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Audit of Corrections Account Questions $600,000 in Payments

An audit by the V.I. Inspector General’s Office released Thursday found more than $600,000 in questioned payments from an account managed by the Bureau of Corrections, an account that was established outside the legal channels of the V.I. Government.

Funds were spent from the account contrary to the financial, procurement and personnel laws, regulations and policies of the V.I. Government and were used for questionable purposes that were not in compliance with the court order under which it was set up, according to the audit report.

The audit was for the BOC Management Remedial Checking Account, which was established in December 2001 without the approval or even the knowledge of the Department of Finance. The audit covers a period from 2002 to 2012.

According to the report, the account has apparently never been audited.

During that time, $2.96 million had been deposited in the account, mostly from payments from the Marshal’s Service and Immigration. A total of $2.89 million was spent from the account.

The audit report explained that the account was set up as part of ongoing court actions stemming from the 1986 consent agreement over unconstitutional conditions at the Golden Grove Adult Correctional Facility. The territory’s government has been under court order to bring the prison up to constitutional standards. The U.S. Justice Department has continued to press the case, saying the problems cited in 1986 largely remain unaddressed.

During contempt hearings in December 2000 and June 2001, the Justice Department claimed it was unable to meet the requirements of the court to improve the conditions of the facilities and inmate population, because of funding shortages and bureaucratic delays, the audit report said. In addition, the inmates’ legal representation, the American Civil Liberties Union, also voiced concerns over Finance’s control over the funds to be made available to Corrections to remediate the conditions cited in the contempt orders.

On Oct. 29, 2001, the U.S. District Court ordered a separate bank account be established “for the costs of Bureau of Corrections operations, with priority given to expenditures mandated by all consent decrees, orders, judgments, and settlement agreements addressing conditions at Bureau of Corrections’ facilities.”

The order continues, “Expenditures shall include but not be limited to payment for food services, medicines, contractual services, repairs and maintenance, and board fees for Virgin Islands’ inmates housed in off-islands correctional facilities,” according to the Inspector General’s audit report.

The order required that the account be funded by “all monies from the U.S. Marshal’s Service and the U.S. Immigration and Naturalization Service, for the housing and board fees for federal detainees in the Bureau of Corrections facilities.”

The account was set up by the Department of Justice, but according to the auditor, it was set up in a way that circumvented the rules and policies for use of public funds set out in the U.S. Virgin Islands Code and the policies and procedures of the Department of Finance. Instead of going through normal channels, it was set up "outside the control and effective accounting and reporting of Finance," the report says.

The Bureau of Corrections was removed from the purview of the Department of Justice and made an independent agency of the executive branch in 2008, but control of the account was not transferred to the new bureau until 2010.

The report says that members of the inspector general’s staff interviewed District Court officers, who were not aware that the account had been set up outside the legal framework.

"In our discussion with the District Court judge, it was indicated that the judge did not intend for Justice and Corrections to maintain a checking account and expend account funds without being in compliance with the code governing financial controls, reporting, procurement, and personnel policies and procedures and intent of the court orders. The court intended the funds to be used to bring Corrections into compliance with its orders."

Among the $602,236 of questioned expenditures from the account, the auditors found:
– During the audit scope period, $54,796 was spent for social functions, retreats, ceremonies and other functions which were not allowable expenses, including two checks in 2010 totaling $5,025 identified as expenses for a Christmas/New Year’s party; four October 2009 checks identified as “BOC Transition Ceremony” totaling $2,434; and $4,080 paid to a travel agency Feb. 16, 2010, for the “1st Management Retreat.”
– In 2010, on March 15, May 3 and May 7, checks were written for $10,000, $2,700, and $5,020 as reimbursement to the “BOC Commissary Account” for “BOC Week Activities.” The $10,000 check was for one dinner hosted by Corrections for 100 people at a local restaurant.
– On April 9, 2010, $4,400 was paid to a St. Croix hotel, unnamed in the audit, for “rooms, food, drinks and tips (2-17 to 22-10)” for two off-islands consultants.
– Corrections officials’ travel expenses and per-diem advances were paid for several trips taken out of the territory without authorization from the governor or following the travel regulations of the government.
– Four employees received salary payments of $2,000, $1,544, $1,961 and $2,884 in December 2009, January 2010, December 2010, and August 2011 for “Salary advance” and/or “Payroll error.” There are no records to show that those payments were ever reimbursed to the account.
– And in December 2007, $1,950 was paid to replace a Corrections sign.

Many of these expenditures may have been legitimate expenses for the Bureau, the audit report noted, but do not constitute "emergencies" under the terms of the consent decree, for which the account was set up.

The report also shows that the account was often used to pay outside workers for jobs that were not contracted through the normal process and that no 1099 tax forms were ever issued to the people who did the work.

"Some of the payments were for purposes which should have been processed through (the Department of Property and) Procurement for a formal contract for they were for supplies, repair materials, services and other purchases, including regular and periodic maintenance which could be contracted on an annual basis using General Fund appropriations. These purchases did not demonstrate an ’emergency’ requiring expedited procurement through the account and therefore should not have been made from the account," the report says.

The account was set up before current officials were in office. Bureau of Corrections Director Julius Wilson was first named to the post in 2008. The current warden at Golden Grove, Basil Richards, took the job in 2012.

The audit report includes a list of recommendations for rectifying the circumstances, as well as a letter from Gov. John deJongh Jr. acknowledging the problems with the fund and agreeing with most of the recommendations.

The Department of Justice expressed concern about moving the funds into a current account before the purpose of the fund is expanded. He suggested that the funds not be placed in an account that can be re-allocated by the Legislature for other purposes.

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