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OFFICE OF THE DISTRICT OF
|December 13, 1995||2123||Norma Davis||$100.00||Gift Needy|
|December 13, 1995||2124||Leroy Thorpe||100.00||Gift Needy|
|December 13, 1995||2125||Doris Brooks||100.00||Gift Needy|
|December 13, 1995||2126||T. Henighan||100.00||Gift Needy|
|December 13, 1995||2127||L. Thomas||100.00||Gift Needy|
|March 14, 1996||2137||L. Thomas||400.00||Child in Trouble|
|April 17, 1996||2141||L. Thomas||500.00||Community Activities|
Source: ANC 2C quarterly financial reports and canceled checks.
|October 4, 1996||2157||Doris L. Brooks||23.00||Petty cash|
|November 6, 1996||2160||Norma Davis||160.00||Moving Office Furniture|
|December 5, 1996||2161||Leroy Thorpe||100.00||Gift for needy|
|December 5, 1996||2162||Doris Brooks||100.00||Gift for needy|
|December 5, 1996||2163||Lawrence Thomas||100.00||Gift needy|
|December 5, 1996||2164||Torrence Henighan||100.00||Gift needy|
|December 5, 1996||2165||Norma Davis||100.00||Gift needy|
Source: ANC 2C quarterly financial reports and canceled checks.
According to ANC 2C's chairperson, the $100 disbursements listed in Table I represented each commissioner's "share" of a $400 donation made to ANC 2C in December 1995 by the Law Firm of Wilkes, Artis, Hedrick and Lane (Law Firm) and a $200 donation made by one of the Law Firm's employees. (A discussion of the propriety of these donations is discussed later in this report).
Further, ANC 2C's chairperson stated that the $100 disbursements listed in Table II represented each commissioner's "share" of a donation of $400 by Wilkes, Artis, Hedrick, and Lane and a $100 donation from one of the Law Firm's employees.
In response to inquiries regarding these payments, two commissioners indicated that they purchased Christmas toys and gifts for ANC 2C neighborhood children. However, the ANC's files contained no receipts or invoices to support these purchases. Further, no documentation existed in the ANC's files that revealed the names of the children selected to receive the toys and gifts nor how the recipients were selected. A third commissioner indicated that he used the $100 to purchase refreshments for affairs held in the apartment building in which he lived. A fourth commissioner provided copies of hand-written receipts to the audit team. One receipt reflected a purchase of one pair of binoculars for $100 by Citizens Organized Patrol Efforts (COPE), a citizens group. The other receipt reflected a purchase of "anti-drug video surveillance" and banners for ANC-SMD 2C02. ANC 2C's minutes did not reflect the ANC's approval of these purchases. Further, the purchases were not consistent with the stated purpose of the donation which was "ANC Christmas gift needy". The remaining commissioner did not provide an explanation or documentation to support how he used the $100 disbursement.
All funds donated to an ANC must be used for public purposes. D. C. Code, Section 1264(1) states, in relevant part, the following:
"A Commission shall expend funds received through the annual allocation received pursuant to subsection (a) of this section, or other donated funds, for public purposes within the Commission area or for the functioning of the Commission office. . ." [Auditor's Emphasis]
Further, D.C. Code, Section 1-261(1) states the following:
"(1) No Commission may solicit or receive funds unless specifically authorized to do so by the Council, except that receipt of individual contributions of $400 or less need not be approved by the Council. No person shall make any contribution, nor shall a Commission receive any contribution from any person which, when aggregated with all other contributions received from that person, exceeds $400 per calendar year. Each Commission shall include in the Commission's annual report required pursuant to subsection (j) of this section a report of all contributions received in the previous fiscal year."
According to the Law Firm's employee, the $400 fiscal year 1996 contribution from the Law Firm and $200 contribution from the employee as well as the $400 fiscal year 1997 contribution from the Law Firm and $100 contribution from the employee were intentionally split to avoid triggering the requirement that the Council of the District of Columbia approve all contributions to ANCs of more than $400 per calendar year from any one "person". Notwithstanding questions regarding whether the contributions required Council approval, additional questions may be raised concerning whether the contributed funds were used for a public purpose that benefited the ANC 2C community as a whole.
Checks numbered 2137 for $400 and 2141 for $500 were made payable to "L. Thomas" (Mr. Lawrence Thomas) chairperson of ANC 2C. ANC 2C's files did not contain any receipts or invoices documenting how the funds were used or if they were used for a public purpose. Mr. Thomas provided the following verbal explanations regarding the funds he received:
Minutes of ANC 2C meetings did not reflect ANC 2C's approval of a disbursement to a family for assistance because of a fire loss. Further, minutes of ANC 2C meetings did not reflect that either of the disbursements to Mr. Thomas was approved by a majority of commissioners at a public meeting. The ANC's files did not contain a loan agreement or other documentation reflecting Mr. Thomas's agreement to repay the $500 loan in full. The ANC law does not authorize ANCs to make loans or permit commissioners to accept loans of ANC funds. ANC funds must be used for a public purpose and may not be used for private grants, loans, or personal subsistence expenses. D. C. Code, Section 1-264(1) states in relevant part the following:
". . . Funds allocated to the Commissions may not be used for a purpose that involves partisan political activity, personal subsistence expenses, Commissioner compensation..."
The Office of the Auditor has repeatedly informed ANCs in written correspondence, training sessions, and audit reports that the preferred procedure for purchasing goods and services with ANC funds is for the ANC to obtain a receipt or invoice from the vendor and pay the vendor directly for goods and services provided to the ANC. Presently, a significant number of ANCs permit commissioners to pay vendors with their personal funds and then seek reimbursement from the ANC, often without providing adequate documentation such as a receipt or invoice to support the reimbursement.
During the audit period, ANC 2C's officers did not follow the preferred procedure for disbursements totaling approximately $1,500 that were made to commissioners who had paid vendors with their personal funds. Minutes of ANC 2C meetings did not reflect that the expenditures were approved by a majority of ANC 2C commissioners. These disbursements represented undocumented and unapproved uses of ANC funds and the commissioners who received the funds must repay them to the ANC immediately or the ANC may ratify the disbursements. The Auditor will recommend deduction of the $1,500 from the ANC's next quarterly allotment in the absence of ANC approval and lack of supporting documentation.
During the review of ANC 2C's financial transactions for fiscal years 1996 and 1997, the Auditor identified three checks totaling $223 that were payable to and signed by ANC 2C's treasurer. The checks were counter-signed by ANC 2C's chairperson. The Auditor also identified an additional four checks totaling $1,100 which were payable to and signed by ANC 2C's chairperson. The checks were counter-signed by ANC 2C's treasurer. These disbursements were not approved by a majority of ANC 2C commissioners, and the treasurer and chairperson could not provide invoices or receipts that justified and supported the disbursements.
To ensure proper internal control over District funds, ANC officers should not sign ANC checks made payable to themselves. Instead, another ANC officer should sign the check after reviewing supporting documentation and verifying that the ANC has approved the disbursement. This procedure would allow at least two ANC officers, who are not payees on the check, the opportunity to review the supporting documentation and to ensure that the disbursement is proper and approved by a majority of commissioners in a public meeting.
ANC 2C commissioners must immediately discontinue the practice of writing checks directly to themselves for services performed by third parties. Rather, the ANC must pay its vendors directly for purchases of goods and services.
ANC officers who receive ANC funds by check must refrain from signing checks made payable to them. Other officers who were not involved in the transaction should counter-sign such checks.
ANC 2C's chairperson, Mr. Lawrence Thomas, must immediately repay the $500 loan that ANC 2C made to him, and the $400 unapproved disbursement made to him for a family victimized by a fire.
ANC 2C officers must not use ANC funds to provide loans to commissioners or any other individuals.
D. C. Code, Section 1-1462(i)(2) states the following:
"Members of Advisory Neighborhood Commissions shall be covered under the conflict of interest provisions of §1-1461."
D. C. Code, Section 1-1461(a) and (c) state the following:
"(a) The Congress declares that elective and public office is a public trust, and any effort to realize personal gain through official conduct is a violation of that trust.
(c) No person shall offer or give to a public official or a member of a public official's household, and no public official shall solicit or receive anything of value. including a gift. favor. service loan gratuity. discount. hospitality. political contribution. or promise of future employment. based on any understanding that such public official's official actions or judgment or vote would be influenced thereby, or where it could reasonably be inferred that the thing of value would influence the public official in the discharge of his or her duties. or as a reward, except for political contributions publicly reported pursuant to §1-1416 and transactions made in the ordinary course of business of the person offering or giving the thing of value." (Auditor's Emphasis)
Also, the Office of the Corporation Counsel issued an opinion regarding the circumstances under which a commissioner's actions could result in a violation of the District's conflict of interest law. An ANC commissioner asked the question: "Is it public corruption for a commissioner to accept lunches and other like materials from persons who come before the Commission for support?" In response to the question, the Office of the Corporation Counsel issued the following opinion dated March 27, 1991:
"ANC's should have conflict of interest provisions in their by-laws. Thus you should consult your ANC's by-laws to see if this situation is addressed there. If not, you should consider adopting rules addressing this situation. ANC commissioners are expressly covered by the conflict of interest provisions of D. C. Code, §1-1461 (1987). See D. C. Code §1-1462 (i) (2) (1987). Subsection (c) of D.C. Code §1-1461 provides:
No person shall offer or give to a public official or a member of a public official's household, and no public official shall solicit or receive anything of value, including a gift, favor, service, loan, gratuity, discount, hospitality, political contribution, or promise of future employment, based on any understanding that such public official's official actions or judgment or vote would be influenced thereby, or where it could reasonably be inferred that the thing of value would influence the public official in the discharge of his or her duties, or as a reward, except for political contributions publicly reported pursuant to §1-1416 and transactions made in the ordinary course of business of the person offering or giving the thing of value.
Thus, to establish a violation of this provision it is not necessary to prove that an ANC commissioner consciously took something of value in exchange for his or her vote. All that need be established is that the acceptance of the thing of value by the ANC commissioner created a reasonable inference that his or her vote was thereby influenced."
Another question posed to the Office of the Corporation Counsel stated the following: "Can ANC's accept free rent from a developer in exchange for voting against the community and in favor of the developer?" In response, the Corporation Counsel stated that:
"No law specifically addresses this situation. D. C. Code §1-1461 applies to situations involving a public official's selling his or her vote for personal gain. However, the conflict of interest inherent in such a situation is obvious, and would tend to weaken the persuasiveness of the position taken."
By check dated December 13, 1995, the Law Firm of Wilkes, Artis, Hedrick and Lane donated $400 to ANC 2C, and an employee of the Law Firm, Mr. Norman M. Glasgow Jr., also donated $200 to ANC 2C. On the same date, the treasurer and chairperson of ANC 2C signed ANC checks disbursing $ 100 to each ANC 2C commissioner. The purpose noted on each check simply stated "ANC Christmas gift needy."
During fiscal year 1997, the Law Firm donated another $400 to ANC 2C and Mr. Glasgow donated $100. The audit team was not able to read the date on the copy of the check from the Law Firm, however, Mr. Glasgow's check was dated December 4, 1996. The ANC's treasurer and chairperson disbursed $100 to each ANC 2C commissioner by checks dated December 5,1996. The purpose written on each check simply stated "gift needy."
The donations to ANC 2C, as a whole, appeared to have been made at the rate of $100 per commissioner. In December 1995, ANC 2C consisted of 6 commissioners. At that time, Mr. Glasgow and the Law Firm donated a total of $600 to ANC 2C. A check for $100 was written to each commissioner from ANC 2C's account. However, one commissioner, Ms. Sallie Wilson, did not cash the check made payable to her and this check was subsequently voided by the ANC. As a result, only $500 of the $600 in donations were actually received by five of the six commissioners.
In December 1996, when $500 in donations were made to ANC 2C, the ANC consisted of six commissioners, however, only five of the commissioners attended ANC 2C meetings. The ANC's treasurer and chairperson issued an ANC 2C check for $100 to each of the five commissioners. As noted earlier in this report, the ANC's files for fiscal years 1996 and 1997 did not contain any documentation which justified the commissioners receipt of these funds and described how the funds were actually used by each recipient.
ANC 2C's files did not contain any correspondence or explanation regarding the purpose of the donations. However, minutes of a December 5, 1997 ANC 2C meeting reflected that:
"Mr. Glagskow [sic] presented a check to the commissioners for contributions for the single member district for Christmas each person would receive $100 dollars a pierce.[sic]"
ANC 2C's bank account was closed as of December 31, 1997 and a review of its bank statement for December 1997 (fiscal year 1998) did not reflect any deposits to the ANC's account. Therefore, the audit team could not determine if ANC 2C commissioners received any donations in fiscal year 1998.
The audit team spoke with Mr. Glasgow regarding donations made to the ANC in fiscal years 1996 and 1997. He stated that he and the Law Firm made donations to ANC 2C because they were aware of the ANC's work. Mr. Glasgow indicated that the donations were to be used to assist needy ANC 2C community residents. Further, Mr. Glasgow indicated that the Law Firm donated only $400 while he donated the additional amounts because they were aware of the provisions of D.C. Code, Section 1-261(1). This provision of the ANC Law requires the ANC to obtain specific authorization from the Council of the District of Columbia before receiving individual contributions in excess of $400.
A review of available minutes of ANC 2C meetings reflected several occasions when Mr. Glasgow requested ANC 2C's support for various zoning issues. Some of the issues included: (1 )" the proposed amendments to the Downtown Development District regarding the use to be permitted in buildings which formerly housed department stores, "(2) the Zoning Map to allow the Bibleway Church to proceed with Golden Rule Plaza, the churches project to develop housing for senior citizens and a community center." Minutes of ANC 2C meetings included specific instances in which Mr. Glasgow requested the ANC's support on certain issues. The minutes also included the ANC's action with regard to these requests. The following presents meeting dates, requests made by Mr. Glasgow for support, and actions taken by ANC 2C commissioners:
"Mr. Glasgow stated on Square N-1 he would like
the support of quorum to vote on his project.
"Mr. Glagsow [sic] presented to the commissioners
the land mark closing of L Street. Mr. Glagsow [sic] wanted the commissioners to vote on
the designation of the L'Fant [sic] Plan Action.
"Mr. Glagskow [sic] gave an up date on the Opera
Project. He ask [sic] the commissioners to support the project of the modify projecy that
It appears that ANC 2C commissioners violated conflict of interest provisions when: ( 1 ) the ANC accepted donations from a Law Firm and one of its employees who had requested the ANC's support on certain zoning issues; (2) the ANC disbursed the donations to individual commissioners; (3) commissioners accepted the donated funds; (4) commissioners asserted that they disbursed the donated funds for public purposes but could not provide adequate documentation to support how the funds were actually used; and (5) commissioners voted to support the issues raised by the Law Firm and its employee.
Based on the conflict of interest concerns raised by these transactions, the Office of the Auditor will refer this matter to the Office of Campaign Finance for further review.
ANC 2C violated D.C. Code, Section 1-264(m) which states that:
"A grant approved by a Commission shall provide a benefit that is public in nature and that benefits persons who reside or work within the Commission area. A grant to an individual shall be prohibited as a non- public purpose expenditure. A Commission shall adopt guidelines for the consideration and award of grants that shall include a provision that requires the proposed grantee to present the request for a grant at a public meeting of the Commission. A grant may not be awarded unless the grant is awarded pursuant to a vote of the Commission at a public meeting. The award of a grant by a Commission shall not be conditioned on support for a position taken by the Commission."
During the audit period, ANC 2C disbursed $750 in grants. The grants violated the ANC law as follows: 1) the ANC did not adopt grant guidelines for the consideration and award of grants; 2) a grant was made to an individual; and 3) minutes were not available to reflect the ANC's approval of the grants. Further, the ANC did not have sufficient documentation that would enable the Auditor to determine whether the grants provided a public benefit to persons who resided or worked within the Commission area.
Table III below presents disbursements for grants for fiscal year 1996.
|December 13, 1995||2122||Cope, Inc.||$250.00|
|June 5, 1996||2145||American Theater Project||250.00|
|July 22, 1996||2148||COPE||50.00|
|August 7, 1996||2151||S. Mathews||200.00|
Source: ANC 2C quarterly financial reports and canceled checks
The minutes of ANC 2C's meeting on June 5, 1996 indicated that the ANC discussed the American Theater Project. However, the minutes do not indicate that the ANC approved a grant to this organization.
According to the minutes of ANC 2C's August 7, 1996 meeting, $200 was approved as a donation toward a "youth that's going to the Democratic Convention." The grant was disbursed to Derek Mathews and violated D.C. Code, Section 1-264(m) because it was payable to an individual and was prohibited as a non-public purpose, partisan political activity expenditure. D.C. Code, 1264 (1) states in relevant part the following:
". . . Funds allocated to the Commissions may not be used for a purpose that involves partisan political activity. . . "
The ANC's files did contain a grant request letter from the then treasurer of COPE, Inc. requesting $250 to purchase anti-drug caps identifying the anti-drug group, and to purchase plaques and certificates. However, available minutes of ANC 2C's meetings did not indicate that the ANC approved any disbursements to COPE. Also, the ANC's files did not contain a grant request letter for the $50 grant to COPE which was disbursed on July 22, 1996, and did not contain minutes indicating the ANC's approval of the disbursement.
ANC 2C's records did not reflect that any grants were issued in fiscal years 1997 and 1998.
ANC 2C officers did not ensure that all disbursements complied with the provisions of the Advisory Neighborhood Commission Act of 1975, as amended, ANC legal opinions issued by the Office of the Corporation Counsel, and Financial Guidelines and Procedures issued by the Office of the District of Columbia Auditor.
Further, ANC 2C's internal controls were inadequate to safeguard its assets and records, and did not ensure that its financial data was reliable and its transactions legally credible. ANC 2C's recordkeeping measures were inadequate. As consequence, the ANC lacked the necessary supporting documentation to ensure that its disbursements were valid and legitimate, and that ANC funds were used only for public purposes.
The ANC's acceptance and distribution to commissioners of donations from Wilkes, Artis, Hedrick and Lane and one of the Law Firm's employees appears to have violated the District's conflict of interest provisions. Therefore, the Auditor has recommended that this matter be reviewed by the Office of Campaign Finance.
ANC 2C officers and commissioners must comply with applicable laws, Corporation Counsel opinions, and Financial Guidelines and Procedures issued by the Office of the Auditor. The ANC must establish effective controls over its assets and financial data. Further, the ANC must obtain and maintain documentation in its files to support all of its disbursements.
Deborah K. Nichols
Interim District of Columbia Auditor
1. Purchase of Services is defined as a service provided by a consultant or services obtained on a contractual basis.
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