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December 18, 2012

Action Alert, Part 1

Filed under: The City's Pulse — mary @ 3:44 pm

Mary Souza’s Newsletter  -2

There are important things happening right now which will seriously affect the future of our city, our state and our nation.  But it’s the Christmas season and no one really wants to pay attention to two pesky, huge problems. Yet we must.   

First, our City is dealing with the embezzlement of $365,000 of taxpayer money.  Tonight’s city council meeting might focus on some of the consequences, so I’ll tell you about it in today’s Part 1 of this Action Alert newsletter, and then you can attend the meeting tonight at 6:00 pm in the lower level of the Library downtown or watch it live on Channel 19.

Secondly, the Governor has recently declared that Idaho will set up state exchanges to help implement Obamacare.  But then he also said he might change his mind.  Hmmm.  This is a serious problem of national proportions because half of the states in our country have already refused to set up state exchanges. It’s part of the effort to resist Obamacare and retain our individual and state’s rights.  I’ll send you more info in Part 2 of this newsletter tomorrow and ask for your help.

So those are the two big topics.  Let’s get started on Part 1:

You all know that Sheryl Carroll, who worked in the City’s Finance Dept., embezzled $365,000 of payroll-related money over the course of six years.  No one noticed.  There were no systems in place to catch this kind of illegal activity and no supervision to the degree that would have prevented or discovered it.  But that’s not all.

When Sheryl Carroll applied to the City of CdA, back in 2002, according to City Administrator Wendy Gabriel, the City did not know that this woman, who would be handling enormous amounts of public money, was a convicted embezzler.  They didn’t do a thorough background check.

Sheryl Carroll, whose name was Sheryl Anderson back in 1982, was convicted and sent to jail for 5 months with an additional 5 years of probation because she embezzled money from an Oregon real estate company.

Pam McDonald, HR Director for the City admitted to the Press last August that there were serious problems with the city’s job application process that allowed Sheryl Carroll to be hired without uncovering her past felony conviction.

And City Finance Director, Troy Tymeson, who was Sheryl Carroll’s boss, is trying to sweep this whole mess to the side and sound reassuring as he talks about the city’s upcoming regular yearly audit by Magnuson McHugh.  The same audit by the same company that was done each and every year that Sheryl Carroll was stealing from us.  Those audits didn’t show any missing money.

I want to tell you, dear readers, what I’ve learned about audits. This is important:  Audits are only done on the accounts that the customer asks the auditor to review.  It does not mean that the auditors check over all the details and all the money flowing from one place to another to make sure it is all correct.

So here’s what the City Council will vote on tonight—whether to give the contract for the City’s regular yearly audit to Magnuson McHugh again.  Maybe they should get someone else in the game?  Or maybe they should order a much more in-depth and comprehensive audit?

No Finance Dept. systems in place to catch the embezzlement.  The same audit company year after year after year.  Poorly structured job application.  No FBI background check.  All of these mistakes were made for a job position that handles millions of taxpayer dollars. But Mayor Bloem isn’t concerned.  She says no one, other than Sheryl Carroll, did anything wrong.

Boise Weekly online carried this story last week:  “After watching one of its finance department employees admit to stealing $365,000 of public funds, the City of Coeur d’Alene has decided not to reprimand anyone else in the department. The Coeur d’Alene Press reports that the Coeur d’Alene City Council is expected to consider a new audit of its fiscal controls when it meets on Tuesday, Dec. 18. But the city’s mayor, Sandi Bloem, said the meeting’s discussion “shouldn’t veer toward punitive issues inside the finance department. The punishment is going to take place with the person who did the wrongdoing. The other employees in the department, there was no wrongdoing,” Bloem told the Press. “I look on the bright side: The bright side is our employees were smart enough, and quick enough, and on it. It took a lot of hard work to figure this out—it was pretty sophisticated.”

No other wrongdoing within the department?  Smart and quick enough—six years?  Well, I’m going to see what happens at tonight’s council meeting.  Please tune in or go to the meeting and let’s see if our Mayor demands accountability for the errors leading to the loss of major taxpayer money.

Stay tuned for Action Alert, Part 2 tomorrow.

31 Comments

  1. Mary,

    In my opinion, the City’s Finance Director, Troy Tymesen, is too willing to do the Mayor’s and Gabriel’s bidding and is too timid or too arrogant to forcefully assert the need for outside guidance on establishing fraud and theft prevention and control procedures long ago. As this and previous years’ agreements with Magnuson, McHugh clearly state, it was the City’s responsibility to prevent and detect fraud and theft. That responsibility is squarely Tymesen’s, but it was Gabriel’s responsibility to ensure he did his job. Both failed to perform their duties acceptably.

    It is also my opinion that in spite of that responsibility vested in the City, Magnuson, McHugh could and should have pressed the City harder to fulfill it. Magnuson, McHugh could and should have recommended, publicly, to the City that it hire a different accounting consulting firm to help Tymesen set up the safeguards which his inactions show he was clearly incapable of or unwilling to perform himself.

    I believe the City’s taxpayers need to be reassured that the City is properly entrusted with their money and that the City is not playing fast and loose with acceptable accounting procedures. I believe that the City would benefit tremendously by having outside eyes and a different mindset looking at the City’s complete financial system to ensure that money is being handled and accounted for properly. The outside eyes should be provided by an accounting firm with a national reputation to protect and, most importantly, no social or political or cultural ties to the City and any of its employees. If Magnuson, McHugh has been doing its job diligently, it should welcome outside verification by peers who cannot and will not be swayed by local influences.

    Comment by Bill — December 18, 2012 @ 5:02 pm

  2. Also, Person Field was added as an agenda item yesterday for tonight’s meeting. Gridley is making the presentation. I believe tomorrow is the drop-dead date for the City to tell the School District what the City’s intentions are.

    Comment by Bill — December 18, 2012 @ 5:25 pm

  3. I think I have pretty much identifie the major problem of city hall. I was watching one of those hoarder shows, and it dawned on me that the city is very much like a hoarder sufferer(s). They just don’t know when to quit and essentially they can’t, they keep piling expenses on top of more and more expenses gone wild. It’s a very nasty case of OCD and in this case the city has to get as much green space as they can – like in kitchen cupboard/counter spaces or living areas and occupy it with more and more stuff as in buildings, malls, concrete, art, and a movable bunker or two. They think it is viable living space and need essentials, but that is part of their disorder. Pretty soon, they will have sky scrapers on top of sky scrapers but that won’t be enough, they will continue to clutter the area even more, until we have to bulldoze it down and scrape it out with shovels. Mayor Bloem et. al. is essentially a compulsive hoarder surrounded by enablers. She needs an intervention.

    Comment by Stebbijo — December 18, 2012 @ 5:49 pm

  4. The admissions by HR Director,Pam McDonald, that there were serious problems with the city’s job application process leads the reader to ask a few questions: How long has McDonald been the HR Director? Was she there when Carroll was hired? Did she change the application process during the six years of embezzlement?

    What is the city paying her for? She doesn’t do anything.

    Comment by Ancientemplar — December 19, 2012 @ 8:01 am

  5. I watched the city council meeting last night. I learned something new. Audits are not in place to find fraud. I give up, our government is so out of control, I fear with botched elections to remedy the situation and ridiculous explanations to justify spending while at the same time our city administrator TELLS the council what to do – we are toast. When city council professionalism resorts to “bitchin” – I am at a loss for words after such profound remarks.

    Comment by Stebbijo — December 19, 2012 @ 9:28 am

  6. Bill, I agree with you about Magnuson McHugh but they have deep ties to the city. That’s not to imply they are not a good accounting firm, but I am sure the city does not want to offend any of the very well connected folks at the firm.

    (Retired partner John McHugh is a former Mayor of CdA and still active in many groups, his son Barry is our County Prosecutor. The Magnuson side started with Harry Magnuson, the Wallace civic leader whose son John is a prominent local attorney here. Many of the accountants currently at the firm are highly involved in city and community groups. None of these are negatives but they indicate possible heavy influences, going both ways.)

    You are so correct that the council should hire a firm from outside the area to do a complete forensic audit.

    Comment by mary — December 19, 2012 @ 9:59 am

  7. Stebbijo, I love your Woody comment about “bitchin”. He’s in his own alternate reality. It is scary.

    Comment by mary — December 19, 2012 @ 10:01 am

  8. Stebbijo,

    Whether fraud and theft will be detected depends on the type of audit requested by the client. In this case, the client is the City.

    The reason I included the Agreement in my post was to point out that the responsibility for fraud and theft detection and prevention rested clearly and unambiguously with the City. It was the Mayor, the City Administrator, the City Finance Director, and no doubt others that essentially wanted a “vanilla” audit, one that would examine the data presented by the City and would arrive at the appropriate conclusions (nothing to see here…) about how the people’s money is being handled and accounted for.

    Comment by Bill — December 19, 2012 @ 10:10 am

  9. Bill, I was surprised, as I was watching last night’s city council meeting, to hear Toni Hackwith from Magnuson McHugh explain the regular yearly audit for the city as a “financial statement audit”. She explained that in this type of audit the auditors verify “that the cash your employees say is in the bank is there.” She said this is the audit required by law. It’s the basic minimum audit. (my words)

    I’m figuring, from her explanation, that the auditors take each line of the city’s financial statement and run various tests to be sure that each line entry on the statement matches what’s in the bank.

    But there’s at least one big problem–perhaps many more: City Finance Director Troy Tymeson has said that the McEuen Park funds will NOT be included on the city’s financial books because “they’re in and out”. That means they’ll never be audited. What other funds are “in and out” and avoiding scrutiny?

    Comment by mary — December 19, 2012 @ 10:44 am

  10. Mary raises a very interesting point. I am assuming that she is referring to the money from LCDC. I don’t know how the transaction is structured, but it would seem that if LCDC pays the contractors directly that the money would not be reflected in the city’s books. On the other hand if the LCDC money is paid to the city and the city in turn pays the contractors, that the receipt of the LCDC money would have to be documented in the city’s books and that the city’s payment to the contractors would also have to be documented in the city’s books.

    Comment by up river — December 19, 2012 @ 10:59 am

  11. Well, at least it appears from comments made that there will be an investigation for details on how this happened, but not until after sentencing in February, which is puzzling legal advice from the city attorney. Regardless of the outcome, it does not appear that any reprimand, not even a notation in anybody’s file that there was a failure of duty, will be forthcoming due to the attitudes already expresses by the Mayor and others.

    Comment by Gary Ingram — December 19, 2012 @ 11:02 am

  12. When the embezzlement case first broke, I believe that eth CDAPress told us that “staff” caught it while she (Carroll) was on vacation. Well, how does “staff” catch this type of occurrance? What tipped whomever off? Who was the “staff?” I don’t know why it’s all so secret and we are told because it is a “personnel” issue – but now it is a crime, so what’s the issue? Somebody broke the story to the CDAPress, why do we have to wait until February of next year? For that reason, the council – all except Dan, chose to table the motion for a later date. Sounds like everyone knows, but no one can say anything. Mayor Bloem clarified this concern stating that waiting was due to the “personnel” confidentiality.

    So nothing is formerly public until after the sentencing? It is still considered investigative at this stage?

    Maybe, if it on the hush and hush and drawn out long enough, she (Carroll) will eventually get appointed to the Idaho Judicial Council.

    Comment by Stebbijo — December 19, 2012 @ 11:52 am

  13. I might have this one part incorrect. I believe was the only one who voted NO – retaining Magnuson & McHugh – and then on the ordering of an independent audit,after discussion – the enti:-)re council decided to wait because of this personell/sentencing thing – which makes no sense to me at all. But, like I said – I was in a post surgical haze. :-)

    Comment by Stebbijo — December 19, 2012 @ 12:44 pm

  14. Sorry – Insert Dan Gookin in the above post. I am going back to sleep.

    Comment by Stebbijo — December 19, 2012 @ 12:45 pm

  15. Up River made a good point in comment #10. What I meant by “in and out” money, as Troy called it, is what other money is received by the city, then spent on a project so it does not leave a balance at the end of the year. Are we not to know about that kind of money?

    I was given the impression, Up River, that the city’s request to change the way the McEuen funds are doled out, was a feint effort labeled as “increased efficiency”, when it was much more probably a method of maneuvering the money through accounts that won’t show.

    Comment by mary — December 19, 2012 @ 2:25 pm

  16. The City is still covering up. Just like the officer who had an affair sounds like he may have been in trouble before. Also the captain who rear-ended another officer while he was texting. The officer who was on duty is now disabled and the City is fighting the workman’s comp claim. The officer & his family are in financial trouble. No discipline happened to this captain not even a ticket from what I am told. My guess is that this officer will win another huge lawsuit. Now a L.I.D. for McEuen field, where does this stop?

    Comment by TheWho — December 19, 2012 @ 2:48 pm

  17. The Who- You have got it figured out.There is so much more out there that never sees press unless someone comes forward to tell their story. Maybe you should be the citizen of the year!

    Comment by jayhump — December 19, 2012 @ 6:14 pm

  18. TheWho,

    If you know, when and where did the captain rear-end another officer while he was texting? Which captain? You said the officer on duty was disabled. Did Fire/EMS treat the injured and take him to KMC? What is the nature of his injuries and disability? How many vehicles involved? Which other agency such as KCSD or ISP was called to investigate the fleet collision?

    I don’t recall reading about this in our local skewspaper.

    Comment by Bill — December 20, 2012 @ 6:52 am

  19. Bill, I think his rank was a captain. I got this second hand, but it is good information. I know the officer had a neck injury, not sure about EMS, but I do know that I.S.P. took the report and I assume the police department did their own investigation. Good question to ask Christy Wood. There were only two vehicles a involved and it was right by the police station. The captain was in his own car and the officer was in a patrol car.

    Comment by TheWho — December 20, 2012 @ 8:36 am

  20. TheWho,

    Can you please at least give me the date, either exact or approximate to month and year, so I can prepare public record requests to both ISP and the City? More precise information in the request gives evasive or deceptive responders much less wiggle room.

    If the on-duty officer had a neck injury that ultimately resulted in his disability, then EMS would have been called even if only for evaluation. Absent outwardly obvious wounds and severe pain, it is possible the on-duty officer might not have realized until much later he had been injured.

    Comment by Bill — December 20, 2012 @ 12:41 pm

  21. I did some checking this morning after my first post. An old fellow from across the way thought it was in 2010, possibly in October. I am sure if you call ISP & tell them what you are looking for they can help, not to many officer vs officer texting accidents in this town. From what I am told the officer has had two or three surgeries and is not back to work and is probably done as a cop.

    Comment by TheWho — December 20, 2012 @ 1:03 pm

  22. Think it was a Luitenant and the police car totaled. No ticket issued to said texter.

    Comment by jayhump — December 20, 2012 @ 7:00 pm

  23. PS- The texter was not another one who got caught having sex on duty in his car. That was a Sergeant (and not the one whose house was shot.) All quietly hushed by the top brass.

    Comment by jayhump — December 20, 2012 @ 7:04 pm

  24. Jayhump, it sounds like a lot of trouble at the Police Dept, with issues like these being swept under the rug. Typical for this city. Make everything look nice, no matter what the reality. How do the other officers feel? Does the morale reflect these problems?

    Comment by mary — December 21, 2012 @ 8:15 am

  25. How does the PD expect citizens to trust and respect LE when they apparently are above the law, never have to pay for their crimes or even let the public know about these things?? Every one of us should be mad as hel* and demanding transparency AND justice.

    Comment by chouli — December 21, 2012 @ 8:24 am

  26. And this morningI read in the paper about the CC desire to move forward with a private, for-profit jail…OMG. Doesn’t that send up a huge red flag that any for profit operation is going to increase the number of people incarcerated! more people = more profit
    I’ve read awful reviews of these types of prison systems in other parts of the country and it isn’t good.

    Comment by chouli — December 21, 2012 @ 8:28 am

  27. Here is the probelm as you know the mayor, city council, and the city administration do not care. They protect their own and I am serious that an outside agency come & do an investigation. Not sure who, maybe 20/20 or some other outfit should come & start digging. I was at the store last week when I overheard a checker talking to another checker about the officer having an affair & having his house shot. The checker said yeah he has been in trouble before for on some sexual type thing. So these types of things are out in the community, not sure how these checkers know these things, but I guess the Director of the CIA even got caught. I have no clue why this type of behavior is allowed, sounds a lot like Spokane before the new chief came in. In fact I just heard on the radio the new Spokane Chief plans to clean up his department by demotions and letting some staff go. Longo has let the citizens down, sure he can get his picture in the paper, but he has not taken care of business.

    Comment by TheWho — December 21, 2012 @ 8:56 am

  28. I’m retired from another city but the officers I know seem to think their brass is untouchable because the city leaders love them. They kiss butt at council meetings and play on their computers all day.

    Comment by jayhump — December 21, 2012 @ 9:20 am

  29. Does California law requires cities or perhaps governmental entities to change accounting firms and banks every three years? I have not verified this but find the idea of interest.

    Comment by Susie Snedaker — December 21, 2012 @ 11:01 pm

  30. Susie,

    Possibly, but I’ve quickly scanned the California Public Contract Code and can’t find anything like that. It could be somewhere else in California’s codes, though.

    Comment by Bill — December 22, 2012 @ 6:50 am

  31. Bill, any luck on the records request? I feel bad for the officer and the non justice involved. If any one of us had been texting and caused an accident we would have got a huge fine and our insurance rates would have sky rocketed. Jay hump also brings up good points that all got brushed over by the brass. Who can investigate those claims? Are those open to public records request?

    Comment by TheWho — December 22, 2012 @ 11:52 am

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