Inspector General Kurland Announces Result of Forensic Audit

Philadelphia, May 4, 2010 – Inspector General Amy L. Kurland today announced the completion of a forensic audit and investigation into grants awarded to two non-profits controlled by or associated with former State Sen. Vincent J. Fumo.  The audit and investigation was  requested by the Delaware River Waterfront Corporation (DRWC) and performed under DRWC’s contract with L.B. Pedrotty & Associates, in collaboration with the Inspector General’s office.

The report details how the grants were awarded to Citizens’ Alliance for Better Neighborhoods (CABN) and the Spring Garden Community Development Corporation (SGCDC), how the funds were expended – or in some instances not expended – and how the expenditures followed or did not follow the grant agreements.

Based on an analysis of tens of thousands of documents and interviews with a number of individuals, the report established that more than $5.4 million in grant funds were misspent and/or misappropriated.

SGCDC was found to have misappropriated approximately $23,643 in profits made from a parking lot, and the investigation also established that CABN violated the terms of its 501(c)(3) status by diverting more than $4.5 million in grant money to for-profit ventures and $137,371 to Fumo and longtime aide Ruth Arnao.

The report makes the recommendation that the $5.4 million of misappropriated funds, plus interest earned, be returned to DRWC to determine an appropriate use for the money – one in line with the original purposes of the grants and in accordance with City rules and regulations.

The report also recommends that PPJOC, a joint committee of the former Penn’s Landing Corporation and the Philadelphia Industrial Development Corporation, immediately cease funding operating grants to CABN and SGCDC because of violations of 501(c)(3) rules, the commingling of funds, reports not being submitted and/or inaccurate reports being submitted, and because of possible improprieties among Fumo and officials at CABN and SGCDC.

Not funding the remaining years left on the two operating grants could potentially be worth up to $10.2 million. These funds should be retained by the grantor and should be used in accordance with its original purpose – to benefit the City of Philadelphia – according to Kurland.

 “Grants should be awarded to non-profits according to their merit, not their political connections,” Kurland said.

A full report is available online at http://planphilly.com/sites/planphilly.com/files/PPJOC_report_investi.pdf

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