Ch­ester County K-9 au­dit ques­tions spend­ing, con­trol of funds.

The Phoenix - - FRONT PAGE - By Michael P. Rel­la­han mrel­la­han@21st-cen­tu­ry­ To con­tact Staff Writer Michael P. Rel­la­han call 610-696-1544.

WEST CH­ESTER » Four thou­sand, seven hun­dred, eigh­teen dol­lars and forty­one cents paid for a stay at the Hil­ton Bal­ti­more in June and July 2015. At least $5,290.74 on 75 miscellaneous lunches and din­ners over a three-year pe­riod; $4,200 for a cus­tom­made golf cart; $2,500 for tires and front and back winches on a pri­vately owned pickup truck; $579 for a one-night stay at the Qual­ity Ho­tel in Ex­ton in Septem­ber 2017.

Those are some of the ex­penses that the Ch­ester County Con­troller’s Of­fice has ques­tioned in its au­dit of the way that funds for the county sher­iff’s K-9 Unit, es­ti­mated at more than $198,000, were raised and spent over the years 2015 to 2017. The con­troller ze­roed in on ex­penses, paid for with checks and credit cards, where it could not as­cer­tain how those in­di­vid­ual pay­ments di­rectly re­lated to the ser­vices K-9 Unit was formed to pro­vide to law en­force­ment agen­cies and oth­ers in and out of the county.

The 23 in­stances of ques­tion­able ac­tions by the K-9 Unit cited in a sum­mary re­port of the con­troller’s au­dit — in­clud­ing fail­ure to reg­is­ter as a char­i­ta­ble or­ga­ni­za­tion, file for tax-ex­empt sta­tus, and es­tab­lish an over­all “for­mal or in­for­mal struc­ture” for re­ceipts and dis­burse­ments — led the of­fice to the rare step of bring­ing the mat­ter to the at­ten­tion of other elected of­fi­cials in the county, ac­cord­ing to a state­ment is­sued by the con­troller’s of­fice.

“Based on our eval­u­a­tion of the lim­ited doc­u­men­ta­tion we re­ceived, it did not ap­pear that the ma­jor­ity of the gen­er­ous do­na­tions re­ceived from well-mean­ing donors and spon­sors (of the K-9 Unit) were be­ing used for their in­tended pur­pose,” Con­troller Mar­garet Reif said in a state­ment to Dig­i­tal First Me­dia. “Given that fact, ac­cord­ing to the County Code, our re­spon­si­bil­ity at that point was to stop what we were do­ing and bring our con­cerns to the com­mis­sion­ers and the district at­tor­ney, which is what we did.”

In a sep­a­rate state­ment to Dig­i­tal First Me­dia, at­tor­ney Daw­son R. Muth of the West Ch­ester firm of Lamb McEr­lane said that Reif, a Demo­crat, was pur­su­ing the au­dit of the K-9 unit as a way of at­tack­ing county Sher­iff Car­olyn “Bunny” Welsh, a Repub­li­can. He also said the sher­iff had re­cently en­listed an out­side au­di­tor to re­view the same records that the con­troller ref­er­enced, and that to date no wrong­do­ing was found.

“The sher­iff of­fered sev­eral times, prior to be­ing sub­poe­naed by the con­troller, to sit down with the con­troller and ex­plain all of the pro­grams and fundrais­ing ef­forts,” he said. “The con­troller and her so­lic­i­tor chose not to ac­cept that of­fer. In­stead they have cho­sen to leak cer­tain in­for­ma­tion to the press, to start a crim­i­nal in­ves­ti­ga­tion and to ma­lign the hard­work­ing pro­fes­sional law en­force­ment of­fi­cers who pro­tect and serve the cit­i­zens of Ch­ester County.

“The con­troller’s con­duct in this mat­ter is clearly and with­out ques­tion po­lit­i­cally mo­ti­vated and is noth­ing more than a per­sonal at­tack lev­eled at the sher­iff of Ch­ester County,” Muth said.

On Mon­day, Sept. 10, District At­tor­ney Tom Ho­gan sent sep­a­rate let­ters to the state At­tor­ney Gen­eral’s Of­fice and the U.S. At­tor­ney’s Of­fice in Phil­a­del­phia, pass­ing on Reif’s re­quest for an in­ves­ti­ga­tion into al­le­ga­tions swirling around the K-9 funds.

No charges have been filed in the case.

Ho­gan de­ter­mined that his of­fice could not con­duct an in­ves­ti­ga­tion into the fi­nances of the K-9 unit it­self be­cause of an ap­par­ent con­flict of in­ter­est, he wrote in let­ters to the agen­cies, in­volv­ing a dona­tion his of­fice made to the K-9 Unit for train­ing.

In­cluded in the re­fer­ral to the two out­side agen­cies was a copy of the con­troller’s 10-page sum­mary of its find­ings in­volv­ing the re­view of records for the unit, which con­sists of nine dogs and their county-em­ployed han­dlers.

The unit is not sup­ported by county tax dol­lars be­yond the salaries of the deputies who han­dle the ca­nine of­fi­cers and in­sur­ance paid for those dogs. For sev­eral years, the sher­iff’s of­fice has so­licited pri­vate funds for sup­port for the unit — in­clud­ing ap­peals for do­na­tions on the county gov­ern­ment’s web­site and out­side events in­clud­ing a golf tour­na­ment, a “wild game” din­ner, and a clas­sic car show.

In June, the con­troller be­gan ask­ing the sher­iff’s of­fice to sub­mit to an au­dit of those funds that had been raised for the K-9 Unit par­tially through the county’s web­site and email. The sher­iff, Reif said, ini­tially agreed to the au­dit, but later backed away from that stance. The con­troller is­sued a sub­poena for records in­volv­ing the unit from 2009 to the present.

Ac­cord­ing to the sum­mary, the au­dit be­gan on Aug. 13, when the con­troller’s staff was pro­vided with six file fold­ers for the K-9 Unit fund for the years end­ing in 2015, 2016, and 2017, a third of the records that the con­troller had de­manded.

The staff pho­to­copied the records, but af­ter sev­eral days of sort­ing through them noted that, “a ma­te­rial amount of sup­port­ing doc­u­men­ta­tion … was not in­cluded in the six file fold­ers pro­vided by the sher­iff’s of­fice.” It com­pleted its re­view of the par­tial doc­u­men­ta­tion re­gard­less, end­ing that pro­cess some­time in early Septem­ber.

Among the de­fi­cien­cies noted in the sum­mary was the fact that even though the K-9 fund listed five bank ac­counts that han­dled K-9 ac­tiv­ity, the in­for­ma­tion pro­vided by the sher­iff’s of­fice re­lated to only two.

In its find­ings, the au­di­tors noted that, “there is no for­mal set of doc­u­mented con­trols, pro­cesses or pro­ce­dures for the K-9 Fund.” Even af­ter ask­ing for in­for­ma­tion about the fund’s sys­tem of checks and bal­ances, noth­ing was pre­sented. From what the au­di­tors could de­ter­mine, only two peo­ple han­dled the ac­count — a book­keeper in the sher­iff’s of­fice and Lt. Harry McKin­ney, the long­time sher­iff deputy and founder and head of the K-9 Unit.

When the book­keeper was re­moved from the ac­counts, McKin­ney took over all re­spon­si­bil­ity of de­posits and with­drawals for the bank ac­counts, the au­di­tors wrote. He thus had au­thor­ity for both re­quest­ing and au­tho­riz­ing funds from the bank ac­counts.

The au­dit showed that the two bank ac­counts re­viewed showed de­posits of $64,790 in 2015, $61,438 in 2016, and $72,039 in 2017, for a to­tal three-year in­come of $198,268. The K-9 ac­counts showed pay­ments of $201,800 dur­ing the pe­riod, split es­sen­tially equally be­tween check pay­ments and credit card pur­chases. Those credit cards were listed un­der the names of Welsh and McKin­ney, who have had a long­time per­sonal re­la­tion­ship.

In con­nec­tion with the credit card ex­penses, the au­di­tors said they de­ter­mined that McKin­ney was “the main spend­ing user,” along with Welsh. But there did not ap­pear to be any au­tho­riza­tion pro­cess to use the K-9 funds via credit cards, in con­trast to the min­i­mal check-writ­ing over­sight be­tween McKin­ney and the of­fice book­keeper, Lee DiMat­tia.

“Based on the struc­ture noted, it ap­pears that Lt. Harry McKin­ney was both the ap­prover and the spender for the credit cards, giv­ing him unchecked con­trol and dis­cre­tion of how and when the funds were spent,” the sum­mary re­port states. It noted that of the $93,519 put on credit cards for the three-year pe­riod, only $52,836 was doc­u­mented, leav­ing $40,683 un­ac­counted for — most of which were billed by McKin­ney.

Of the $52,833 in credit card pur­chases the au­dit team was able to doc­u­ment, $5,290 went for “non-event meals,” $15,899 to di­rect K-9 ex­pen­di­tures, $22,654 to store pur­chases, $7,448 to travel and au­to­mo­bile ex­penses, and $1,540 in mem­ber­ship pay­ments.

“Due to the fact that only a ven­dor, date and amount was listed to the credit card sup­port for the pur­chases, the ap­pro­pri­ate­ness of many ex­pen­di­tures re­mains in ques­tion and in need of fur­ther ex­pla­na­tion,” the re­port states. “Also, it ap­pears that the di­rect K-9 ex­pen­di­tures were mainly for K-9 dogs un­der the con­trol of (McKin­ney) and not the rest of the K-9 Unit.”

The re­port fur­ther stated that $1,690 of the di­rect K-9 funds were spent on groom­ing ser­vices for McKin­ney’s dogs, in­clud­ing one, Roxy, which is not listed as a mem­ber of the K-9 Unit.

Au­di­tors iden­ti­fied sev­eral of the ex­pen­di­tures, such as the stay in Bal­ti­more dur­ing the 2015 Na­tional Sher­iff’s As­so­ci­a­tion Con­fer­ence or the pur­chase of the golf cart, or in­stal­la­tion of winches on the pri­vately owned pickup truck, that ap­peared to be per­sonal ex­penses and not K-9 re­lated. No re­im­burse­ment doc­u­ments were pro­vided.

Of the 23 items of con­cern pointed out in the re­port, the first is that the K-9 Fund did not ap­pear to be in com­pli­ance with state Depart­ment of State guide­line for or­ga­ni­za­tions so­lic­it­ing con­tri­bu­tions from state res­i­dents that to­tal more than $25,000 a year. It also noted that the fund did not ap­pear to be in com­pli­ance with fed­eral guide­lines.

Ad­di­tion­ally, even though some of the pur­chases from ven­dors were made tax-free, the K-9 fund was not a regis­tered char­i­ta­ble or­ga­ni­za­tion and thus did not hold tax-ex­empt sta­tus.

Also of note, the re­port states that funds that went to sup­port the K-9 unit, for pur­chase and in­sur­ance of the dogs, came from fed­eral and county tax dol­lars, and that de­spite Welsh’s in­sis­tence that the unit had brought $165,000 to county cof­fers since 2009, the county Fi­nance Depart­ment listed only $34,000 in pay­ments.

“This num­ber needs fur­ther ex­pla­na­tion and doc­u­men­ta­tion,” the re­port au­thors note.

In his com­ments on the re­port, Muth de­clined to ad­dress spe­cific ques­tions about in­di­vid­ual find­ings in the re­port, cit­ing the po­ten­tial in­ves­ti­ga­tions by the at­tor­ney gen­eral and U.S. at­tor­ney’s of­fice. He said, how­ever, that the sher­iff had re­tained an “in­de­pen­dent, pro­fes­sional au­di­tor” to re­view the records of what he re­ferred to as “the K-9 en­tity.”

“Un­like the con­troller, this au­di­tor took the time and ef­fort to con­duct a thor­ough and com­pre­hen­sive re­view of the records, the ac­tual re­ceipts, the ex­pen­di­tures, the credit card state­ments and the bank state­ments,” Muth said. “It was a real au­dit, not a cur­sory re­view with as­sump­tions of wrong­do­ing.”

Muth stated that the au­di­tor — whom he de­clined to iden­tify — con­cluded at least for the 2017 records he re­viewed thus far, “there was no wrong­do­ing, there was no self-deal­ing” and that there were no ex­pen­di­tures in­con­sis­tent with the broad ob­jec­tives of the fundrais­ing ef­forts con­ducted by mem­bers of the sher­iff’s of­fice.

Muth promised that when the au­di­tor’s work was com­pleted, it would be made avail­able to the public.

“Based on our eval­u­a­tion of the lim­ited doc­u­men­ta­tion we re­ceived, it did not ap­pear that the ma­jor­ity of the gen­er­ous do­na­tions re­ceived from well-mean­ing donors and spon­sors (of the K-9 Unit) were be­ing used for their in­tended pur­pose.” — Con­troller Mar­garet Reif


Ch­ester County Sher­iff Car­olyn “Bunny” Welsh


Ch­ester County Con­troller Mar­garet Reif

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