NassauCountyNY.gov
County Comptroller's OfficeSeptember 4, 2008Comptroller Weitzman: 'Agency for troubled youth overcharged Nassau County $834,000'Double bills Nassau and other counties for same servicesAn audit released today by Nassau County Comptroller Howard Weitzman revealed that an agency serving troubled youth overcharged Nassau County taxpayers $834,000. The bulk of the overbilling—$426,000—was the result of a scheme under which the agency billed other counties for the use of beds in a group home already being paid for by Nassau County.
Leadership Training Institute (LTI), a not-for-profit agency, pocketed money from other counties, which should have gone to Nassau County. Other overbilling abuses included charging Nassau County $286,000 for salaries that should have been charged to LTI's other programs; $51,000 for bonuses paid to LTI employees; and approximately $71,000 in other improper charges, such as violent video games and beer.
"It is outrageous that Nassau County taxpayers have been ripped off by the management of the Leadership Training Institute," said Comptroller Weitzman. "Deeply troubling is that the agency misused funds that could have gone to help our troubled youth. The economic slowdown is putting enormous strains on our budget and funding for important social services programs is in short supply."
The Comptroller's audit covered the years 2003 – 2006 and examined three LTI programs for troubled youth. The most significant findings involved a group home in the Hempstead community that provided non-secure detention for children aged 10-16, known as "Project 29". The limited scope financial audit did not review the quality of LTI's services. LTI's annual expense budget for 2006 was approximately $2.3 million; since 2003, the County's funding to LTI has grown from $1.5 M (54.9% of LTI's expenses) to $1.8M (82.2%) in 2006. LTI's IRS filings for 2003-2006 showed a profit of $714,642.
Double billing schemeThe County's Department of Social Services (DSS) and LTI had an agreement that eight out of the 12 beds in the Project 29 group home were to be reserved for Nassau County children. According to the agreement, if LTI allowed any other county to use any of the "Nassau County only beds" it was to seek approval first and then DSS would bill the other counties for the beds. Unfortunately, LTI never told Nassau when other counties used the beds and pocketed the money instead. For 2004 through 2006 this amounted to over $110,000.
In addition to the agreement to reserve Nassau County beds, in 2005 Nassau began reimbursing 100% of the group home's expenses. However, auditors found that LTI was also charging $316,000 to Albany, Westchester and other counties to house their children, even though all the group home's expenses had already been paid by Nassau. In addition, LTI charged Nassau for food, doctor's visits, bowling trips, cash incentives for good behavior and haircuts for children from other counties. During one month LTI billed Nassau for over $47,690, including $892 in food bills and $313 in gas bills, even though not one Nassau County child had stayed at the home.
"Any money LTI received from housing out-of-county children should have been paid to Nassau County, but instead, the agency kept the money," Weitzman said.
The other counties paid a per diem of $282 for each day a child was in residence. Nassau County paid all the group home's expenses but only used the group home 35% of the available time between June 2005 – December 31, 2006. Nassau's payments were the equivalent of $2,000 per child, per day.
"Why should our taxpayers pay $2,000 a day for services other counties were only paying $282 for?" asked Weitzman. "You don't have to call Price Line to know that it's a bad deal."
"Donated" timeThe agency also billed the County $286,000 for salary and fringe benefits that should have been billed to non-County programs. The agency's executive director, who earned over $180,000, billed 100% of his salary to the Nassau County-funded programs and "donated" the time he worked on non-Nassau County programs. The financial officer, acting as deputy executive director, charged the County 90% of her salary.
In response to the audit, the agency claimed its two highest paid employees routinely donated their services to the agency's other programs, but received full salaries when Nassau County paid the bills.
"It's absurd that they would think Nassau County should be footing the whole bill," Weitzman said.
Employee bonusesIn December of 2003, 27 other employees received bonuses totaling $47,865. Eleven of the bonuses, totaling $22,232, were charged to a County-funded program, even though, according to payroll records, none of the 11 employees worked there. The executive director told auditors that the bonuses for the 27 employees were "salary adjustments." However, payroll records showed no change in the salaries of the 27 employees in subsequent pay periods and there was no supporting documentation to show how these bonuses were determined.
"Under no circumstances should a 'bonus payment' have been charged as a reimbursable expense," Weitzman said. "These charges were improper, especially considering the fact that 11 of these employees didn't even work on County-funded programs."
The audit also found several conflicts of interest with the executive director's duties. His daughter was employed by the agency and he also determined her salary and bonus payment and approved her time sheets. The agency's financial officer also had relatives working at LTI.
Other inappropriate billingAuditors found LTI billed Nassau over $71,000 in other inappropriate expenses, including over $2,800 for two X-Box 360 video systems, games and accessories, including the purchase of mature-rated video games and a R-rated movie ("Saw II"); $985 for an eye doctor visit and eyeglasses for the executive director (the only employee to get these reimbursements); four Bluetooth hands free sets; magazine and newspaper subscriptions, which were delivered to the executive director's house; a luggage cart rental fee and gas expenses for the executive director's trip to California; a University Club membership fee of $103 paid to Hofstra University for the executive director; $752 for coffee and soda, which the children were not even allowed to drink; and a disconnected phone line for a dentist's 1-800 number that the agency continued to pay for until auditors brought it to LTI's attention.
"It is paramount for any agency that contracts with Nassau County operate with accountability and honesty," said Weitzman. "Every dollar of funding should be targeted to helping troubled Nassau County youngsters and making their lives better."
The Comptroller's Office discussed the findings with DSS, the County Attorney's Office and the County District Attorney's Office, as the audit proceeded. The completed audit has been forwarded to the District Attorney's Office, consistent with the Comptroller's routine practice.
PDF File:
LTI Audit Report (92 pp)
