State Board of Accounts report makes clear that Mayor Freeman-Wilson, Council President Ron Brewer, Council Member Linda Barnes-Caldwell, Council Member Rebecca Wyatt and Financial Adviser Curtis Whittaker knew of some inter-fund transfers which were prohibited.
September 3, 2018-Gary Mayor Karen Freeman-Wilson will face the public on Wednesday September 5, 2018 and answer questions regarding the misappriation of millions of dollars in public safety funds by her Administration over several years. In May of this year, Gary Council Member Lavetta Sparks-Wade publicly announced that the Ambulance/EMS fund was short millions of dollars. At the time, the report was that the amount reflected in the Chase Bank account for the fund was approximately $4.9M short of what was reported on the City’s accounting system. In short, someone was cooking the books to make it look like there was more money in the bank than there was because the money had been spent.
The City of Gary Ambulance/EMS Fund, also referred to as “Fund 224”, is a restricted fund according to Gary City Ordinance. The funds are a result of charges to users of Gary ambulance services. The fees and the use of the funds are spelled out by Gary City Ordinance. The funds are to be used only for fire equipment and some salaries according to City of Gary Ordinances.
- 2015 Assistance to Firefighters Grant-Awarded June 3, 2016
On page 12 of the report prepared by Freeman-Wilson confidante Curtis Whittaker, a notation provides that there was a $1M transfer to fund 550 at Chase Bank for “5 Alarm Payment.” A footnote provides that the “* 5 Alarm payment of $798,015 is a vendor expense for Fund 275 FEMA Grant GFD.” The immediate question is, why would you be transferring money from one fund to cover a grant? Was the grant spent somewhere else? To determine the answer to this question we looked to the Indiana State Board of Accounts reports for 2015 and 2016. The grant was nowhere to be found: not on the required Schedule of Federal Awards and not on the annual financial statement.
Putting aside the question of the extra $202,000.00 that was transferred (the contract was for $798,015.00 according to Whittaker and the transfer was for $1,000,000.00), the first question which must be asked is why wasn’t this grant reported properly?
Shortly after transferring the $1M to cover the Assistance to Firefighters Grant, the account was again $500,000 overdrawn. In October 2017, records show that a transfer of $500,000 was made into the account to cover Negative Balance.” Residents should question the Mayor and Council President as to why the account was overdrawn and what the other transfers into the account paid.
State Investigators have been highly critical of the City of Gary interdepartmental transfers for years:
“TEMPORARY TRANSFER OF FUNDS
The same comment also appeared in 11 prior reports, including prior Reports B44236, B47027,
and B47523, entitled TEMPORARY TRANSFER OF FUNDS.
Various temporary transfers between certain funds had been made and not repaid within the time
frame permitted by statute.” (See 2016 Audit Report, P. 10 https://www.in.gov/sboa/WebReports/B49191.pdf )
A note makes clear that many should have known of the continuous misappropriation of funds. This report was discussed with Mayor Karen Freeman-Wilson, Council President Ron Brewer, Council Member Linda Barnes-Caldwell, Council Member Rebecca Wyatt and Curtis Whittaker, Financial Advisor. Then City Controller Celita Green responded to the note, misleading investigators into believing that the interfund loans had stopped and were being repaid:
“TEMPORARY TRANSFER OF FUNDS;
During the time that the state underwent a change in the method of reassessment, property tax distributions
were delayed up to 4 months, so the City had to make additional inter-fund loans. Property tax caps
became institutionalized soon after, which reduced the City’s property distributions to a point that made
it impossible to repay inter-fund loans in a timely manner. Property tax collections continue to decline
annually as assessed values also decline for the City. The City departments inter-fund loans
(excluding GSD internal inter-fund loans) totaled $19,664,842 at the end of 2016. Of that amount,
$5,500,000 was repaid in the first 6 months of 2017. The city continues to make every effort to repay loans,
as funds become available. (See 2016 Audit, p. 11 https://www.in.gov/sboa/WebReports/B49191.pdf)
At the end of each year, the City Controller is required by state law to submit a report, under oath, to the Council regarding expenditures by department. If Council President Ron Brewer and Council Members Linda Barnes-Caldwell and Rebecca Wyatt knew that the State Board had found improper transfers of funds, why didn’t they question this when the Controller submitted her annual reports?
- Blight Elimination Fund Transfers Required Council Approval