An audit whose preliminary findings were so grave it led to the immediate ouster of the operator of Suffolk’s largest homeless shelter is finally finished and the group owes the county $3.6 million — $362,000 more than first estimated, said Comptroller John Kennedy.
The audit — which covers the period from Feb. 1, 2013 to Dec. 31, 2014 — found that the Long Island Women’s Empowerment Network had a “blatant disregard” for contract budget rules, has had “a stern unwillingness” to return overpayments, and tried to hide a lawsuit with its biggest creditor, which could have led to seizure of county-owned shelter assets.
Specifically, the audit found that the county overpaid the agency $1,099,536, which must be repaid, and that the agency claimed another $2,599,547 in inappropriate expenses that were disallowed.
The audit also criticized the Department of Social Services for “inexplicable changes” to its rules, which eliminated the requirement that financial reports be submitted to the department for review. The comptroller found that change alone led the network to overcharge the county $1.1 million on its $12.3 million contract.
Kennedy said his office from now on will review financial statements for all shelters. “There was a total abandonment of checks and balances,” Kennedy said. “We’ve been forced to step into the void.”
The audit also criticized the county for failing to pursue required background information on the agency’s president and CEO Julie Levine and consultant Richard Ottimo, both of whom had criminal records. Ottimo, who has since died, was convicted of bank fraud in 2001 and assault in 1988, while Levine was convicted in 2001 for criminal possession of marijuana with intent to sell.
“We believe that had the CEO/president . . . been screened prior to the execution of the contract it is doubtful the county would have ever entered into a contract with the agency,” the audit said. Social Services officials had no comment Monday.
The final audit comes three months after the network was removed as an operator on March 31 because of irregularities found in a preliminary audit. The review was launched after numerous anonymous complaints to the comptroller’s fraud hotline. Since then, the Family Service League has taken over the 400-bed shelter, once a hotel in Brentwood. Kennedy and Social Service officials also have referred the audit to District Attorney Thomas Spota for possible criminal prosecution.
Officials say the county has already withheld about $1.5 million in payments due the network and has referred the audit to the county attorney to make further recoveries.
Levine, in a June 27 letter to the county, said it was “impossible” for the network to respond to audit findings because the county barred the network from removing any documents or financial data from the shelter. Officials said that the move was made “to preserve the integrity” of the records during the audit, but that Levine never sought access to data after the audit was done.
Among the new findings in the final audit was that the agency permitted its vice president of administration, who made nearly $87,000 a year in salary and fringe benefits, to work from Arizona by telecommunication, though it is Social Services policy for all employees to work on site. It also found that the agency inappropriately reported $61,377 in bad debt expenses without prior county approval. The audit also found the network failed to comply with the county living wage law, which requires county contractors to pay workers above the poverty level.