City worker's 6-year crime spree costs Philly $1.3 million; how many more are stealing?
December 3, 2012By Dave Davies
We have trouble, folks.
• Last week, federal authorities charged a Philadelphia Water Department employee with ordering thousands of extra printer and toner cartridges and selling them to contacts in Arkansas for six years, costing taxpayer $1.3 million.
• A few days before that, a court employee was sentenced for stealing for 10 years, in ways that are truly impressive: ordering plasma TVs, buying cell phones and paying for monthly cell phone contracts for his friends, all on our dime.
• And, in August, a city records department employee was sentenced for selling police reports on the side and pocketing the money, costing taxpayers about $600,000. She ran that scam for four years.
There are other cases. Which makes me wonder: If controls in city offices are so lax that these employees felt comfortable stealing with impunity for years, how many other employees are out there right now, quietly draining the city treasury?
Looking for answers
It's not an easy question to answer since, to paraphrase Donald Rumsfeld, sometimes you don't know what you don't know.
I know one reason we're seeing more of these cases is that Mayor Michael Nutter appointed a tough, experienced prosecutor, Amy Kurland, as the city's inspector general, and gave her the staff to get something done.
Just in the past year, her investigations have resulted in 37 terminations, 13 suspensions and two demotions among Philadelphia employees. A lot of the cases begin with tips from other employees.
There's presumably a deterrent effect when people see their fellow employees getting fired, going to jail and losing their pensions. But I wondered whether anybody goes back after one of these things is uncovered, to ask why the miscreant was able to steal undetected and impose new controls.
I spoke to Kurland last week, and she said that's one thing she likes about her current gig as opposed to her days as a U.S. attorney, when she'd prosecute public employees and send them to jail.
Now, she told me, "We try to go into the department and figure out how in the world could this have happened. How could somebody have ordered over a million dollars worth of ink and toner over all these years and not have anybody notice it?"
Kurland said it takes time to go over a department's procedures and make changes, but that it actually happens. She gave me a couple of examples of places where they've made some simple changes that will help to prevent theft.
"It's really the same issues," she said. "Lack of controls, lack of separation of responsibilities, and how you handle cash."
She noted that letting the same guy order supplies, make payments, keep the records and manage inventory, it's kind of like putting up a "Nobody's watching -- help yourself" sign.
What about the auditor?
I also wanted to get the city controller's take on this, since his department's job is to keep an eye on payments and to audit city departments. Can't his auditors tell if a Water Department clerk is ordering twice as much toner as the department needs?
Actually no, Alan Butkovitz said. Their audits don't get into that kind of granular detail. What they do is look at systems and accountability, and he said they're constantly criticizing departments for a lack of financial control.
"Our audits are like a broken record," he told me. "Simple things like reconciliation of checking accounts ... the person who deals with the orders shouldn't be the same person who pays the bills."
Such weaknesses are regularly included in audits, he said, but city managers have other concerns.
"Their position is that we're busy doing the work, and in a time of tight budgets we can't do all this back office stuff," Butkovitz said. "But virtually every audit has a complaint about the weakness of systems."
I looked up the last audit of the Water Department, and noted this:
"Duties for the PWD's $15 million supplies and inventory were not adequately segregated, with store workers receiving and issuing inventory, maintaining the records, and conducting the physical inventory."
I spoke to Water Department spokeswoman Joanne Dahme, who said procedures have been tightened since the clerk's theft was uncovered.
And Kurland told me it's her impression that the investigations and followup with departments are making a difference.
"I think that we're really seeing a lot of changes," she said. "I mean, I'm not seeing the same cases out of the same departments again and again."
This could be overly optimistic, but there's no question a revived and energetic inspector general's office has been breaking up some scams and saving taxpayers money.
And one thing City Council could and should do is to enact city charter reform legislation that would make the office an independent entity. As it now stands, the inspector general works for the mayor, and that's not a good arrangement.