Consultant arrested after $72,000 stolen from 2 BIAs: Auditor General report


Toronto police have arrested a consultant accused of stealing more than $72,000 from two local Business Improvement Associations (BIA).

Details of the incident were released by the city’s Auditor General’s (AG) office, which also conducted its own investigation.

According to the AG, the consultant used access to the BIA’s finances to cash more than 70 cheques for himself, between paying real vendors for their services.

The consultant was originally hired on a part-time basis by one of the two BIAs in 2017 to help the board with event planning, community liaison work, and administration. Two years later, while preparing an audit, BIA board members noticed a $2,000 discrepancy in a vendor’s invoice total. According to the AGs report, the vendor told the BIA they hadn’t received the additional money.

Further investigation uncovered the money had been deposited into the same account used to pay the consultant. When the board questioned the consultant about the money, he resigned but then took a similar position at another BIA.

Even further investigation by the first BIA, along with their auditor, found that from January 2018 to June 2019, 73 cheques totalling $71,558.35 made payable to various BIA vendors and individuals appeared to have been deposited into the same bank account used by the consultant.

The AG’s report shows that the consultant began working for the second BIA in June 2019 and by December of that year cheques meant to go to vendors were being deposited into a bank account used by the consultant.

The Auditor General then accessed the consultant’s records and bank account information under the authority of the Public Inquiries Act (2009), and found that four cheques dated from December 2019 to February 2020 totaling $1,450 appeared to have been made payable to various vendors from the second BIA, but were actually deposited into a bank account used by the consultant.

The AG said $35,866.73 in funds from the first BIA have since been recovered

The two BIAs involved were not named in the report.

More from the Auditor General’s reports

Fraud and Waste Hotline

The AG says calls to Toronto’s fraud and waste hotline went up by 44 per cent in 2020, to 848.

Eighty-nine of the complaints were COVID-19 related, including time theft while working from home, violating the city’s guidelines for business operations during COVID-19 and violating physical distancing rules.

Nine per cent of the total complaints were substantiated and two city workers have been disciplined so far.

The infographic above provides key statistics at a glance for the Fraud and Waste Hotline program for 2020. The volume of complaints and allegations increased approximately 44 per cent since 2019. Source: AG report

 

Among the major fraud investigations, one involved three city employees and two of their spouses committing health benefits fraud, claiming reimbursement for medical spa treatments totalling $38,000 since 2017.

The City of Toronto conducted its own investigation and one employee admitted to the fraud, took full responsibility and repaid around $1,500. He was also temporarily suspended and agreed that he would be fired if he engaged in fraud again, and would not be able to work for the City of Toronto thereafter.

The second employee also admitted he had provided documentation that stated he was treated for a condition he did not actually have. He repaid $10,000 and was fired from his position.

The third employee has not yet reimbursed the city but the report says “she must have known she was submitting false and/or misleading invoices to obtain reimbursement.” She has been asked to repay the amount she was reimbursed but has not replied.

All three cases were also referred to the police.

Several more investigations of other cases are underway.

Tree maintenance services audit

In a follow up to a 2019 report, the AG reports that Torontonians are still not getting value for money on tree maintenance.

Investigators found that contractors are still spending more than two hours of an eight-hour day not doing tree work, which is costing the city hundreds of thousands of dollars.

In an average eight-hour day, workers spend five hours working on trees. Over two hours are “non-productive” which includes down time due to parked cars, extended or unreported breaks and other idle time. The rest of the hours are spent on “supporting activities” like driving/fueling, dumping and so on.

A pie chart showing the average time spent on trees by vendor crews in a standard eight-hour paid work day, based on Auditor General’s observations during a two-month follow up. Source: AG report

 

The report provides an example from crews working out of just one yard, saying they reported 478 hours of down time due to parked cars during the AG’s two-month follow-up. Parks, Forestry and Recreation (PFR) paid an estimated $68,000 for this, which adds up to $408,000 annually.

There are eight other yards in Toronto and some crews have much higher rates of unproductive time than others.

The report says that if all crews increase the time they actively work on trees by an average of 30 minutes a day, the City would gain around $1 million worth of more work on trees annually, based on 2019 contracted rates and crews.

The AG notes that while GPS-tracking of the crews is helping, contractors aren’t providing as much detail as promised. They add that PFR management has more work to do to “improve how it oversees and manages tree maintenance.”



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