Memo: Money flowed, no questions asked
A former Department of Social Services employee at the center of a charity probe says the county advanced her as much as $198,000 since 2005 with the approval of her supervisors.
The county checks, which she deposited in her personal bank account, were meant to provide gifts for needy children, according to an internal memo the Observer obtained. The 74-page document was written by Cindy Brady, the former DSS employee who ran the Giving Tree charity.
The document paints the defunct charity in more detail than the county has released publicly. It also raises new questions about the investigation, which the county has turned over to police.
The county has never publicly identified Brady or released the full internal audit of the Giving Tree, which the county maintains are both prohibited under personnel law.
The county also has said that all expenditures were accounted for - a fact that the former internal audit director now disputes. Cornita Spears, who was disciplined for a flawed review of the Giving Tree, says the county can't be sure of how $108,000 of $162,000 was spent in 2008.
Brady said the investigation has focused on her spending, which she defended as appropriate. But she acknowledged she fell behind in collecting receipts last year, and some were handwritten, damaged or lost.
Her memo and statements from current and former employees describe a popular Christmas charity that operated for years without accepted standards or accountability. The county has said DSS has not been audited comprehensively since 1996.
The memo, dated July 29, was sent to a county human resources manager, but it's unclear who read it and when.
County spokesman Danny Diehl would not say if County Manager Harry Jones has read it, citing personnel law. Three county commissioners listed as recipients said they have not seen it.
Former Internal Audit Director Spears said she first received the document in November, five months after she released her audit of the program.
Spears said Brady's memo had enough evidence to cause her to revise her June report, and she now says she wishes she had seen it earlier. Spears said personnel rules prevented her from interviewing Brady. Brady wrote in the memo that she wanted to talk but was "given no opportunity for input or clarification."
She said in her memo that some receipts were either lost in a rainstorm or shredded by her dog. Original receipts also remain missing, including some for more than $2,200 spent for the charity at an Old Navy store, the document says.
The county has asked the Charlotte-Mecklenburg Police to investigate the Giving Tree and help retrieve receipts from vendors.
Contacted by the Observer, current and former DSS administrators named in the memo supported Brady's description of how the program operated, though one former director said fiscal controls were appropriate under his watch.
Brady's attorney has said Brady is cooperating with a police investigation. Brady, a 20-year county social worker who retired in August, declined to comment for this story.
Suspicious Spending
Organizers launched the Giving Tree nearly two decades ago to provide toys, clothing and other gifts to foster children.
The program relied on donations of money and gifts. Past supporters include Second String Santa, Young Lawyers, employees of Wachovia and Bank of America and Project Joy, a fundraiser set up by Observer columnist Tommy Tomlinson. Brady said financial contributions began to grow after Tomlinson became involved.
Officials collected more than 8,400 gifts last Christmas.
But Department of Social Services Director Mary Wilson got a tip earlier this year about suspicious spending and ordered financial audits of the Giving Tree and other programs. Wilson declined to comment through a spokesperson.
E-mails previously obtained by the Observer have shown officials suspected an employee received $80,000 in checks from Giving Tree donations.
Officials also investigated whether an employee's sister got money to buy gifts. Questions were also raised over purchases of diamond earrings, leather coats and a DVD player.
Auditors found numerous accounting failures across the department. County officials suspended some programs and put the agency's finances under direct county control. Officials retrained workers on accounting rules, including the use of restricted purchasing cards.
More Oversight
County records show the Department of Social Services wrote checks to Brady totaling more than $176,000 during a three-year period that ended in June 2009. Brady's memo reflects that about $126,000 was for the Christmas program last year, but the county records didn't say how much of the remaining money was for the charity.
The agency also gave another woman about $8,000, records show. Brady's memo identifies her as the sister of an administrator who helped oversee the Giving Tree.
The administrator's sister used her employee discount at Belk Department Store in Brevard, in Western North Carolina, to purchase gifts for the charity, according to the memo and an accompanying letter from the store's manager.
The woman could not be reached for comment.
Jones said officials have strengthened supervisory oversight and clarified employee rules, responsibilities and requirements.
Ward Simmons is a citizen member of the county commission's Audit Review Committee, which investigated accounting failures in DSS. He said that regardless of whether the county explicitly spells out procedures for handling donations, employees have a responsibility to remain diligent in bookkeeping.
"There exist certain standards of prudent behavior that any employee who handles money should adhere to," Simmons said. "If someone else is not using good judgment it's not a license for a second person to do the same."
Lost, damaged receipts
Brady's report contains photocopies of checks she returned to the county, pictures of torn store receipts, a detailed accounting of more than 40 transactions, and her positive performance evaluations.
Her memo says 10 bags of clothing were purchased at an Old Navy store for $2,222. The clothes were put in a room with donated toys, but the original receipts are lost, she said.
Brady wrote that receipts were lost or damaged on hundreds of dollars worth of items from Belk, Coldwater Creek, Target and Kohl's.
Brady also wrote that for years workers did not inventory donated items individually. Storage rooms contained jewelry, music players, a home theater system and toys. She defended purchasing expensive items, saying some children overcame obstacles to graduate from high school, college or find a job.
Brady said she asked the county in February to do an inventory of the items stored at Walton Plaza, a government building on the edge of uptown.
But she said she received a phone call days later from another social worker who told her a county auditor looked at a room of clothing and said she wasn't going to inventory the items because there was "too much stuff," the memo states.
Diehl said items bought with Giving Tree donations are secure and DSS staff conducted an inventory after the audit.
Brady said after a February meeting where she was first questioned about Giving Tree spending, she was told to bring in receipts showing how money advanced to her was spent.
In the following weeks, she said she kept updating the information, and returned $33,000 in money that she hadn't spent.
Internal Audit
Spears, the former internal audit director, recently said her June report on the Giving Tree failed to account for money returned by Brady. Spears was suspended last month after acknowledging the error. At the time, Jones said the auditor failed to consider information that had been available before the June report.
Spears said she discovered the oversight after receiving the Brady memo on Nov. 11 from someone in the county manager's office who asked her to review it.
There are "inconsistencies" between the information used to conduct the audit and statements contained in Brady's memo, Spears said.
One example, she said, involves an $11,000 check Brady wrote to the county. Spears said in an interview she was informed that the check was for repayment of personal purchases.
But Brady's memo states that $10,000 of the amount was unspent money from the program, Spears said.
She said she performed a thorough investigation, given the circumstances. It would have been helpful, Spears said, to interview Brady for "clarification" on some issues.
Brady said she was placed on nondisciplinary suspension in February. On March 9, she was placed on medical leave and remained on leave until she retired.
Diehl, the county spokesman, said the county typically tries to contact workers involved in internal audits or human resources investigations.
But he said exceptions may be granted in some cases, such as if an employee is on leave. "Requiring an employee on leave to participate in work-related functions, including investigation interviews, would constitute a county violation of the employee's leave status," Diehl wrote in the county statement.
In recent weeks, Jones and some county commissioners have said the Giving Tree investigation has been handled appropriately.
County commission chairman Jennifer Roberts said she is confident in Jones' assessment that the county knows how last year's donations were spent. She said the county has receipts, possession of items purchased, and returned checks.
But Roberts acknowledged that some receipts may have been altered and have missing dates and store names.
Commissioner Bill James said statements in Spears' audit report about the poor condition of receipts or other documentation makes it inaccurate to say the county has accounted for all of the expenditures. "The central question I have asked since this started was how much of the $162,000 made it to the children or needy," James said. "That question hasn't been answered."
Asked about questions that the county can account for all of last year's donations, Spears said: "From an auditing standpoint, it's not accounted for. You have to have reliable documentation."
Scapegoat?
The Observer sought comment from the roughly two dozen current and former DSS employees named in the memo. Most declined to comment or could not be reached.
Five corroborated Brady's account. None said they witnessed any wrongdoing in the program.
Polly Needham, a former DSS administrator who helped oversee the Giving Tree, said she anticipates that police will interview her. In her eight years with the program, Needham said DSS finance administrators always approved how Brady and others handled donations.
"Cindy is an honest person," Needham said. "We tried to follow the rules."
Robert McCarter, a former DSS attorney and volunteer for the Christmas charity, said he believes DSS is trying to cover up how little oversight the agency provided the program.
"There was no accounting," McCarter said. "This is the county finding a scapegoat and it is Cindy."
Darryl German, an administrative assistant for DSS who volunteered with the Giving Tree program for five years, said Brady still has broad support in the agency and many people are angry over her departure.
"I have never seen anything at all" that would be considered inappropriate, German said. "It's all been blown out of proportion."
For years, he said the program operated without any complaints about how donations and money were handled. German said it was "common" for employees to receive advance money to purchase items for clients and then submit receipts.
The county no longer runs the program, which has been taken over by the Salvation Army, but he said residents still call to inquire about donating items.
Donald Bynum, who led the Giving Tree program in the early 1990s, said he is sure Brady handled donations appropriately, but disagreed with her description of lax accounting.
In 1992, members of Second String Santa, a nonprofit that holds an annual fundraiser benefiting the program, questioned how donations were handled and feared they did not reach foster children, Bynum said. The group threatened to stop giving donations to the program, he said.
Bynum said he responded by implementing a new inventory system and making sure gifts were placed in a secure area. Organizers then compiled a report each year to show Second String Santa how donations were used, he said.
"I was proud of how we handled the program," Bynum said.
Brady wrote that she was also proud of her work. She cited a passage from a performance evaluation that said "she is an excellent ambassador for the agency."
"My job was to do what I could to get the most we could for our children with the money we had to spend," Brady wrote. "It was someone else's job to monitor the financial end of the process."
Brady memo tells of surprise questioning
Cindy Brady said she was off work one day when an administrator told her she needed to come in hours later to meet with human resources.
The administrator wouldn't tell her what the meeting was about, Brady said.
But when she arrived, Brady said, she was confronted about $80,000 in checks written to her last year. Brady said she replied the money was for the Giving Tree charity, then was pressed for details about the program that gave gifts to needy children.
A third manager in the room "continued to repeat over and over that $80,000 was a lot of money" despite her explanations, according to an internal memo written by Brady and obtained by the Observer.
"It soon became apparent to me that this meeting was more accusatory than information seeking," Brady wrote.
Brady wrote that she was told to bring in receipts to show how she spent the money by 8 a.m. the next day, and described a hurried attempt that night to collect them. The task was made more difficult, she wrote, because some receipts had been damaged or lost months before.
The account offers a new glimpse into the months-long investigation into the Giving Tree, a probe that started after an employee raised questions about money spent after last Christmas. Brady's document says since early 2008 she had been advanced about $120,000 with the approval of her supervisors.
Two employees were suspended early on in the probe, though one was later reinstated. The county has never publicly identified the pair, citing state personnel laws.
But Brady writes she was suspended in late February, more than a week after the confrontation about the checks. She later went on medical leave, and retired in August from her post as a social work supervisor.
Brady said the memo was written in response to a recommended firing - and was her first chance to give a lengthy response to the investigation.
Some DSS administrators named in the report, including those Brady said were involved in the February meeting, either declined to comment or didn't return calls.
Brady said she began work as a volunteer with the Giving Tree years ago, then started tracking donations and children served in 2004.
She alleges the charity operated without written policies and procedures. Administrators, she says, were aware of how she and volunteers operated and praised its successes. But Brady said they never offered any assistance or oversight.
Support grew, from about 250 gifts received in early years to more than 8,400 in 2008.
Donors also gave money that was used to buy more gifts.
At one time, Brady would spend her own money to buy items and then ask for reimbursement, said Beverly Hinson, a DSS administrator who helped run the Giving Tree. But as the practice became difficult, the county made out checks directly to some retailers. Some stores refused the checks, Hinson said.
Brady said she and a former supervisor agreed to advance her money, then have Brady turn in receipts to back up the purchases.
As the program grew, Brady asked for more help running the program. But she and Hinson said none came.
Brady said demands of her full-time job grew more hectic last year. She fell behind in turning in receipts for the Giving Tree. Then she describes other mishaps: an envelope of receipts went missing, others were damaged or flew away after Brady said she fell on a rainy, windy day. Her puppy chewed on other receipts, she said.
Brady said she tried to explain all this as she turned in receipts after the February meeting. But in one instance she said a manager never took notes. She said she also never received responses to inquiries about the overall investigation.
"The fact that I was immediately assumed to be guilty and given no opportunity for input or clarification, although I requested to be given this opportunity from my employer of twenty years, both angers and sickens me," Brady writes in her memo's closing remarks.
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Sources: McClatchy Newspapers, Charlotte Observer, Charmeck.org, Google Maps
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