Dogs kenneled at ACCT Philly's shelter. (Charles Mostoller)

Taking care of the stray animals of Philadelphia is a hard job. But leaders and staff at ACCT Philly, Philadelphia's city-contracted animal shelter cut corners, inappropriately moved money around, and let thousands of dollars slip through the cracks, according to a report by City Controller Rebecca Rhynhart's office.

“The waste and mismanagement of funds in this case is troubling,” Rhynhart said in a statement regarding her office's report of the Animal Care and Control Team of Philadelphia (ACCT Philly). "My goal is to make government run effectively and efficiently, and it’s clear that ACCT is not meeting the standards of its contract with MDO [the Managing Director's Office] or its requirements for the Petco Foundation grant. ... It’s my hope that this review serves as a wakeup call, and that moving forward, ACCT will be better stewards of taxpayer and external funds.”

While the report didn't find evidence of fraud, Rhynhart said they uncovered numerous improprieties, specifically in reference to a $1 million Petco foundation grant – $750,000 of which was designated for opening a new adoption – which Rhynhart's office was originally tipped off by a member of the public to investigate. Rhynhart also accused the city's Office of the Managing Director of letting several improprieties go on unhindered.

ACCT referred requests for comment to Philadelphia city government, which includes the Managing Director's office. A city official said via email, "We appreciate the suggestions put forth by the Controller’s office, and will immediately begin an assessment of each of the Controller’s concerns." (See full response from the city of Phialdelphia below). 

 

Former ACCT Philly executive director Vince Medley resigned on April 13, 2018, 10 days after the Controller's Office first requested records from ACCT Philly.

During his tenure in charge, Medley was the subject of heavy online and social media criticism from mostly-anonymous animal lovers who questioned his leadership of the organization, and accused him for example of requiring ACCT's managers to sign a loyalty oath.

ACCT Philly dogs in kennel.

An ACCT Philly dog in the kennel. (Charles Mostoller)

Rhynhart's report states that in early 2017 Medley, without telling ACCT's board, offered a senior-level position of marketing and development director to a woman from Texas, where he had formerly resided, even as he implemented a "hiring freeze and other cost cutting measures" for the rest of the company. Medley later cut the unnamed woman a check for $4,000 in "moving expenses," but she never showed up to actually start the job, and never returned the funds, Rhynhart's office found.

"ACCT did not attempt to seek reimbursement until after the controller’s office began inquiring into its operations," Rhynhart's report states — first requesting the return of the funds in May 2018. "When questioned about the expenses in the course of this review, a representative from the MDO stated that they did not believe that $4,000 was such a large expense."

Medley himself received $7,000 in relocation expenses after he took on the role of executive director in November 2015, eight months after ACCT Philly was awarded the $1 million grant from Petco.

ACCT Philly has not yet built the adoption center, but currently has funds in its reserve account equal to the amount of the Petco grant allotted for the adoption center, Rhynhart found, so no net loss, fraud or theft was reported. But she also found the terms of the grant were violated, with full knowledge of supervisors at the Managing Director's Office, by the grant monies being deposited into the operating funds and used for costs like payroll.

"MDO, which is charged with oversight of ACCT under contract, knew about the misuse and mismanagement of the grant funds," Rhynhart's office claimed. "Both the MDO and ACCT implied that ACCT had an operational shortfall that required ACCT to violate the terms of the grant and use the funding for operational costs, including payroll." (As noted above, the city and managing director's office did not respond to these allegations by press-time.)

Issued as restricted funds to only be used for specific purposes like building a new adoption center, according to the Controller's office, instead, ACCT Philly deposited the grant into its operating fund and used it for general costs including payroll, the City Controller's report found.

The city of Philadelphia city Deputy Managing Director of Community Services Joanna Otero-Cruz, Deputy Managing Director of Community Services denied that the Petco grant required segregation of funds.

A copy of the Petco Foundation grant agreement viewed by Metro states the funds "(1) shall be deposited in a separate account for use as specified herein; or (2) if no such separate account exists, such funds will be specifically held aside and designated for use as specified herein and such funds shall not be used in any way to decrease the allocation or budget of municipal funds for such animal welfare purpose."

ACCT got the first grant installment of $600,000 in March 2015 and deposited it into its operating fund, then began making semi-regular $17,000 deposits into a reserve account. After receiving the second installment of $325,000 in May 2016, ACCT again deposited the funds into its general account regularly sending payments to a reserve fund. The final installment of $75,000 was received in May 2017 and likewise deposited in the general account.

In June 2018, after the Controller's review had begun, ACCT Philly sent Petco a follow-up form saying the construction of the adoption center was delayed by an HVAC renovation and delays with architectural designs. Construction was due to begin in fall 2018. As of press-time, no announcements have been made about the construction of the adoption center.

The Petco Foundation itself, which awarded the grant to ACCT Philly, didn't quibble with the shelter's actions.

"As the report indicates, the reserve account currently exceeds the $750,000 amount of our grant," said Petco Foundation president Susanne Kogut. "After speaking with Executive Director Susan Russell and the independent third party accounting firm that oversees the grant use of funds, it is our understanding that Petco Foundation funding has been utilized as planned and the remaining funding to complete the adoption center is available. The Petco Foundation does not dictate internal processes for organizations receiving funding, and tracking of funds may be managed through internal recordkeeping."

"We note that ACCT Philly is one of the most underfunded large municipal organizations as compared to their peers, with others having budgets three times or more than that of ACCT Philly," Kogut continued. "We hope that ACCT Philly, with the support of the city of Philadelphia, moves forward on building an adoption center that the City and entire community can be proud of and that together all will move forward in creating a lifesaving Philadelphia were no animal is unnecessarily euthanized."

ACCT Philly has a budget of $4,269,942 in city funds for fiscal year 2019, has about 125 staff members and a volunteer base who in 2017 donated about 10,000 hours of time.

Update: After this article was originally published, Philadelphia Deputy Managing Director of Community Services Joanna Otero-Cruz released the following response to the report.

“The Managing Director’s Office and ACCT Philly have reviewed the Controller’s recommendations and concerns, and take these concerns very seriously.  ACCT Philly’s Board of Directors and newly appointed Executive Director are committed to the continual improvement of ACCT Philly’s financial controls and operations.  We appreciate the suggestions put forth by the Controller’s office, and will immediately begin an assessment of each of the Controller’s concerns," Cruz said in a statement issued via email, adding that the city disagrees with the Controller's assessment that the Petco grant was improperly used:

“We take issue with the Controller’s conclusion that ACCT Philly has violated the Petco agreement, in that the Petco grant does not require a segregation of funds as indicated. In conversation this week with the Petco Foundation, ACCT was informed it remains in good standing with this grant. We thank the Petco Foundation for their ongoing support with the New Adoption Center that is scheduled to break ground this spring.  We look forward to follow up conversations with the Controller’s Office to review and discuss findings and recommendations."

Otero-Cruz continued, “It should be noted that over the past year ACCT Philly has implemented significant new policies, processes and controls as recommended by the organization’s independent controller. These include, but are not limited to, financial controls regarding reconciling bank accounts, petty cash and pay advances, donor/grant tracking, credit cards and monthly payments thereof, payroll, inventory and supply management, traffic tickets, and mileage reimbursements Our auditors, Friedman LLP, have issued an opinion with regard to the audit of ACCT Philly they completed for the year ended June 30, 2018. In that audit they noted no significant deficiencies or material weaknesses in internal controls. The Managing Director’s Office, ACCT Philly, and ACCT Philly’s Board of Directors will continue to work together to ensure that ACCT Philly continues to improve its financial controls and operations to best serve the residents of Philadelphia.”

Read the Controller's full report at controller.phila.gov/audits. Citizens can report fraud, waste or abuse to the Controller's office fraud hotline at 215-686-3804 or online at controller.phila.gov.

Loading...
Latest From ...