The Crusader Newspaper Group

Mayor subpoenaed for financial transfer

Crusader Staff Report

Tensions are rising at City Hall, where Mayor Karen Freeman-Wilson and several top officials are being subpoenaed by the city council, which wants to conduct its own investigation into a multimillion dollar transfer of funds from the Fire Department’s ambulance fund.

Seeking answers, the Gary Common Council at its meeting Tuesday, September 18, voted 8-0 to subpoena the mayor, Dayna Bennett, Freeman-Wilson’s chief of staff, City Controller Angelia Hayes and Fire Chief  Paul Bradley. The council wants to examine documents in their possession that relate to the transfer of funds from Fund 224.

Sparks-Wade sponsored a request Tuesday to have the Common Council issue subpoenas to Freeman-Wilson, Dayna Bennett, Freeman-Wilson’s chief of staff, Controller Angelia Hayes and Fire Chief Paul Bradley for any and all documents they may have in their possession that relates to money being transferred from Fund 224..

In an email to the Crusader, Freeman-Wilson said “We received a letter prior to the vote about the subpoena and have every intention of working closely with the council to provide all information about the 224 account.  We are pursuing the same goals, to insure that taxpayer dollars are fully accounted for.”

That fund was audited by the Merrillville-based Whitaker & Associates accounting firm that found it was some $8.1 million short of where city officials thought it should be. The fund was intended for ambulances and other equipment used by paramedics, but the study found that some 55 percent of the shortfall wound up being spent to cover payroll expenses in recent years, the study said.

Councilwoman LaVetta Sparks-Wade said the study, which was commissioned by Freeman-Wilson, does not satisfy her.  She sponsored the measure to have the mayor and other officials subpoenaed. Councilman Herb Smith did not vote.

“You’d never see the House (of Representatives) just blindly accept a report by the president,” she said. “They’d do their own study. That is a lot of money to be unaccounted for,” Sparks-Wade said. “We need to get to the bottom of this.”

After reviewing the account and transactions of over $8 million in deposits beginning January 1, 2015 and ending March 31, 2018, it was determined that $131,850.49 from the fund has not been found.

A review of the city’s 224 Fund revealed that 2 percent of the account funds are still unaccounted for.

Earlier in the year LaVetta Sparks-Wade said she was told by several firemen that where was a discrepancy in the account.

As reported in last week’s Crusader, Sparks-Wade brought the matter to Freeman-Wilson’s attention during a city council meeting. According to Freeman-Wilson, City Controller Hayes observed that the fund had not been used in the way that it was intended. The city later brought in Whitaker and Company to conduct a review of the account.

The 224 Fund is an account, restricted by city ordinance, to support Emergency Medical Services and Fire Equipment.

On Wednesday, September 5 Freeman-Wilson held a town hall meeting to present and discuss the review findings.

The report did indicate that expenditures such as personnel were allowable. Other expenditures were for the Genesis Center, salaries and up-front payments on demolition projects.

Although it was noted that it is common practice to borrow from different funds to cover city expenses, the report makes several recommendations, some of which have already been implemented. A copy of the report has been sent to the State Board of Accounts for further review.

The report suggested a further review of other city accounts, and that all city departments adhere to internal control procedures.

According to Freeman-Wilson, the 224 funds have now been placed in a segregated checking account at a bank separate from the general fund account, so the Fire Chief can check the balance on the account, and its activity. The mayor, council president, and ambulance chair will receive monthly statements on the account. No one outside the Finance Department will be able to make transactions on the account, other parties will be able to review it regularly and question any irregular activity.

“It should be noted that it is not customary for the mayor or council president to view bank account balances. City officials should be able to rely on the City Controller, however, when there is an occurrence that deviates from the process, we think it is important that we provide a greater level of scrutiny,” said Freeman-Wilson.

In addition to holding the town hall meeting, Freeman-Wilson says she has kept the council informed and has met with the Fire Chief and firefighters to discuss the findings. “While I was not aware of the irregularities regarding the 224 funds, I understand that the “buck stops here” and it is my intent to ensure the measures are being implemented and adhered to, to make sure this does not happen again,” said Freeman-Wilson.

In addition to the review, Deputy Controller Michelle Roby was terminated and City Controller Celita Green’s consultant contract with the city was also terminated. Neither Roby nor Green was implicated in any wrong doing regarding the 224 funds.

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