OIG Annual Report 2019: Audit, Oversight and Investigations Division

Part IV of the Office of the Inspector General's 2019 Annual Report

Download the PDF version of the full OIG 2019 annual report.

Table of Contents

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The Audit, Oversight and Investigations Division:

1) Investigates possible criminal or civil misconduct in the use of public funds and property.
2) Recommends improvements to internal and financial controls to prevent the misuse of government assets.
3) Conducts reviews into potential waste and abuse in the expenditure of public funds.
1,173   Unique complaints the AOI Division responded to in 2019

As previously discussed, the Audit, Oversight and Investigations Division (“Division”) investigates possible misconduct in the use of public funds and property and recommends improvements to internal and financial controls to prevent the misuse of government assets. The Division also conducts reviews into potential waste and abuse in the expenditure of public funds.

In this role, the Division receives, reviews and processes complaints addressed to the Office. In some instances, these complaints lead to comprehensive investigations, while in other instances the Division may forward the complaint to the appropriate oversight, regulatory or prosecutorial agency. The Division forwards complaints to other agencies if, for instance, a preliminary investigation reveals that the complaints are outside of the Office’s jurisdiction.

In addition to complaints, the Division’s investigations arise from many other sources, including:

  • Anonymous tips
  • Information developed during the course of other reviews and activities
  • Requests for assistance from other investigative agencies, including local authorities, federal agencies, the state police and prosecutorial agencies

In 2019, the Division responded to over 1,173 unique complaints from public employees, private citizens, municipalities, and other public and private entities. The Division investigated and reviewed a wide range of alleged wrongdoing, including:

  • Theft
  • Bribery
  • Extortion
  • False claims
  • Tax fraud
  • False statements
  • Time fraud
  • Larceny
  • Forgery
  • Embezzlement
  • Procurement fraud

The Division’s work crossed diverse areas of government, including:

  • Administration
  • Education
  • Housing
  • Municipal and county programs
  • Public benefits
  • Public land
  • Public safety

Below is a representative sample of the Division’s work from 2019.

I. Administration

A. Former Fall River Mayor and Associates Indicted on Corruption and Conspiracy Charges

The Office conducted a joint investigation with the United States Attorney’s Office, the FBI, the Internal Revenue Service and the United States Department of Housing and Urban Development into alleged extortion, theft, bribery and false statements by the former mayor of Fall River, Jasiel Correia.

During his tenure as mayor, Mr. Correia issued at least 14 non-opposition letters for marijuana businesses to operate in Fall River, including two for his girlfriend’s brother. A marijuana business cannot get a state license to operate without first receiving municipal consent. Mr. Correia allegedly agreed to issue these non-opposition letters in return for cash bribes that ranged from approximately $100,000 to $250,000, as well as for other payments such as campaign contributions, mortgage discharges and a Rolex watch valued at between $7,500 and $12,000.

In September 2019, Mr. Correia was arrested and charged with bribery, conspiracy, extortion, aiding and abetting, wire fraud and filing false tax returns. Genoveva Andrade, Mr. Correia’s former  chief of staff, was charged with extortion, conspiracy, theft, bribery and making false statements. Antonio Costa, Hildegar Camara and David Hebert, associates of Mr. Correia, were charged with extortion, conspiracy and making false statements in connection with statements they allegedly made to federal agents about their roles in assisting Mr. Correia to extort money and property from marijuana vendors.

The indictment also alleges that Mr. Correia demanded and received kickbacks from his former chief of staff, Ms. Andrade, in return for appointing her and allowing her to keep her city job.

Mr. Correia, Ms. Andrade, Mr. Costa, Mr. Camara and Mr. Hebert are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

B. Inspector General Recommends that Malden Hire a CFO to Implement Financial Controls

The city of Malden requested that the Office review the conditions that led to the arrest and indictment of a former employee of the city’s Permits, Inspections and Planning Services Department (“Department”).

In November 2018, the former employee admitted to sufficient facts to resolve charges of larceny over $250, uttering, forgery and embezzlement. The employee agreed to pay restitution, received two years of probation and had his case continued without a finding for two years.

In response to the city’s request, the Office reviewed and evaluated the Department’s payment intake process. The Office focused on the internal controls at the time the crimes occurred and the policy revisions the Department adopted after the misconduct was identified. Additionally, the Office followed up with the city after the city appointed a new Department director and a new Treasurer.

The Office found that the Department of Revenue and external auditors had repeatedly informed city officials that weak financial controls made it vulnerable to embezzlement and other misuse. However, the city failed to address these deficiencies by, for example, implementing documented, sustainable, cross-departmental controls. Furthermore, the Office found that the internal control environment for handling checks and cash in the Department was extremely weak. It lacked basic controls, including segregation of duties, regular reconciliations, employee accountability and monitoring.

The Office also found that the city reacted to the embezzlement by improving financial policies and procedures, as well as implementing certain basic financial controls. However, the city failed to formalize those improved financial policies and basic internal controls by putting them in writing.

When the Office conducted follow-up to reassess the Department’s operations following management turnover, some of the improved procedures and controls were no longer in effect. The lack of documented policies and procedures exposed the city to the same internal control vulnerabilities that allowed the original criminal conduct to occur.

Additionally, the Office found that a number of the deficiencies that enabled the theft had already been identified in 2009 by the city’s outside auditor, who recommended that the city hire a Chief Financial Officer (“CFO”) to oversee its entire financial operation. While the city has authorized incorporating a CFO-like oversight role into either its Treasurer, Controller or Assessor positions, it has repeatedly failed to assign them to a particular employee or to fund a new CFO position.

The Office recommended that the city hire a CFO to oversee financial operations across all government departments, monitor the city’s day-to-day financial operations and establish internal controls. The Office also recommended that the city finalize its Financial Policies and Procedures Manual before the end of the fiscal year.

In response to the Office’s recommendations, the city hired an internal auditor and the controller’s office finalized its Financial Policies and Procedures Manual.

Additional Resources

II. Education

A. Former Marblehead METCO Director Indicted for Larceny

The Office conducted a joint investigation with the Essex County District Attorney’s Office into allegations that the former Director of the Marblehead branch of the Metropolitan Council for Educational Opportunity (“METCO”), Francois Fils-Aime, stole approximately $20,000 from a fund designated to support the METCO program at Marblehead High School.

Mr. Fils-Aime is accused of using a bank account referred to as The Marblehead METCO Sunshine Fund for his personal expenses, including restaurant meals. The account was funded by yearly dues from parents of students in the METCO program, as well as from donations from individuals and organizations.

The investigation revealed evidence that the Marblehead School Department did not know about the bank account while Mr. Fils-Aime worked for the school. In 2017, however, the school allegedly discovered the account after Mr. Fils-Aime left the school system and organizations inquired to whom they should make their annual donation.

An Essex County grand jury indicted Mr. Fils-Aime on larceny charges for stealing money intended to benefit students. He is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

B. Office Recommends the Boston Retirement Board Recover $67,000 from Retired Boston Headmaster

In 2019, the Office reviewed work that a Boston Public Schools (“BPS”) headmaster, Linda Nathan, performed for a public charter school to determine whether she violated the earnings limitations Section 91 of Chapter 32 of the Massachusetts General Laws (“Chapter 91”).

Ms. Nathan worked for the BPS for more than 32 years. During the last 16 years of her service, she was a headmaster.1 When Ms. Nathan retired from the BPS in 2014, she began receiving a monthly pension of $8,654 ($103,842 a year).

The Conservatory Lab Charter School (“CLCS”) is a public charter school. In 2015, CLCS established a search committee to replace its retiring Head of School. The search committee chose Ms. Nathan to lead both CLCS and the Center for Artistry and Scholarship in Education (“CASE”), a non-profit established by CLCS’s board of trustees to assist CLCS in meeting certain responsibilities under its charter. At the time, CASE only existed on paper, it lacked a staff, and its board had never formally met. CLCS offered Ms. Nathan the position of Executive Director of CASE for $150,000 a year.

Chapter 91(b) of Chapter 32 of the Massachusetts General Laws limits the salary that a retired public employee can receive from a public entity. Specifically, it limits it to the difference between the retiree’s yearly pension and “the salary that is being paid for the position from which he was retired.” (See M.G.L. c. 32, § 91.)

The Office found that Ms. Nathan was (and is) being paid to provide services to a public entity, CLCS. Specifically, the Office determined that more than 65 percent of Ms. Nathan’s salary should be attributed to providing service to CLCS. Furthermore, Ms. Nathan’s pension plus the portion of her salary attributable to public service exceeds the salary she would have earned if she had remained a BPS headmaster. The Office concluded that as of April 6, 2020, Ms. Nathan owed the Boston Retirement Board $67,979.

In its letter to the Retirement Board, the Office recommended that the board conduct its own analysis and recover any overearnings from Ms. Nathan. The Retirement Board is reviewing Ms. Nathan’s post-retirement earnings.

Additional Resources

III. Housing

A. Joint Investigation Leads to Indictment of a Former Non-Profit Employee for Embezzlement

The Office conducted a joint investigation with the Massachusetts Attorney General’s Office into allegations that a former non-profit manager embezzled more than $45,000 from Heading Home, Inc., a Charlestown-based organization that provides housing assistance to individuals and families.

Between March 2015 and November 2016, Donna Scott allegedly stole more than $45,000 that was intended to provide transitional and permanent housing and support services to individuals and families experiencing homelessness. At the time, Ms. Scott was a manager at Heading Home, Inc., which is partially funded by grants from the state’s Department of Housing and Community Development.

In 2019, a Suffolk County grand jury indicted Ms. Scott on one count of larceny over $250. She is presumed innocent until proven guilty.

Additional Resources

IV. Municipal and County Programs

A. Plymouth County Dredge Program Wasted Resources

The Office reviewed Plymouth County’s Dredge Program (“program”), specifically the County’s $212,000 purchase of excavating equipment in 2015 and its subsequent use and benefit to County communities. The Office concluded that the program has been unsuccessful because the County did not adequately plan to effectively utilize its capital investment. Further, the County did not properly secure municipal funding that would allow it to purchase the additional equipment and hire the staff needed for the program.

The County formed the program in 2013 with the goal of providing low-cost dredging services to Plymouth County municipalities. The County planned to fund the program, including hiring staff and buying additional equipment, through annual fees collected from participating communities. Several communities initially expressed strong interest in the program.

In 2014, the County received $250,000 from the Commonwealth to purchase saltwater dredging equipment and in 2015 the County bought a John Deere excavator for $212,000. The excavator was delivered to the town of Kingston’s transfer station in June 2015. In 2016, the County received another $200,000 from the Commonwealth and paid an additional $3,594 to extend the equipment’s warranty, leaving a balance of $233,806 for the program.

In the meantime, municipalities decided not to participate in the program due to concerns about lack of proper equipment, staff and funding. The excavator sat, unused, at the transfer station until June 2019. The County continued to propose various uses for the excavator while it remained stored at the Kingston transfer station; however, these projects never materialized. In 2019, County rented the excavator for one week to the town of Harwich for $1,400.

The Office found that the County did not secure funding from the participating municipalities that would have made the dredge program feasible. The County moved forward with a purchase of the excavator before the program was fully funded and, in doing so, put itself in a position of owning a piece of equipment with no operator or supporting infrastructure.

The Office also found that the County’s lack of equipment posed logistical challenges to municipalities that were difficult to overcome and limited the program’s effectiveness. The County also lacked the requisite skilled employees to operate the equipment and the withdrawal of communities left the County without the operating revenue to hire any staff.

In its letter, the Office recommended that the County determine whether communities would actively participate in a dredge program if it was properly staffed and equipped; if so, the County should secure written funding agreements from interested communities. The Office further recommended that if the County is unable to secure the funding to ensure that the program is fully operational, the County should consider ending the program, surplussing the excavator, and remitting all proceeds and unused funds to the Commonwealth.

The Plymouth County Commissioners responded to and disputed the Office’s findings; however, the Office stands by its findings and recommendations based on its thorough investigation.

B. Ratepayer Cost Burden: The Expense of Municipal Light Plants’ Sick-Leave Payouts

The Office reviewed the sick-leave policies at 40 municipal light plants in Massachusetts, including the plants’ policies for paying employees for unused sick leave. The Office found that for some light plants, employees’ accrued sick leave represents a significant financial liability that ultimately is borne by their communities’ ratepayers.

Over a six-year period, for example, 26 light plants paid approximately $10.7 million to 219 employees for unused sick leave, an average of more than $49,000 per employee. Three communities’ light plants accounted for $9.2 million (85 percent) of that total.

By the Numbers: Light Plants 2010-2016
$13,500,000 Paid to employees for unused leave time
$10,700,000 Paid to employees for unused sick leave time
$9,200,000 Total sick-leave payouts made by the Taunton, Reading and Westfield light plants
$350,000 Highest single sick-leave payout
$49,000 Average payment for unused sick leave
Table 3. Leave Time Payments

The Office also found that light plants’ sick-leave policies vary widely, from paying employees for 100 percent of their unused sick time when they leave the plant to no payouts to departing employees.

In contrast, the state generally pays its employees for 20 percent for their unused sick time, and only upon retirement. Paying 100 percent of any unused sick leave creates an undue burden on ratepayers and light plant budgets, detracting from their ability to spend funds efficiently and in the best interest of the ratepayers. Also, certain light plants pay employees at the end of each year for 100 percent of any unused sick leave.

In its report, the Office recommended changes to light plant policies to bring them in line with either state or local rules on sick leave. The Office urged municipal officials to take an active role in overseeing the light plants in their communities, including conducting thorough reviews of light plant expenditures. Lastly, the Office recommended legislative measures, including requiring periodic audits and reporting leave balances.

V. Public Benefits

A. Office of the Inspector General Assisted on Federal Identity Fraud Cases

During 2019, the Office provided assistance to federal investigators and prosecutors on cases involving identity theft and benefit fraud. The Office identified two individuals who obtained a driver’s license using another person’s identity. This information was provided to a federal taskforce that combats public benefits fraud.

The United States Attorney’s Office charged the two individuals that the Office identified and three others with aggravated identity theft and false representation of a Social Security number. These individuals are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

Additional Resources

VI. Public Land

A. Montague Land Dispositions Violated Chapter 30B

The Office reviewed the disposition of town-owned land in the town of Montague. The Office found that the town violated Chapter 30B in its attempted sale of town parcel 29-180, known as Lot F. Specifically, the town’s valuation of Lot F did not comply with Chapter 30B and its request for proposal (“RFP”) improperly restricted the eligible buyers to one individual.

In 2018, the town tried to sell Lot F through an RFP process. The town received one bid below its minimum asking price. After the Office began its review, the town rejected the bid and cancelled the RFP.

The Office found that the town failed to determine the value of Lot F through procedures customarily accepted by the appraising profession, as required by Chapter 30B. The town listed the value of the land as $5,100 based on 2016 data from the town Assessor’s Office, whereas 2018 data from an appraising company listed the value of the land as $20,200.

The Office also determined that the RFP included restrictive language requiring that bidders own an abutting property to Lot F. This restriction established a non-competitive process with only one eligible bidder and presupposed that no other potential buyer might find value in the property.

Additional Resources

VII. Public Safety

A. Methuen Officials Violated State and City Rules to Approve Police Contract

Following calls and complaints to its fraud hotline, the Office conducted an investigation into Methuen officials’ negotiation and approval of the city’s most-recent contract with its police supervisors.

The Office found that the contract’s terms would significantly raise salaries for the 26 sergeants, lieutenants and captains on Methuen’s police force; some salaries would increase by more than 100 percent. For example, police captains’ average salary would increase more than 180 percent from the prior contract, to $432,295 per year. The captains’ salaries would surpass those of top law enforcement officials for Massachusetts and major cities across the country.

Table 4. 2017 Police Salaries
Title 2017 Salary2
Methuen Police Captain (estimated) $432,295
Los Angeles Police Commissioner $371,076
Chicago Police Superintendent $260,004
Massachusetts State Police Colonel $241,845
Boston Police Commissioner $238,846
New York City Police Commissioner $226,366

The investigation further revealed that the contract’s unprecedented pay increases would have far exceeded the police department’s budget. After the financial impact of the raises came to light, Methuen’s mayor signed a memorandum of understanding (“MOU”) that outlined somewhat smaller raises for superior officers, but still well above the level the department’s budget could support. As a result of the MOU, city officials had issued layoff notices to 50 patrol officers, about half of the police department’s uniformed staff.

Finally, even though the Mayor was paying the superior officers the salaries outlined in the MOU, the City Council never approved the MOU as required under local and state law.

The Office concluded that the former mayor and the Methuen City Council likely violated state laws, failed to comply with their own municipal rules and breached their fiduciary duties to the residents of Methuen.

Specifically, the Office found that:

  • City officials failed to analyze the financial impact of the contract as mandated under city rules.
  • The City Council voted to approve the contract on the same day it was introduced, violating the city’s charter and a city ordinance.
  • The City Council improperly invoked a procedural rule in order to allow councilors with conflicts of interest to vote on the contract.
  • City councilors and the former mayor neglected their obligations as public officials to exercise care and due diligence on behalf of Methuen’s residents.

The Office recommended that the City Council take steps to rescind the police superiors’ contract, including contacting the State Ethics Commission as well as consulting with legal counsel as to the validity of the contract and the MOU.

After the Office issued the letter, Methuen stopped paying the superior officers based on the MOU and reverted to payment based on the prior contract. The superior officers’ union and the city have negotiated a new contract that is more in line with police salaries in Massachusetts. It is awaiting approval of the City Council.

B. East Longmeadow’s Surplus Disposition Did Not Consider Sale Options

The Office reviewed the disposition of a surplus fire truck by the town of East Longmeadow. The Office found that the town complied with the advertising requirements in Chapter 30B but that it could have been more financially advantageous to consider the fire truck’s scrap metal or salvage value.

In 2017, the town published an invitation for bids (“IFB”) for the disposition of a surplus fire truck. The town sold the fire truck that same year for $1,501. In valuing the fire truck for the IFB, the town relied on the value the town Assessor’s Office used to calculate excise taxes. The excise valuation, however, was insufficient to capture the truck’s value as salvage or on the resale market. The Office also found that while the sale price ($1,501) was reasonable, the town likely could have obtained a higher price for the surplus fire truck had it been sold as scrap metal or for salvage.

The Office recommended that, moving forward, the town determine the resale and salvage values of surplus public assets in compliance with Chapter 30B and that the town formalize its written policies for conducting surplus dispositions. Following the Office’s review, the town did formalize its surplus disposition policies and submitted a copy to the Office.

Additional Resources

Contact   for OIG Annual Report 2019: Audit, Oversight and Investigations Division

(1) At the BPS, the title “headmaster” is equivalent to that of a principal in other jurisdictions.

(2) The first year of the Superiors’ contract was 2017.

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