More details emerge about Reichert House financial irregularities
BY JENNIFER CABRERA / NOVEMBER 16, 2019
We’re still waiting for Part B of the Reichert House audit to be completed. Part A was presented in April and described a lack of financial controls. Part B was postponed because some nonprofits that received funds intended for the Reichert House Youth Academy argued that their records were not subject to a city audit. The nonprofits did eventually provide a number of documents, which were given to local CPA firm Carr, Riggs, and Ingram for examination.
We now have a better idea what may be found in Part B. Former City Auditor Carlos Holt wrote a letter to State Senator Keith Perry in September, which was included in the backup for Thursday’s Joint Legislative Audit Committee meeting.
In the letter, Holt said that the Department of Justice is pursuing an internal investigation into an application by Reichert House Youth Academy for a $20,000 federal grant from the National Police Athletic League (which distributes funds provided by the Department of Justice). Reichert House Youth Academy, which is part of the city because it’s a subdivision of the Gainesville Police Department, applied for the grant under the organization name Gainesville Police Athletic/Activities League (“Gainesville PAL, Inc.”), which doesn’t exist in SunBiz (the State of Florida’s business registry). The application also used the City’s Dun & Bradstreet (DUNs) number and Employer Identification Number (EIN).
The grant funds were provided by a check made out to Gainesville Police Department. Instead of depositing the check, the audit found that emails were sent from Reichert House Youth Academy to the National Police Athletic League, requesting that they take back the check and reissue it to Palm Breeze Youth Services. The audit reported that the check was reissued to Palm Breeze Youth Services, a private 501(c)3 that does not have a contractual agreement with the City or any entity of the City.
In the yet-to-be-issued Part B engagement, documents that were turned over by Palm Breeze are to be classified and categorized; we will know more when the report is released, but Holt’s letter says that “a cursory review” showed the grant was used to pay “mentors” for their time.
These checks were in amounts such as $4000 and $5000; no taxes were withheld, and no IRS Form 1099s were filed by Palm Breeze Youth Services to report the income to the IRS. Holt stated in the letter that he reported all of these irregularities to the Department of Justice, which opened an internal investigation to determine why National PAL reissued the check and why they granted funds that were applied for under an organization that didn’t exist and didn’t match the DUNs and EIN numbers that were used.
Also, the Director of the Reichert House Youth Academy submitted duplicate travel expense reports for “the National PAL grant recipient training” to both National PAL and to the City, totaling $1318.94. The audit stated that it appeared that the City employee was reimbursed twice.
In addition, the audit found that “donation” checks from Gainesville Regional Utilities (made to Reichert House Inc., not Reichert House Youth Academy) were deposited to an unknown bank account (the owner of the account had still not been identified when Holt was fired).
Holt’s letter goes on: “To further complicate matters, the GPD Police Chief is the Registered Agent for the Palm Breeze Youth Academy 501; while city employee J. Alexander, the REICHERT HOUSE YOUTH ACADEMY Director, is the Registered Agent for Reichert House Inc. (a 501) and the GPD Police Chief is a Director of 501(c)(3) Reichert House Inc.”
What an interesting turn of events. Mr. Holt may have exposed the wrong group.