Sunday, December 15, 2013

Ousted city phone boss deals facts on budget fraud

Federal securities cops opened case in May

Former phone chief estimates 25 percent of 9-1-1 calls failed 
Third In A Series
I had a $5 million annual budget, but my department never had any money.” - John Foddrill 

San Antonio – Though his attorneys have long advised him to stay silent, a whistleblower came forward with explosive evidence passed over in a public integrity trial 6 years ago, and it involves the kind of hard-edged facts that can cause police officers and firemen to lose their certification, lawyers their licenses to practice, and accountants their privileges to certify the audits they perform.

Former Telecommunications Manager John Foddrill says his former boss, San Antonio's Municipal Integrity Manager, and a man who now serves as a Deputy City manager all lied about a 30-year program of “massive long-term theft and fraud” involving the $5.2 million “variable” account designated to pay the city's phone bill.

Foddrill is the plaintiff in a federal suit against his former employer alleging mistreatment over his efforts to reveal fraudulent accounting practices in the city's Information Technology budget and payment process. He alleges a long-term campaign of harassment that cost him his job, a lot of mental anguish, terroristic threats and police allegations that proved false.
He has a smoking gun in the form of a long-secret e-mail that serves as a Rosetta Stone that he says translates exactly how city managers concealed a method of accounting which has enabled the misapplication of funds and misallocation of payments for anything and practically everything besides that for which they are dedicated – telecommunications service and equipment

The illegal procedure diagram shows the secret, criminal process where millions of dollars a year of non-telephone, non-grant related documents/invoices were knowingly processed by corrupt IT employees/officials in an effort to gain access to upwards of $5.2 million a year for the past three decades, was shown on audits and statements that the money was used to pay for monthly telephone costs, but this was a lie and accounting fraud...”

Accountants who sign off on audits submitted to credit rating bureaus such as Moody's, bond investors, and prepare reports for government grant administrators have been operating in collusion, according to Foddrill.

When the fraudulent audits are submitted to grantors and bond investors, it becomes grant and bond fraud as state/federal agencies and municipal bond investors are being defrauded and are never told the massive long-term theft and fraud. The SEC opened up a tracking case in May of this year after we reported the bond fraud to them.”

In a pair of 2005 e-mails between Municipal Integrity Manager Virginia Ann Quinn and Hugh Miller, Foddrill revealed in information packets distributed to social media writers late this past week, Ms. Quinn “lies when she states that no laws were broken...” He further alleges that a February Whistleblower trial lost traction when she “lied under oath in hide the crimes.”

The e-mail's addressee, City Information Technology Director Hugh Miller, “helped coach city witnesses,” and Peter Zanoni, who is now a Deputy City Manager, “lied under oath at my trial as the City's Budget Director to hide the crimes.”

Those crimes, according to Foddrill, are concealed in a complicated system of paying for telephone services and equipment known as “the variable.”

In the November 29, 2005 exchange of e-mail memos, an IT department employee named Michael Armstrong thanked Ms. Quinn for her assistance in deciphering what for him was an incomprehensible jumble:
As a relative newcomer, the existence of variable accounts came as a surprise to me. We will be working with staff and Management and budget to make sure ITSD is operated in a sound, businesslike manner. The information will be useful to me as I consider what should be the appropriate methodology for funding IT activities in the City. I agree that our entire billing system is in disarray, and has been for some time. We are working to bring that under control but I'm not sure that internal billing as it exists in ITSD provides much value for the City.”
So, what is the “variable”?

Ms. Quinn explained that, though the investigation based on complaints from Foddrill had been concluded, the case file closed due to “lack of evidence/unfounded,” she needed to “close the loop with you...and communicate our finding on one particular area of concern.”

In interviews with current and former staff, she explained, investigators had discovered that “the telephone 'variable' charge that was established approximately 25 years ago” had been a part of the ITSD budget process ever since.

In those days, each department paid its own phone bill, but when Ma Bell started complaining about the confusion, “ITSD instituted the 'variable' because they didn't know how much the telephone costs would be in any given month.”

Over time, four variables were established, the largest among them the phone account.

Ms. Quinn memorandized, “We established that the telephone variable has been used to pay for items completely unrelated to City telephones. Those things included: The ITSD trophy case, training for ITSD personnel, remodeling at ITSD, numerous department-specific purchases, and date equipment for the City network. If, during the course of the year, any single department incurred a large unbudgeted cost item, it was likely that the variable would be tapped so that the cost of this item could be spread across City departments. Because City departments were essentially powerless to protest the charge, the practice has continued. The largely unsupervised and unregulated billing of departments across the City under the guise of the telephone 'variable' for the past 25 years has resulted in the department having been billed for an untold amount of goods and services from which their department received no benefit or for costs that rightfully should have been borne by ITSD.”

That's putting it mildly, according to Foddrill. By his calculations, he has charted the way untold millions upon millions of dollars have been siphoned off the variable to pay for “illegal costs added to variable.”

They include “costs not associated with grants; costs not associated with telephones; contracts not approved by city council; IG services company time sheets/extra hours; purchases not approved/not in budget/secret; credit extended for secret/non-approved purchases/money.”

To complicate matters, he has pointed out to the SEC and other government hounds, investors who rely on fraudulent reports turned over to credit rating agencies get ripped off by getting paid a much smaller rate on tax-free muni bonds; grant auditors are fooled into paying for a lot of things not covered by the terms of the grant, and taxpayers take it in the shorts for outright subversion of a carefully orchestrated budget process promulgated by city budget regulation 6.12, state laws, and federal regulations.

Foddrill included a complain naming namest to the State Board of Accountancy and enclosed copies to all major accounting firms in the area, put in a jingle to the FBI, and has sent all his material to every major media and social media outlet in the region.

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