GOSHEN — Two years after learning of significant financial troubles at the Goshen Housing Authority, the agency’s board finally got a firm view of the financial picture through 2010 Thursday.
The audits of 2008 through 2010 “certainly confirmed what most of us here, all of us, believe may have occurred,” said Wayne Kramer, a recent addition to the board. “Accounting was certainly suspect, and that’s pretty obvious,” he said.
The audits of three years’ worth of financial activities at the agency is the latest step — a major one — in getting the housing authority back on track. It’s not the last step, though.
The audit didn’t get to the level of determining exactly where and when money was misspent and whether there was criminal wrongdoing, or just poor management.
Those answers would require a forensic audit, according to housing authority board members, and the agency doesn’t have the money to pay for one.
“Because there is suspected misuse, fraud, waste and abuse here, a forensic audit would bring more of that (information) to you and more concrete numbers,” said Pam Simpson, the auditor. She pointed out personal charges made by former employees on housing-authority-issued credit cards and expenditures for dog food, cat food, magazines and even cellular telephones for family members of former staff members. She also found that payroll advance loans to employees ended up skirting tax withholdings, and she found a suspicious loan for $6,000 from a contractor and a suspicious check to former director Bob Brenneman, an amount that went through six or seven accounts.
Since the authority doesn’t have the cash to pay for a forensic audit, they plan to ask the Indiana State Police about the status of their criminal investigation into some of the expenditures. No charges have yet been filed.
The police already turned the case over to the prosecutor’s office for possible charges.
“It’s still under review,” said Ed Windbigler, chief investigator with the Elkhart County Prosecutor’s office. “It’s quite lengthy. There’s a lot to it,” Windbigler said.
Prosecutors are looking at the case for possible theft charges, but no decisions have been made, he said. “It’s very complex,” Windbigler said.
The housing authority board is also contemplating asking the federal Office of Inspector General to look into the finances to see if federal prosecution might make sense.
The board learned two years ago from the U.S. Department of Housing and Urban Development that there were serious financial problems with the Goshen Housing Authority.
The board fired the executive director and took on a much more hands-on management role. The board, which has changed members completely over the last several years, started selling off assets, including the agency’s headquarters.
Last year the board entered into a joint consortium agreement with the Warsaw Housing Authority, and both operate out of headquarters in Milford now.
Earlier this year HUD called in $571,000 in missing funds, meaning the housing authority either had to cut its housing-assistance voucher program or raise the money. After much controversy, the Goshen City Council agreed to keep the program running by paying the balance of what wasn’t raised privately. The community reached out and donated more than $90,000 to help the program.
The housing authority board has already made some of the changes Simpson recommended, but she suggested formal, written internal controls on bookkeeping and applying those to the agency’s software, and separating out accounts.
The way the books were handled through 2010 showed “a significant number of problems,” Simpson said.
In 2010, the authority overspent its administrative funds by more than $333,000 and raided housing voucher funds, Simpson said. “You still had money, but you were using it improperly according to HUD guidelines,” she said.
The agency tried to move to a “paperless” office, but botched scans of many financial records, Simpson said.
Four members of the Goshen City Council and the mayor attended the housing authority’s meeting, and all expressed appreciation for the audits.
They agreed with the board that taxpayers need an explanation, but the trick is deciding whether the explanation comes from state or federal criminal investigations, or whether the housing authority pays for an audit or files lawsuits.
Kramer said, “even lacking criminal action, there is civil action that could be taken to recover this cost to taxpayers.”