Report: City’s ‘gross mismanagement’ of contract led to $1.2M in questionable payments
“Misconduct and gross mismanagement” by city staff in Pembroke Pines led to over $1.2 million in questionable payments to fraudulent security vendors, the Broward County inspector general said in a report released Wednesday.
In January, police arrested two people involved in an alleged scheme to defraud the city and obtained a warrant to arrest a third. But while those three “committed the fraud,” Broward Inspector General John W. Scott said, it was the city “that permitted it to occur and continue” over a five-year period.
Pembroke Pines contracted with Miami Gardens’ Bayus Security Services and Bayus Security Protection to provide security at several city-owned properties, but prosecutors said they never did much of the work. Company owners Ololade and Olalekan Shokunbi and operation manager Oluwatoyin Laditan allegedly used the contract between 2012 and 2017 to charge the city more than $700,000 for security services they never provided.
In a press release announcing the arrests earlier this year, Florida Attorney General Ashley Moody said the vendors “made the public less safe by using unlicensed guards, unarmed guards or no guards at all.”
The inspector general’s investigation found “several failures by numerous departments” in Pembroke Pines that allowed the trio to execute the scam. Staff failed to follow procedures to detect fraudulent invoices, the report says, and the city’s heads of procurement failed to ensure that the security officers were properly licensed.
The procurement division also twice let the contract lapse past the time allowed by city code, and improperly renewed the contract for a third term.
Other departments came up short, too, the inspector general found. Accounts payable, for example, improperly paid Bayus Security Protection even though the contract was with Bayus Security Services. And risk management staff “either failed to require proof of contractually required insurance coverage or failed to document it.”
“Together, this misconduct and gross mismanagement resulted in the city’s avoidable and unfortunate retention of the Bayus providers,” the report says.
The inspector general report doesn’t recommend any sanctions for city staff or the city itself.
In an Aug. 24 letter to the inspector general, City Manager Charles Dodge said the city wasn’t to blame for the fraud, echoing what the inspector general had said in a preliminary report in June. But Dodge acknowledged that “certain staff” didn’t adhere to protocols meant to prevent fraud, and said the city has since taken steps to improve its invoice review process and oversight of contracts.
“The city had significant internal controls in place during the course of time the services were being provided by the Bayus entities,” a city spokesman told the Miami Herald in a statement. “The city has taken extensive steps since learning of the OIG review of its contracts with the Bayus entities to address issues about which it became aware during the course of the three-year investigation.”
According to the inspector general report, city staff ignored “obvious red flags” as it processed payments. One city employee, a bookkeeper at the Academic Village charter high school, took it upon herself to compare Bayus’ invoices to its logbooks and found many discrepancies, the report says.
In a 2013 email to a city employee, the bookkeeper wrote: “Can we request that they send the guard to the premises that we are being billed for on the invoice? I’d say 99% of the time the person that signs the Log sheet is not the person we end up getting billed for on the Invoice.”
In 2016, the city ended its agreement to have Bayus provide security at Academic Village after “repeated after-hours incidents of vandalism — at times when the provider was supposed to be guarding the site.”
Nonetheless, “no one at the city took steps to confirm that [Bayus] delivered its services at other sites,” the report says.
Staff also signed invoices indicating services had been provided without verifying that they were, and displayed a “complete disregard” for ensuring they were accurate, according to the inspector general.
“We acknowledge that the city, being a larger one, is made up of many moving parts and that human error will occur,” Scott wrote. “For this reason, adherence to internal processes is even more important to detect any aberrations that may exist.”
Pembroke Pines, located in Southwest Broward, is the second-largest city in the county with over 170,000 residents. The city manager told the inspector general the city will try to recover its losses from the alleged fraud, possibly by suing the companies and individuals responsible or by seeking restitution in the criminal cases.
This story was updated to include a statement from a spokesman for Pembroke Pines.
This story was originally published August 26, 2020 at 1:56 PM.
