Skimming from city sticker sales, $200K in rogue debt collection fees highlight inspector general’s report
CHICAGO - An employee of the city clerk’s office who allegedly pocketed six figures worth of cash payments for city stickers over a seven-year period.
A contractor accused of pocketing more than $200,000 in 25% debt collection fees on accounts that were not delinquent.
Inspector General Deborah Witzburg’s final quarterly report for 2023 includes at least two cases that underscore the longstanding belief that nobody is minding the store.
"As is frequently the case, misconduct is co-located with inadequate controls. … We need to have tighter controls. We need to have more frequent audits. We need to have tighter accountability metrics so that taxpayers dollars are going to the city — not into the pockets of city employees," Witzburg said of the city sticker theft that allegedly continued from May 2014 through November 2021.
"People left with their stickers. But the employee was collecting money for themselves into the six-figures. … When people paid with cash, they manipulated the payment system so the system reflected the sale of the sticker, but not all of the actual cash went into city coffers."
City Clerk Anna Valencia said her office uncovered the alleged city sticker fee skimming "before COVID" and promptly reported it to the inspector general’s office. Valencia said she "can’t believe it took them this long" to go after the accused employee.
"It was very small amounts of money that she skimmed. … She did it in very small amounts that would be hard to catch. I’m just grateful to my team that we found out. We took action and she’s now on the no-hire list, which she should be. And she should face criminal charges," Valencia told the Sun-Times.
"Once we were able to find it, we put in a technology piece to ensure that no one can do that again. …. This is also a reason why I’ve been innovating in my office so much with technology because a lot of the technology is so outdated. And you need to go from a paper-based system to a technology-based system. That’s how you find these things. When it’s paper-based, it’s really easy to cheat. You know, like ghost payrolling and all of those things. So, to go more the technology route, that’s where you’re able to find things like this so you don’t have it happen again."
As always, the inspector general’s quarterly report does not include the names of those accused of wrongdoing.
It simply includes synopses of the completed administrative investigations and the punishment recommended and subsequently followed or ignored.
The painstaking city sticker investigation "cross-referenced dates and times from video security footage and matched them … with sales records for the employee which revealed that cash payments were missing for those transactions." A historical audit of the accused employees available sales records from May 2014 through November 2021 was then used to determine the "scope of missing payments attributable to the accused employee.
"By identifying the city sticker sales in the over-the-counter (OTC) application, which had no corresponding payment record in the point-of-sale (POS) system, OIG was able to determine that the amount of missing monies attributable to the employee was well into six figures," the synopsis states.
"During the course of the investigation, the employee resigned … and did not give a statement in OIG’s administrative investigation. The matter was referred for criminal prosecution."
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The rogue debt collector allegedly managed to collect more than $200,000 worth of illicit fees by accessing the city’s debt collection portal and using it to, as Witzburg put it, "improperly assigning debts to themselves" that were not delinquent. They were water and sewer fees that were paid on time.
"The contractor subsequently submitted invoices to the city seeking a contractual 25% contingency fee for its collection of the debt, which required no meaningful collection efforts, as the account at issue had been regularly paid by the customer. As a result of the contractor’s conduct, it received over $200,000 in improper contingency fee payments from the city," the synopsis states.
The contract has been terminated, and the debt collection company has been barred from future business with the city. To guard against future schemes, the Department of Finance has disabled the contractor’s access to all city systems. It has limited system access to ensure that collection firms "could not repeat the behavior at issue."
"There again, that is misconduct co-located with inadequate controls," Witzburg said.
"City resources are precious. We can’t have them misdirected for the personal benefit of individuals. I am heartened by the fact that the city took immediate action to avoid doing any further action with that entity."