businesses, including a $75,000 loan in 2009 to Digital Outernet Inc., a startup firm that planned to earn income from advertising on televisions screens it hoped put in local businesses.

Digital Outernet closed a short time later when its principal owner died. But the city failed to secure a guarantee of repayment from other investors and waived a provision in the deal that would have given it some collateral for the loan.

Cooper said the Digital Outernet loan was “not gross mismanagement” because it attempted to help establish a minority-owned business, according to the report. Good said the loan was “properly made,” adding that at it was “unfortunate that some paperwork had not been signed,” the report said.

Good, too, defended a $50,000 loan to the South Florida Sun Times weekly newspaper, saying it was “justified” because the newspaper needed assistance. The 2009 loan, under terms so favorable that half of it need not be repaid, was made under a new program Good had established for assist struggling businesses.

At the time, the two top executives of the for-profit newspaper reported to the IRS that they’d paid themselves $469,000 in salaries in the two years before receiving the loan.

Cooper told the Inspector General that the salaries of those seeking loans are now part of the loan evaluation process, the report said.

But the Inspector General’s report said Hallandale Beach’s failure until recently to take any steps to empower the CRA as an independent body that might “act as a check on the improper use” of CRA tax funds is problematic.

“While we are encouraged by the remedial steps taken by the city and the CRA in the last year, the OIG remains concerned that the city has not acknowledged the statutory limit on the use of TIF (tax increment financing) funds diverted to the CRA,” says the report, which makes a number of recommendations it said would ensure the CRA’s independence.

Hallandale Beach is not the only Broward city to have misspent CRA funds. Within the last year, the Inspector General found $2.5 million misspent by Lauderdale Lakes and the Florida Auditor General identified “several significant expenditures” by Hollywood that did not follow state law.

“It is becoming increasingly apparent that the gross mismanagement of CRA funds by a Broward County municipality is not a unique occurrence,” the report says. “The OIG will continue to examine the expenditure of CRA funds by municipalities.”

The report also recommends the county assess its legal options “to prevent the ongoing abuse of the CRA process and recover those funds that may have been misspent.”

By William Gjebre, BrowardBulldog.org 

Hallandale Beach City Manager Renee C. Miller

Hallandale Beach officials have fired back at county investigators who last month found “gross mismanagement” of tax funds at the city’s Community Redevelopment Agency, accusing them of “numerous factual inaccuracies” and challenging their legal authority.

In its official 10-page response to the Broward Inspector General’s report, the city also said the OIG had misinterpreted the state statute governing the CRA.

“It is this failure which results in the OIG (Office of Inspector General) erroneously coming to certain conclusions that the city and CRA grossly mismanaged public funds,” says the report approved by City Manager Renee C. Miller.

The Inspector General’s preliminary report in March, after a year-long investigation, concluded that top city officials had grossly mismanaged millions of dollars in public funds “entrusted to the care of its” CRA. It identified at least $2.2 million in questionable CRA expenditures between 2007 and 2012, including inappropriate loans to local businesses and grants to nonprofits.

More than $400,000 in bond proceeds also were said to have been used improperly, according to the Inspector General’s report.

The report identified several contributing factors to the mismanagement: the city commingled CRA money with city funds instead of setting up a separate CRA trust fund in years past; the city improperly spent on parks and other activities outside the CRA’s boundaries; and it failed to access and verify work performed by nonprofits that received grants.

The CRA was established in 1996 under a state law that allows it to collect tax revenue to be used to rid slum and blight conditions. It receives 95 percent of the taxes collected on the appreciated value of properties within its boundaries. Hallandale’s CRA has received approximately $70 million since it began.

Florida law does not permit the CRA to fund charitable donations to nonprofits, according to the Inspector General’s report. And a Florida Attorney General’s opinion in 2010 said CRA expenditures should be used only for “brick and mortar” projects, it said.

Yet in its April 4 response obtained by the Browardbulldog.org, the city challenged many of the Inspector General’s assertions, including that one.

“A close reading of this opinion will reveal that the Attorney General gives no definite answer as to whether or not grants to nonprofits are outside the scope of the community redevelopment act,” says the response, noting the opinion was advisory and nonbinding.

City Manager Miller declined to discuss the response in detail. “We asserted our objections,” she said.

City Attorney V. Lynn Whitfield and CRA attorney Steven Zelkowitz helped Miller prepare the response, which included the assertion, first raised last June, that the Inspector General does not have regulatory authority over the CRA.

Mayor Joy Cooper, who like her fellow city commissioners also acts as a CRA director, did not respond to a request for comment.

But Hallandale Beach’s response made it clear that city officials were not backing down and asserting they had acted properly and in accordance with state law.

“There is very little case law or authority providing guidance as to what types of projects may or may not qualify as a community redevelopment project,” stated the response.

The response pointed out that in a case involving the Panama City Beach CRA, a court ruled the state statute governing CRA expenditures for public projects.

The city objected to the Inspector General’s finding that the city had failed to create a separate CRA trust fund until last May, saying in its response that a fund was established in 1996 by city ordinance. The response adds that state law does not require that the trust fund “be maintained in a separate bank account.”

The city also parried the Inspector General’s assertion that the CRA had failed to create an update its redevelopment plan saying, “there is no statutory requirement to update the plan.” The city noted, however, that it is currently updating its plan.

The Inspector General’s critique that the city had failed to established standards for awarding grants to charitable organization was met by a similar defense. The city argued that state law “does not require a transparent process or standardized criteria” — and because of that cannot be accused of “gross mismanagement.”

The city said, however, that it has adopted a formal process for applying for grants that will go into effect next year.

The city’s response acknowledges a good practice would have been to monitor how non-profits spent the money the CRA gave them, but once again contended that state law did not require this.

“The legal requirement is that the funds be utilized for a public purpose,” the response said. “It is the responsibility of the government board to determine whether or not it is a public purpose.”

The city attacked the Inspector General’s criticism of the CRA loan program saying it had failed to understand the need for “flexibility in the administration of its programs” and that some businesses may not qualify for regular private financing.

“This is the nature of community redevelopment,” the response stated. “In certain instances, such may result in financial losses and require the waiver of certain loan terms. Such does not necessarily constitute gross mismanagement….”

Likewise, the city took issue with the Inspector General’s concern that CRA bond funds were used to pay costs related to the upgrading of two parks outside its boundaries, Scavo and South Beach.

“The city objects to the inclusion of this matter in the report,” the response said.

City officials have said a plan is in place to repay any CRA funds used for those parks once work actually gets underway.

The city noted, too, that changes have been made in the past year to improve CRA management and operations.

These include hiring an experienced CRA attorney and a financial analyst; amending CRA policies on loans and grants; assuring accountability for loans; creating standards and accounting for charitable loans to nonprofit groups; fiscally separating CRA funds from city funds; ensuring city and CRA priorities are aligned; maintaining clear and consistent lines of communications regarding for plans and projects.

“It is our mission to continue to implement enhanced internal controls as well as stabilize the administration of the CRA and the city,” the response concludes.

The Inspector General’s Office has said that once it receives the city’s response it will finalize its report and officially release it.

William Gjebre can be reached at wgjebre@browardbulldog.org

By William Gjebre and Dan Christensen, BrowardBulldog.org 

Broward’s Inspector General has found that Hallandale Beach officials “grossly mismanaged” millions of dollars in public funds “entrusted to the care of its Community Redevelopment Agency,” according to a report obtained by BrowardBulldog.org.

“The OIG (Office of Inspector General) investigation substantiated the allegations and uncovered numerous deficiencies in the city’s administration of the CRA,” says the 50-page preliminary report that has not been released publicly.

Investigators said they found at least $2.2 million in questionable CRA expenditures between 2007 and 2012, including inappropriate loans to local businesses and grants to local nonprofits – as well as the improper use of bond proceeds.

The city improperly spent $416,000 of CRA money for parks outside the CRA boundaries, says Tuesday’s report.

The spending, which was not always documented, was often done at what amounted to the whim of former city managers Mike Good and Mark Antonio, the report says.

Former Commissioner Keith London told investigators that his colleagues “looked at the CRA fund as one big pile of money and they didn’t care how or where the money went,” the report says.

Mayor Joy Cooper, however, offered a different take. “She was not concerned with the CRA administration’s lack of (expenditure) verification because the CRA Board members observed the work of the nonprofits when they went out in the community,” the report says.

Cooper and the rest of the city commission also sit as the CRA’s board of directors.

“This report vindicates everything I have stated for the last six years,” London said Tuesday night.

Cooper could not be reached for comment.

Former commissioner Keith London

The probe began 14 months ago following a string of stories in BrowardBulldog.org about questionable city loans to local businesses and land purchase through the CRA. It surfaced publicly last April when county agents sought a multitude of records at City Hall.

In some cases, the report says, the CRA awarded funds despite a 2010 Florida Attorney General opinion that CRA expenditures must be connected to “brick and mortar” capital improvements – not, for example, to promote economic development or promote socially beneficial programs by nonprofits.

In one case, the line of what’s legal was apparently crossed and a crime may have been committed, the report says.

The Inspector General’s findings about Hallandale Beach are the latest to cite serious mismanagement of CRA funds. A year ago, for example, the Inspector General slammed Lauderdale Lakes for misspending $2.5 million in CRA funds. More recently, the Florida Auditor General identified misspending by Hollywood’s CRA.

“It is becoming increasingly apparent that the gross mismanagement of CRA funds by a Broward County municipality is not a unique occurrence,” the report says.

The CRA was established in 1996 under a state law that allows it to collect tax revenue to be used to rid slum and blight conditions. It receives 95 percent of the taxes collected on the appreciated value of properties within its boundaries. The county has provided Hallandale’s CRA with approximately $35 million since it began.

Inspector General John Scott’s report includes what amounts to a warning to other Broward cities that his office will be eyeballing their CRA’s to see how they spend their property tax dollars.

“The OIG will continue to examine the expenditure of CRA funds by municipalities,” says the report.

The final report will recommend to the county that it look over its legal options “to prevent the ongoing abuse of the CRA process and recover those funds that may have been misspent,” the preliminary report says.

In Hallandale, there was an apparent lack of regular monitoring by the CRA of who got its funds and how that money was spent.

In one case, the report says, a nonprofit grant recipient spent nearly $5,000 in funds to make a payment on her time-share at the Westgate Resort in Orlando, make payroll payments to herself and her brother and on other things.

Dr. Deborah R. Brown with former Congressman Kendrick Meek

“We found probable cause to believe that Dr. Deborah Brown, the founder and director of the Palms Center for the Arts (PCA), engaged in criminal misconduct in the handling of a $5,000 award the PCA received from the CRA,” the report says.

Brown could not be reached for comment Tuesday night.

The matter has been referred to the sheriff’s office and the Broward State Attorney for prosecution.

The Inspector General’s report also clears Commissioner Anthony Sanders of allegations that the CRA showed favoritism toward him by substantially overpaying his nonprofit, Higher Vision Ministries, for property it purchased in 2009 at 501 NW First Ave.

“The investigation did not substantiate the allegations, although we found that the CRA fomented an appearance of favoritism by failing to consider the purchase of the property in a fully transparent manner,” the report says.

The report also cites “institutional deficiencies in the establishment, organization and function of the CRA” that it says contributed to numerous instances of gross mismanagement. They include:

•  Failure for nearly 16 years to establish a CRA trust fund, as required by law, which led to the commingling of CRA funds with city funds in the city’s bank account. A trust finally was set up last May.

•  Failure to operate the CRA independently from the city. Former CRA executive director Alvin Jackson told investigators the CRA “was treated like any other city department and that the city had ‘free rein to tap into CRA funds.

•  Failure to timely generate detailed CRA plans and adhere to them, as well as a lack of a “stable and empowered CRA staff to ensure compliance” with the law.

“We also identified multiple instances where city officials ignored warnings from CRA staff of various deficiencies in the management of the CRA,” the report says.

The report notes that before Jackson there were several CRA managers under City Manager Good’s heavy managerial thumb. “More troubling is evidence that Mr. Good and other senior officials lacked understanding of” state statutes governing the CRA “and did not require compliance.”

The report notes that in 2011, after news reports about CRA problems in BrowardBulldog.org and elsewhere, it undertook “remedial steps” to improve its management and effectiveness.

But the Inspector General indicated those steps, including the establishment of the trust fund, are not enough.

The report includes a half-dozen recommendations intended to “ensure the independence of the CRAs,” including building a stable and knowledgeable staff with the authority to ensure compliance with the law, and diligent future monitoring of expenditures.

By William Gjebre, BrowardBulldog.org 

Initial findings by Broward’s Inspector General of mismanagement at Hallandale Beach City Hall have led officials to revise plans for a $12.7 million bond issue, according to city and county records obtained by BrowardBulldog.org.

Exactly what has gone wrong at City Hall remains unclear as the Inspector General’s investigation continues, but it’s now known to involve an alleged mistake with the bond issue, and a possible violation of state law.

“We are pleased that your administration has ultimately acted to address the issue identified by the investigation,” Inspector General John W. Scott told City Manager Renee Crichton in a Nov. 7 letter.

“Clearly, we remain concerned with the circumstances that allowed such an immense oversight to occur in the first place,” Scott wrote.

“Our final investigative report will detail those circumstances and contain recommendations which we hope will, if enacted, create institutional controls that will prevent such misappropriation from occurring in the future.”

Although Scott has prompted action at City Hall, the head of an agency under scrutiny is questioning the county IG’s authority to investigate, and to allow partial information on that investigation to become public.

Hallandale CRA Executive Director Alvin B. Jackson Jr.

“Nowhere in the (county) code is the Inspector General provided with the general authority to act as a watchdog agency by providing correspondence making allegations and recommending future courses of action,” said Hallandale Beach Community Redevelopment Agency (CRA) Executive Director Alvin B. Jackson Jr. in a Nov. 13 letter to Scott.

Jackson criticized Scott for expressing his concerns in letters to the city manager and city commissioners that “are now public record” and “can cause unnecessary negative publicity.”

“We would respectfully request that the Inspector General refrain from sending any further correspondence concerning” the CRA, Jackson said.

The Redevelopment District was established by the City Commission to collect and oversee the use of property tax dollars to promote business and revitalize neighborhoods. Those dollars are supposed to be spent on projects within the district.

The IG’s office has been investigating city management practices, including those at the CRA, since April. Agents have questioned city officials and asked for records concerning CRA property acquisitions and business loans and city grants and leases with community groups.

BOND CONCERNS

In his Nov. 5 letter, Scott wrote that he was concerned about a Nov. 7 city commission agenda item regarding $12.7 million in revenue bonds. The bonds would complete Phase One of the city’s $23.2 million bond issue approved by the city commission in 2007 for park improvements and land acquisition.

“The OIG (Office of Inspector General) has obtained substantial evidence that the funding appropriated for the capital improvements of Joseph Scavo Park and South Beach Park, two parks included in Phase One, would constitute a violation of the Florida Community Redevelopment Act, which requires that Community Redevelopment Agency (CRA) funds should only be expended for capital improvements within the CRA boundaries,” Scott said in his letter.

“Upon questioning by OIG Special Agents, city and CRA officials have verified that the CRA is scheduled to pay the bond over 20 years, even though the parks in question are located outside of the CRA boundaries,” Scott said. “Therefore, the City will risk violation of Florida law if it expends the funds as presently appropriated.”

“The OIG is particularly concerned that city staff have acted unilaterally in accessing the funds for city — not CRA– purposes and in doing so, have neglected to consult the CRA Director,” Scott said.

Scott went on to “strongly recommend” that commissioners halt the use of CRA funds to pay for parks outside the district’s boundaries.

Hallandale Beach City Manager Renee Crichton

In her Nov. 6 response letter, City Manager Renee Crichton challenged Scott’s interpretation of events, saying he had “misrepresented certain facts.” She suggested that included wrongly accusing the city of using the CRA – governed by Hallandale’s five city commissioners – to cover its bond obligations.

SHARING COSTS TO PREVENT TROUBLE

Crichton said the city would make sure debt service payments are proportional between the city and the CRA. She noted city projects outside the CRA district accounted for only 22 percent of the $25 million in bond funds.

The city manager’s assurances seemed to satisfy Scott that the bond would be paid back appropriately. Still, he pointed out in his reply that if not corrected the city could have gotten itself into bigger problems.

“Both the city’s finance director [Patty Ladolcetta] and Dr. Jackson have recently admitted to the OIG special agents that the CRA was intended to pay 100 percent of the bond, despite the fact that the bond was in the city’s name and several hundred thousand dollars had already been spent outside the CRA district,” Scott stated. “This fact was corroborated by various documents obtained by the OIG.”

“As a watchdog for the taxpayers of your municipality,” Scott added, “we believe it is our duty to inform the commission of concerns which might jeopardize the funding of the overall project.”

“After reviewing the city’s revised approach, as outlined in your letter, we agree…the city could correct its initial misappropriation of the CRA-funded bond.”

By William Gjebre, BrowardBulldog.org 

Hallandale Beach’s Community Redevelopment Agency, run by the city’s five elected commissioners, has sent a message to Broward’s new Inspector General’s Office – you can’t touch us.

Numerous questions have been raised about the business dealings of the CRA, in which city commissioners also serve as directors of the agency.

But now the agency has called into question the IG’s authority to delve into its management practices, declining to have commissioners answer county investigators’ questions about their actions as CRA directors. The move is the first significant challenge to the authority of the year-old criminal justice agency whose job is to investigate possible fraud, corruption and gross mismanagement.

“It is our opinion that the authority of the Inspector General does not generally extend to a community redevelopment agency (CRA) and its board members,” CRA attorney Steven Zelkowitz wrote in a June 18 letter to Inspector General Counsel Jennifer Merino.

“As we both know, the individual Hallandale Beach CRA board members and the city commissioners are each one in the same person. However, in these separate capacities they wear separate hats and are guided by separate legal requirements.”

The Hallandale CRA’s bottom line: the IG’s auditors and agents can talk to the five commissioners about their actions as commissioners, but not as CRA board members.

INVESTIGATIVE AUTHORITY QUESTIONED

Zelkowitz’s legal opinion is rooted in the CRA’s status as a special district, a distinct legal entity under Florida law. According to him, board members are public officers regulated by Florida’s Code of Ethics for Public Officials, not the recently updated, and more stringent, Broward County Code that covers all officials and employees of the county and its municipalities.

The CRA uses property tax dollars collected within the district to promote businesses and redevelopment.

What may happen next is unclear, but the Inspector General’s Office is not expected to back down from continuing its probe in the face of a challenge that could impact its authority over the many other special districts in the county. They include large the North and South Broward Hospital Districts and smaller ones such as the Performing Arts Center Authority or the Hillsboro Inlet District.

Inspector General John Scott declined comment.

Robert Jarvis, a professor of constitutional law at Nova Southeastern University, said this is the first big test of the IG’s authority, and that Zelkowitz may have a point. He cited a recent decision by the Fourth District Court of Appeal in West Palm Beach that limited the jurisdiction of the Attorney General to investigate foreclosure mills.

“I think the CRA may be right,” said Jarvis. “I think this has to be decided by a court.”

Last week’s letter is the second push back from Hallandale Beach.

Several weeks ago, City Attorney V. Lynn Whitfield informed the IG that the City Manager’s Office would not voluntarily schedule meetings between city commissioners and county agents investigating city management practices, including those at the CRA.

In last week’s letter to IG counsel Merino, Zelkowitz allowed that the IG has the authority, under county code, with respect to the same city commissioners in their city functions – but not those concerning the CRA.

He also stated that the IG may have the authority to review any goods and services that CRA provides to the city. However, Zelkowitz, stated, “In such case, the Inspector General would have authority, but solely with respect to the provisions of such goods and services.”

Zelkowitz declined comment.

City Attorney Whitfield also declined comment. In her June 13 letter to the IG, she said her office wants to know whether the probe is targeted at commissioners as a whole or to actions of individual commissioners to determine what type of legal representation they may require.

The IG is a watchdog agency established in the wake of recent county scandals. It can investigate, but not arrest. It is a member of Broward’s Public Corruption Task Force – a specialized group of federal, state and local investigators and prosecutors – that in April was designated as a “criminal justice agency” by the Federal Bureau of Investigation.

CITY WANTS MORE INFO

Renee Crichton, Hallandale’s newly appointed city manager, said when the office received a call from the IG it contacted the city attorney and the CRA attorney to discuss the IG’s request to interview commissioners. She declined to comment on whether any member of the city commission was involved in the discussion at some point.

“The CRA and the city commission has not taken any position” on the dispute, Crichton said. “On our part, we need more information as to why the Inspector General wants to interview commissioners. There needs to be some structure; what do they want to discuss.”

“We are not saying we will not cooperate,” Crichton said, adding the city has done so by providing many of the documents requested by the IG.

A call to Broward County Attorney Joni Armstrong Coffey resulted in a callback from Assistant County Attorney Anthony Myers. Asked about the IG’s authority in the matter under county law, Myers said he does not have “sufficient knowledge” to comment. He added it is possible the matter could end up in a court of law.

At least one city commissioner disagrees with the CRA’s position. “The IG does have jurisdiction,” said London, who is running for mayor against incumbent Joy Cooper. A part of the state law, he said, speaks to the mingling of city and state funds and that would give the investigators authority.

If called by the IG, London said, “I’ll go; I look forward to it.”

Commission members Dorothy Ross and Anthony Sanders both said they would be guided by the city legal counsel on whether to be interviewed.

As Broward Bulldog reported last week, the IG has requested city documents about several community-based groups associated with Sanders or his wife Jessica. The complaints made to the IG, Sanders said, are “coming from the negativity of people. I’m not saying who specifically. It is what it is; it’s a part of the politics.”

When and if he speaks to investigators, Sanders said, “I’ll be glad to talk to them in any capacity, as a city commissioner or a CRA director.”

Mayor Joy Cooper and Commissioner Alexander Lewy could not be reached for comment.

In his letter, Zelkowitz asked the IG to restrict his questioning of city commissioners “to their actions as city commissioners and not as HBCRA Board Members. In this regard, we defer to the City Attorney as to the direction of your investigation with respect to the City and Commissioners.

“Notwithstanding the foregoing, the HBCRA is ready, willing and able to comply with all public records requests of the Inspector General as the records of the HBCRA constitute public records under Chapter 119, Florida Statutes.”

William Gjebre can be reached at wgjebre@browardbulldog.org

By William Gjebre, BrowardBulldog.org 

Broward Inspector General John Scott Photo: CBS4 Miami

A Hallandale Beach program that funneled hundreds of thousands of dollar in grants and contributions to community groups is a key focus of the Broward Inspector General’s widespread investigation of city management practices.

Documents obtained by Broward Bulldog show the Inspector General obtained city files on eight community-based organizations, several linked to City Commissioner Anthony Sanders or his wife, Jessica. The documents include information about city payments to Jessica Sanders and others associated with the groups.

Those disclosures, and others about the probe, are contained in a 15-page letter sent to Inspector General John Scott on April 23 from City Manager Mark Antonio.  The letter was the city’s formal response to Scott’s request two weeks earlier for dozens of city records.

Among the records turned over to county investigators are thousands of pages of city memos, reports, minutes, email, budgets, policies, programs, audits, grant reviews and program files. The records sought are for the fiscal years 2010-2012. Antonio also referred investigators to additional public documents on the city’s website.

Some requested information was not supplied. For example, investigators asked for all city records that would show attendance by nonprofit grant recipients at quarterly workshops, as required by grant agreements. Antonio said, however, that there were no sign-in sheets to verify attendance

Antonio, who retires next week, said, “The city has diligently fulfilled the request for records to the best of our ability.’

Scott does not comment on pending investigations.

Antonio’s letter says investigators also sought information about the leasing and rental of city property to local groups; plans and loan programs operated by the city’s Community Redevelopment Agency; and expenditure reports involving the CRA, the city’s general fund and the Law Enforcement Trust fund.

County investigators are also reviewing whether non-profit groups receiving city funds followed procedures, assessments, and commitments.

Broward Bulldog reported last week that the City Manager’s Office has not been fully cooperative with investigators by declining to set up interviews between city commissioners and county investigators who want to speak with them. Those commissioners also sit at the CRA’s board of directors.

The refusal was cited in a June 13 letter from the City Attorney’s Office, which also sought the identities of commissioners who might be targets.

INVESTIGATORS VISIT CITY HALL

The Inspector General’s office began its probe on April 10 with a visit to city hall where investigators met city with Antonio and CRA Executive Director Alvin Jackson. Jackson started in January 2011.

Investigators revisited City Hall in recent weeks, meeting with Jackson for several hours. Documents state that IG special agent William Cates and senior auditor Susan Friend also met with other city officials, including Jennifer Frastai, an administrator in the City Manager’s Office, and Marian McCann-Colliee, the city’s Human Resources Director.

The probe appears to be limited to the past three years, but some requests for records have resulted in the city providing documents going back to 2000.

In March, an outside audit was critical of city management and the tracking of CRA loans and property acquisitions. Broward Bulldog also reported then that the audit, which raised questions about the city’s loan practices, did not review more than $20 million in contracts with city vendors because the city failed to provide the information and limitations on the scope of the audit.

In several of the loan deals involving taxpayer property tax dollars, recipients did not have to pay back the amount as much as half of the value of the loan.

COUNTY FOCUSING ON GIVEAWAYS

While records indicate that the Inspector General’s probe is multi-faceted, investigators appear to be strongly focused on city grants and charitable contributions made through its Community Partnership Grants program.

City records show that such giveaways increased 60 percent in the past three years – from $400,000 in fiscal year 2009-2010 to $647,000 this year.

“As economic times worsened the city saw a greater need for services in the community which directly corresponded with the increase in the amount of requests to the city,” Antonio said in his letter. He added that for 2012 “two teams of professional who were non-city employees” reviewed 29 applications.

Available city documents show that in 2010 and 2011, city grants and donations did not specify where the money came from: the general fund, CRA or the Law Enforcement Trust fund. But this year, after a CRA management makeover, they were shown as follows: general fund, $256,130; CRA, $274,600; and Law Enforcement Trust Fund, $116,654.

The Inspector General asked for the files on these program recipients:

• Eagles Wings Development Center Inc., job training and social services program, $50,000 in the past two years.
• Greater Mt. Everett Resources and Learning Center, a work force training program for construction trades, $61,000 this year.
• Lampkin’s Creative Arts for All LLC, including Dizzy Fingers School of Excellence, Inc., training youth in how to advance in the arts, $50,000 this year.
• Palms Center for the Arts, Inc., a youth arts and job preparation program, $107,000 past three years.
• Palm Community Action Coalition, community based program assistance, $26,000 over two years.
• Palms of Hallandale Beach Weed and Seed, a crime prevention and community development program associated with the Department of Justice, $143,000 past three years.
• Phileo Outreach Ministries Inc., a program for rehabilitation of youth, $45,000 past two years.
• Zamar School of Performing Arts, Inc., $25,000 two years ago.

COMMISSIONER SANDERS AND WIFE

State corporate records for Eagles Wing listed Hallandale Beach Commissioner Anthony Sanders as president and his wife, Jessica, director, in 2009. In 2010 and 2011, Jessica was listed as director, but Anthony Sanders was not listed. He was appointed to the city commission on Sept. 8, 2008 to fill a vacancy.

Commissioner Anthony Sanders

Jessica Sanders also has ties to two other non-profits on the Inspector General’s list, according to public records.

She is a contact for the Palms Community Action Coalition, which until April 2011 was known as the Palms Community Development Corporation. Jessica Sanders, as “interim site coordinator” for Palms of Hallandale Beach Weed and Seed, appeared at a July 14, 2011 Hallandale Beach commission meeting before a vote to award a $45,000 grant to her group.  “Vice Mayor Sanders excused himself from the dais during the presentation and recused himself from voting,” city minutes say.

In an interview this week, Commissioner Sanders indicated that he is perplexed about the county’s inquiry.

“I can’t answer why they are asking for the records,” he said. “They are looking at nonprofits. I don’t mind that they are looking at Eagles Wings. It is a service to the community and always has been…food programs, job training and other services.”

Sanders indicated he may meet with IG investigators soon.

Jessica Sanders said, “I’m not concerned about the probe.” She said there has been no wrongdoing and noted that she has provided some records to IG investigators. She said that she and her husband “stayed here to make a difference. We do good work.”

Her income from the Weed and Seed program was not from city funds, she said, but came from the Department of Justice, which backed the program. She said that on several occasions she was asked by the Weed and Seed governing board to operate the program when the group’s administrators failed to perform.

OTHERS SCRUTINIZED

The county investigators also sought information payments made by the city to Nellie Bacon, Clara Brown, Deborah Brown, Selinda Washington-Jackson and Jacquelyn Rosenau.

According to state corporation records Rosenau is director at Eagles Wing. Clara Brown is corporate secretary for Palms Community Action Coalition. Deborah Brown was president of Palm Center for the Arts in 2011, and a principal and director of Zamar School in 2011. Washington-Jackson works for Weed and Seed. Rosenau used to work for the agency.

The city supplied copies of its lease and rental agreements with non-profits to investigators.

Those agreements are with: Hallandale Beach Area Chamber of Commerce, Zamar School of Performing Arts, and the Palm Center for the Arts.

The chamber, which received $25,000 from the city in 2010, has an office in City Hall, next to the commission chambers. The rental fee for approximately 400 square feet of space is $1 a month.

The Palm Center for the Arts, 501 NW 1^st Ave., sits on land the city purchased with CRA funds in 2009 from Anthony Sanders’ nonprofit Higher Vision Ministries; a commissioner at the time, Sanders did not vote on the sale.

Sanders bought the property in 2001 for $45,000 and sold it to the city for $235,000 after receiving a $46,000 property improvement loan. The city initially agreed to forgive $7,500 of the loan. When the city bought Sanders’ property, however, it forgave an additional $7,500 when at the time the sale was finalized. City officials have said it was an error by the city.

In August 2009, the city leased Sanders’ former property to the Palm Center for the Arts for a one- time fee of $10, on the condition it provide community art and music training programs. While the lease states the center is not allowed to sublet or rent the facility, the city modified the agreement to permit the Zamar School for Performing Arts to operate a summer camp at the center in the summer in 2009.

A provision in the Palm Center lease allowed for a summer camp music program. The city helped Zamar with $25,000 to operate the camp.

The IG’s office has also requested information about additional money given to various groups that was more than initially authorized.

William Gjebre can be reached at wgjebre@browardbulldog.org

By William Gjebre, BrowardBulldog.org 

Commissioners Dorothy Ross, left, and Anthony Sanders

Hallandale Beach City Manager’s Office has refused to fully cooperate with the Broward Inspector General’s Office investigation into the city’s management of the Community Redevelopment district.

City Attorney V. Lynn Whitfield informed the Inspector General’s Office by letter Wednesday that City Manager Mark Antonio’s office will not voluntarily schedule requested meetings between county agents and city commissioners, who also serve as the CRA’s Board of Directors.

City Attorney Whitfield also sought in her letter to identify the target or targets of the investigation.

“As it relates to the members of the City Commission, it is imperative, in order to properly advise them as to the availability of legal counsel, that I know whether your investigation is directed to the actions of the City Commission as a whole or to the actions of only individual City Commissioners,” Whitfield wrote. “This will assist me in advising whether or not they need to obtain independent legal counsel.”

The Inspector General began an investigation in April of city management practices following numerous news stories in Broward Bulldog and elsewhere regarding the city’s poor record keeping of land acquisitions and loans through the CRA.

County investigators have been to City Hall at least twice. They are known to have met with Antonio, who retires June 29, and CRA executive director Alvin Jackson. The city also has responded to the Inspector General’s request for various documents dealing with the CRA and other aspects of city operations.

But in yesterday’s letter addressed to county Special Agent William Cates, the city refused complete cooperation – apparently until the county is willing to disclose which commissioners are under scrutiny.

Outgoing City Manager Mark Antonio

“It is my understanding that the City Manager’s office has notified you that they will not be scheduling those meetings and advised that all such requests should be directed to me or the CRA attorney Steven Zelkowitz,” Whitfield said.

Antonio, a 25-year city employee who has been city manager for the past two years, did not respond to a request for comment. Neither did Whitfield or his replacement, Renee Crichton, who is working alongside Antonio until his departure and has assumed administrative duties, according to a city spokesman.

Special Agent Cates also could not be reached for comment.

MEETINGS ANYWAY?

Despite the letter, two city commission members told Broward Bulldog that they are willing to be interviewed if asked. Two others indicated they would not talk without consulting with the city attorney.

Commissioner Keith London said he does not understand the suggestion that city officials refrain from cooperating with investigators.

“I will go as quickly as I can. I have nothing to hide and look forward to speaking with the IG about (the) CRA and Hallandale’s mismanagement of fund,” he said. “I look forward to the final report and the arrest and conviction of people who mismanaged taxpayers’ money.”

The Inspector General is not conducting a criminal inquiry. It can, however, refer its findings to the State Attorney’s Office for possible prosecution.

By Fred Schulte, The Center for Public Integrity

HHS headquarters in Washington, D.C. Photo: Matt Bisanz/Wikimedia Commons

Thousands of doctors across the country are billing Medicare for routine medical care at rates far above their peers, potentially costing taxpayers tens of millions of dollars in overcharges, according to a new government report.

The audit released Wednesday by the U.S. Department of Health and Human Services Office of Inspector General stopped short of accusing the high-billing doctors of ripping off the government health plan for the elderly. But it stated that Medicare’s payment scales for doctors have been “vulnerable to fraud and abuse” in recent years. (more…)

By William Gjebre, BrowardBulldog.org

A firm that obtained a $75,000 business development loan from Hallandale Beach without signing a repayment agreement or providing collateral has defaulted, leaving the city unable to recover nearly all of the taxpayer-supplied money.

The loan default by Digital Outernet Inc. (DOI), headed by a Californian with past ties to the pornography industry and a local businessman who has since died, is the latest snafu to surface in the operations of the city’s Community Redevelopment Agency (CRA).

News of the soured loan comes as the Broward Inspector General’s Office opened an investigation last week into the city’s management practices, including those at the CRA, whose director are the five city commissioners.

“I was against it from day one; we are not in business to lose money,” said City Commissioner Keith London, who cast the lone vote opposing the loan three years ago. “It was never a sustainable, viable initiative.”

Commissioners approved the taxpayer loan in their capacity as CRA board members.

Digital Outernet was incorporated in November 2008. Four months later, it got the loan to buy equipment and materials. The plan it sold the city on: to setup television screens in local businesses and condominiums and sell advertising while also airing city and other information, such as job ads

CONTROVERSIAL HANDOUTS

The corporate loan was made during a time when the city was making numerous loans to local businesses, some controversial.

In 2009, the city administration also approved a $50,000 loan for a weekly newspaper, The Sun Times, forgiving half the loan ($25,000), even though two top executives earned $200,000 annually two years before the loan. Mayor Joy Cooper is a featured columnist.

The same year, the city erroneously forgave an extra $7,500 on a property improvement loan that Commissioner Anthony Sanders obtained before he was a commissioner. As a result, Sanders’ non-profit Higher Vision Ministries did not repay $15,000 on a $46,000 loan for property improvements at 501 N.W. First Ave. The city then brought the property for $235,000, even though the church only paid $45,000 for it in 2001.

Digital Outernet’s chief officials were local businessman John Hardwick and Steve Fecske, a Californian, according to state corporate and city files.

When the loan was approved, the Sun-Sentinel reported at the time, Fecske told Hallandale Beach commissioners he had been involved with a company that provided technology services to porn-connected websites, one of which featured star Jenna Jameson. He assured commissioners his pornography work was in the past.

Fecske is listed on LinkedIn, the professional networking web sit , where he is described as an “independent information technology and services professional.” He is currently associated with McKenzie & Co., Forensic CPAs in Los Angeles. He was president of Digital Outernet, Inc. from 2007-2010.

Fecske could not be reached for comment.

LOAN RECIPIENT OUT OF BUSINESS

On the current Florida Department of State Division of Corporations web site, Digital Outernet is listed as inactive.

While approved for a $125,000 loan, Digital Outernet only received $75,000. It had to meet certain city-imposed conditions to get the rest, but apparently did not do so.

However, one loan requirement was waived by the city: that the firm had to own its place of business; it was leasing. The loan also provided for 15 percent ($11,250) forgiveness, with the balance to be repaid at 4 percent (interest rate) over 10 years.

City records show it wasn’t long after funds were distributed that problems at Digital Outernet became apparent.

In June, 2010, the city sent a letter to Hardwick and Fecske denying their request for the additional $50,000. The letter pointed out the firm had missed its first two quarterly loan payments of $2,284 each, failed to sign a loan promissory note, and did not provide required financial reports and details on employee hires.

A month later, the city sent a similar letter.

CRA director Alvin Jackson said he met with Hardwick shortly after he became director of the CRA in January 2011, reminding him about the loan repayments and the documents and reports that needed to be filed with the city.

But state corporate records show that by then, the company had ceased to exist as a legal entity.

HARD TO TELL WHAT HAPPENED

Available city records do not explain what happened to Digital Outernet and the city’s $75,000. A recent report by an auditing firm criticized the CRA for failing to properly track loans and property acquisitions.

Jackson said the company made only one installment payment of $2,284 in July, 2010, adding that the firm appeared to go out of business with the death of Hardwick.

A member of the Hallandale Beach Chamber of Commerce, Hardwick, 41, suffered a stroke and died at Hollywood’s Memorial Hospital on May 22, 2011. Prior to becoming involved with Digital Outernet, Hardwick ran a barbershop/salon at 708 Foster Road in the city, the same location listed for DOI.

Jackson said the DOI file was sent to the City Attorney’s office for review and follow-up action. He said he was told that an investigator was sent to the Foster Road address to identify possible assets but none have been recovered, so far.

Jackson said he believed that Digital Outernet may have actually placed several television screens in local businesses, but he did not know for certain. The city file contained no information on the placement of the video screens.

The city “never got the balance” of the loan, Jackson added.

Broward Bulldog reviewed the city’s file. It makes no mention of Hardwick’s death and gives no indication that the city was trying to follow up by reaching Fecske in California.

The file also did not indicate what, if anything, the city attorney’s office did in the matter. There were no reports by the city attorney’s staff in the DOI file.

Local realtor Joe Kessel is listed as an official of DOI in one document in the city’s file. He said in an interview that he was “not involved” with the company and had long ago asked that his name be removed as a DOI associate. Kessel declined further comment.

Mike Good was the city manager at the time of the loan. The file contains a letter he wrote endorsing the DOI project. “The city supports the concept and advertising model offered by Digital Outernet, Inc., and seeks the support from our local business community as well,” Good wrote in his letter in December 2008.

Good, who was fired in June 2010, could not be reached for comment.

By William Gjebre, BrowardBulldog.org

Investigators with the Broward Inspector General’s office descended on Hallandale Beach City Hall this week following numerous reports of mismanagement of tax dollars.

On Tuesday, two OIG investigators spent nine hours at city hall seeking records and interviewing City Manager Mark Antonio and Community Redevelopment Agency (CRA) director Alvin Jackson.

“We were there,” confirmed Dylan Hughes, an assistant inspector general. “I can’t comment on the nature of an ongoing investigation.”

City officials had no immediate comment.

Broward’s Inspector General investigates suspected misconduct, “including fraud, corruption and abuse and gross mismanagement,” according to its web site. The specific focus of investigators at city hall was not immediately clear, but for nearly a year Broward Bulldog has reported about questionable city loans to local businesses and land purchases through the CRA. Hallandale Beach city commissioners also sit as the directors of the CRA.

Last month, a report by outside auditors described poor recordkeeping and oversight at the agency during the tenure of former longtime City Manager Mike Good. Good was fired in 2010, and commissioners asked for the audit weeks later.  On April 2, the city announced that it had selected Renee Crichton to take over as the next city manager when Antonio retires on June 29.

News of the Inspector General’s probe was welcomed by critics of city management.

“I’m delighted to hear that,” said activist Charlotte Greenbarg. “It’s long past due. What’s going on in Hallandale Beach needs a lot of investigation; it’s very welcomed.”

“I’m thrilled that Hallandale is being looked at by an independent agency,” said City Commissioner Keith London, who is running for the mayor’s seat. “I’ve been asking for this for about four years.”

The CRA was created in 1996 with a 30-year mission to facilitate redevelopment in the city. But while it has spent millions in tax dollars over the years, critics complain the city has little to show for it.

A number of controversial findings and actions regarding the city’s redevelopment agency have surfaced in the past year:

• An auditing firm reported in September that the CRA failed to properly track city land acquisitions totaling more than $28 million and loans to businesses exceeding $1.5 million.  Last month, auditors said the city also failed to provide them with $20 million in vendor contracts for review, limiting the scope of their audit report.
• The CRA acquired nine properties for $23.5 million during the past five years – taking them off the tax rolls – yet the city has enacted no plans for how to use eight of the parcels. The value of those properties has also fallen by $9.1 million.
• A local weekly newspaper that regularly features a column written by Mayor Joy Cooper – and has touted her in front page puff pieces – received a $50,000 CRA loan in 2009 that only required the paper to repay half of that amount. The loan was made even though the South Florida Sun Times’ two top executives had made annual salaries averaging $200,000 for two years prior to the loan.
• Last month, the Sun-Sentinel reported that city officials acknowledged they erroneously forgave an extra $7,500 on a property improvement loan that Commissioner Anthony Sanders had obtained in 2002 before he joined the commission. That meant Sanders’ nonprofit Higher Vision Ministries didn’t have to repay $15,000 of a $46,000 loan. In 2009, the CRA brought the property from Higher Vision for $235,000, with Sanders abstaining, triggering a controversy because the price was higher than two city appraisals, the newspaper reported.

City Manager Antonio, a long time city employee and city manager for approximately two years, would not talk about the Inspector General’s investigation. Through a city spokesman, he declined comment.

Mayor Joy Cooper did not respond to requests for comment.

CRA Director Jackson, who took over at the agency in January 2011, had no comment.

William Gjebre can be reached at wgjebre@browardbulldog.org