State Audit Released On Misuse Of City Funds At Sanford Center

Many months have passed since the Minnesota State Auditor’s Office received a report from the City of Bemidji regarding the possible misuse of city funds by the Sanford Center’s former Executive Director and VenuWorks employee Curtis Webb.

The State Auditor’s review says that at least $43,367.00 of city funds were improperly paid to the former Executive Director or used by him for non-business-related purchases during the period of January 1, 2013, to December 31, 2016 as follows:

The former Executive Director sought and received at least $5,616.00 in what appears to be city advances for Sanford Center expenses that he did not incur. $37,751 of the total were cited as improper use of city funds. The OSA (Office of the State Auditor) found several instances where it appears the former Executive Director used city funds to pay for non-business purchases.

Additionally, the internal review report identified, and the OSA agrees, that a number of other transactions through which the former Executive Director obtained are questionable. The vendors parent company reported the discovery of city checks written to the former Executive Director totaling $10,760 for which the former executive director provided no supporting documentation. Its also identified $11,974 in city checks for which only the documentation the former Executive Director submitted were emails he sent to the Sanford Center’s former Director of Finance. In all, the total of these city payments obtained by the former Executive Director without having provided supporting documentation is $22,734.

The vendor’s parent company also reported City checks written to the former Executive Director totaling $44,580 for which the former Executive Director did provide some documentation, but the documentation does not show that he actually paid for the items.

In a letter to Bemidji Mayor Rita Albrecht, the State Auditor’s Office says their investigative report focused on the former Executive Director’s possible misuse of public funds. The letter goes on to provide recommendations to the city regarding its practices and internal controls to help it better protect city funds in the future.

The State Auditor’s Office prepared an investigative report for the period of January 1, 2013, to December 31, 2016 and has provided their report to the appropriate law enforcement agencies.

Areas of concern called out by the State Auditor include bank account and authorized signers, debit card use, and advances for payment of employee expenses, and excessive reliance on a vendor for internal controls.

Through an internal audit, VenuWorks said it identified $164,846.44 in city funds used by the the former Sanford Center Executive Director or paid directly to the former Executive Director from January 2013 through April 2016 that VenuWorks determined to be unallowable.

The $164,846.44 consisted of $82,905.93 in unallowable debit card purchases by the Executive Director and $81,940.51 in direct payments to the former Executive Director.

In the letter, the State Auditor’s Office recommends that the City of Bemidji discontinue the practice of allowing any external entity or individual authority over any city bank account.

For a link to view the entire audit, please click here: http://www.osa.state.mn.us