LAUDERDALE LAKES – An audit of Lauderdale Lakes’ operations has revealed that the city improperly transferred $1.7 million in redevelopment funds from its Community Redevelopment Agency (CRA) to its general operating fund and used the money to pay the Broward Sheriff’s Office for law enforcement services.
Lauderdale Lakes is in a crippling financial crisis and still owes the sheriff’s office $9.1 million for unpaid services.
CRA money may not be used for that purpose.
However, a recently completed forensic audit concluded that the city might have used its CRA as a “short term borrowing institution.”
Latoya Cason, a former Lauderdale Lakes assistant finance director, made the revelation during an interview with audit investigators.
“Cason indicated that wire transfers totaling $1.7 million were made from the CRA’s bank account to the City’s bank account to pay delinquent invoices of the Broward Sheriff’s Office (BSO),” a section of the audit report states.
“After all the transfers occurred, Cason claims she attended a meeting along with the City Attorney, the CRA Attorney and [former city manager Anita Fain] Taylor to discuss the transfers. It was decided during that meeting that the transfers were inappropriate and a repayment plan would have to be put in place to refund the money to the CRA.”
The audit shows financial transfers from the CRA into Lauderdale Lakes accounts were commonplace. Cason told auditors that her boss at the time, former finance director Larry Tibbs, directed her to transfer the $1.7 million.
During his interview with auditors, Tibbs denied doing so.
“Tibbs indicated that he never transferred funds from the CRA’s bank account to the City’s bank account and indicated that, Latoya Cason did all the transfers,” the audit report says. “Tibbs further indicated that he never directed Latoya Cason, the former assistant finance director of the city, to make these transfers.”
The report was presented to Lauderdale Lakes officials at their Sept. 21 CRA meeting. When contacted, Mayor Barrington Russell said the findings would be publicly discussed at the Oct. 18 CRA meeting and he referred calls to CRA Director J. Gary Rogers.
“It’s actually unclear who transferred the funds,” Rogers said. “What’s important going forward is that we have internal controls to address the problems and prevent it from happening again. That’s what we hired the auditor for.”
Kessler International, a New York-based forensic auditing firm, conducted the 44-page audit. The original scope of work was supposed to cover a minimum of three years but city officials later restricted it to the period between October 2009 and September 2010.
During that 11-month period, numerous wire transfers of CRA funds into the city’s bank accounts, totaling $2,575,301.79, were discovered.
City Manager Jonathan Allen said now that the audit is completed, the city would seek loan status for the improperly transferred funds and repay the money over time.
“We don’t have any major disagreement with the audit,” Allen said. “We do take some exceptions, but we acknowledge the funds were transferred inappropriately and are providing a written response to the mayor and commissioners.”
The audit also showed CRA checks were erroneously deposited into city accounts. A $614,135.58 check from Broward County and a $55,471 check from the Children’s Services Council, which were made out to the CRA, were deposited into the city’s bank account. Months later, those funds were paid back to the CRA.
Unaccounted funds, questionable transactions on city-issued credit cards, unexplained expenditures, and altered records were also uncovered. Among these are $2,196 spent at the Museum of Discovery and $3,848.34 at Pollo Tropical, a grilled chicken restaurant.
Credit card payments were made to TubeHunter.com, a website that offers a proprietary video player that allows users to download videos from numerous Web sites. The audit report says that many of them are pornographic Web sites.
“While these charges do not appear to be billed to the CRA, Kessler recommends that the credit card purchases of all city employees be examined,” Michael G. Kessler, president and CEO of Kessler International, wrote in his conclusions.
In an interview with the South Florida Times, Kessler described the Lauderdale Lakes CRA situation as “one of the worst cases I’ve seen.” Kessler said city officials were slow to respond to questions and turn over certain records.
“We fully cooperated and we recommended he communicate to us through one person,” Allen said. “This involved a lot of people, in several different departments, so it required time to locate the information he was requesting.”
The audit also found city officials took numerous trips to conferences, including stays at the MGM Grand in Las Vegas and Gaylord Palms resort in Orlando. Financial records indicate $63,000 in CRA funds was paid to support the Unifest festival, the Gospel Fest, a holiday lighting ceremony, and a “movie night.” The audit uncovered expense records for only $49,136 and it could not be determined what happened to the remaining $13,863.91.
Also uncovered: the CRA purchased a table at a Broward Black Elected Officials gala held at the Seminole Hard Rock Casino in Hollywood.
The report contains a 2010 opinion from Florida Attorney General Bill McCollum about the city of Sanford’s intentions to use CRA money to support similar events and non-profit organizations.
“Use of community redevelopment funds to pay entities promoting tourism or providing socially beneficial programs, however, does not have an apparent nexus to carrying out the purposes of the community redevelopment act,” McCollum wrote. “However, grants to entities which promote tourism and economic development, as well as to nonprofits providing socially beneficial programs, would appear outside the scope of the community redevelopment act.”
The audit report is now in the hands of Broward County commissioners, some of whom have expressed dismay over the findings.
“I am appalled that the city was so careless with its funds and that it used the CRA as its personal piggy bank, violating the law,” said Broward County Mayor Sue Gunzburger.
***Pictured above is City Manager Jonathan Allen, left, and CRA Director J. Gary Rogers, right. Below is Michael G. Kessler, President and CEO of Kessler International.