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Summary report of investigation on misuse of city credit cards

 

Last updated 2/14/2019 at Noon



Following is the report filed by Martha Norberg, CPA, CFE, Principal at Seabold Group at the request of the city of Mill Creek regarding alleged misuse of city credit cards by former Mill Creek City Manager Rebecca Polizzotto.

Norberg began her career as a special agent with the IRS' Criminal Investigation Division, where her activities included investigating financial fraud, money laundering, violations of federal income tax statutes and other financial crimes. In 1990, Norberg left the government to form Seabold Associates, operating since 2000 as Seabold Group.

Since 1999, Norberg has been retained by counsel and private clients on numerous civil and criminal matters, including matters involving misappropriation of funds, mortgage fraud, Medicaid fraud, income tax evasion, embezzlement, business partner disputes, and many other matters requiring forensic accounting services. In addition, Norberg is frequently retained to conduct workplace and internal investigations involving allegations such as corruption, employee misuse of computers, sexual harassment, employee misconduct, discrimination, and other types of allegations.

Although Polizzotto did finally grant an interview to a friendly, supportive publication, the Mill Creek View, she never responded to repeated requests from the Beacon to offer her side of the story during her controversial stint with the city.

Below we offer Norberg's final report (excluding redactions) so that readers can decide for themselves:

SUMMARY REPORT OF INVESTIGATION

Ref: Complaint against Mill Creek City Manager

I. INTRODUCTION AND SCOPE

In or about November 2017, the Washington State Auditor’s Office (SAO) began the field work for their annual audit of the City of Mill Creek’s financial statements and accountability for the 2016 fiscal year. At the same time, on November 14, 2017, the Finance Department received a credit card statement for the City-issued credit card of City Manager (CM) Rebecca Polizzotto. The statement and receipts provided by Ms. Polizzotto reflected expenditures that raised concerns, including a $158 meal at Ruth’s Chris Steakhouse and several room service charges described on the hotel bill as “Informal Roundtable” meetings. Ms. Polizzotto had provided only the credit card receipt for the Ruth’s Chris charge, which contained no details. Additionally, Ms. Polizzotto had written “Credentialing Dinner” on the receipt. She did not provide the names of who she met with.

The Finance Director, Peggy Lauerman, after asking the CM for the names and not receiving them, directed a staff member to obtain the original receipt from Ruth’s Chris. That receipt reflected that the $158 charge was for one meal, for one guest, and included two Cosmopolitans for $14 each. Ms. Lauerman also obtained the detailed receipts for the hotel room service meals marked “Informal Roundtables.” These also were meals for one person and included $94 in alcohol charges. Ms. Lauerman showed the documents to the SAO auditors, who subsequently expanded the audit to review detailed receipts for credit card expenditures from 2015 through November 2017. They discovered several expenditures that Ms. Polizzotto charged to the City which did not comply with the City’s expense reimbursement policies or for which there was not sufficient documentation to enable reviewers to verify the business purpose of the charge, including $269 in alcohol charges and several meals with third parties for which the auditors could not verify the business purpose based on the documentation provided by Ms. Polizzotto.

Seabold Group was retained to conduct a fact-finding investigation of certain credit card charges made by Ms. Polizzotto during the period from 2015 through November 2017.1 Additionally, we were retained to examine allegations that Ms. Polizzotto manipulated expense reimbursement files to cover up the nature of the expenditures and/or the facts of how the expenditures were discovered. We interviewed Ms. Polizzotto, Ms. Lauerman, Accounts Payable clerk Jodie Gunderson, and Executive Assistant Gina Pfister. Additionally, we examined a significant number of documents, including credit card statements, receipts, memos, emails, notes, policies, SAO reports and analyses, and other pertinent documents.

This report is intended to be a summary report and is not intended as a comprehensive detail of all of the information that was collected, reviewed and considered as part of the investigation. The findings and conclusions set forth in this report are based on the entirety of the evidence considered and are not limited to the factual information contained herein. Nothing in this report is intended nor should it be construed as a legal conclusion. Finally, the findings herein are based on a preponderance of the evidence; that is, whether it is “more likely than not” that a particular incident happened or did not happen as alleged.

II. EXECUTIVE SUMMARY

A. Allegation That Ms. Polizzotto Knowingly Charged Disallowable Expenses to the City Credit Card, and/or Failed to Provide Required Documentation

The evidence establishes that Ms. Polizzotto knew she was required to provide sufficient documentation or other information to allow a reviewer to validate the business purpose of charges to the City credit card, and that she failed to provide that documentation or information on numerous occasions, even after being asked for it by Finance staff.

The evidence also establishes that Ms. Polizzotto knew it was explicitly prohibited for a City employee to charge alcohol or meals for family members to the City credit card, and that she charged alcohol and potentially meals for family members to her City card. Further, these disallowable charges were concealed because she failed to submit detailed receipts and/or the names of who she met with to substantiate the business purpose of the expense.

B. Allegation That Ms. Polizzotto Manipulated Expense Reimbursement Files

The evidence establishes that Ms. Polizzotto created memoranda to place in certain expense reimbursement/credit card statement files in an attempt to put the nature of the charges, or circumstances of the discovery of these charges, in a light more favorable to her.

1 We did not conduct a reconciliation of all of Ms. Polizzotto’s credit card charges, but rather we did a limited review of questionable expense reimbursements based on documents provided to us by the City, and which we understood were produced to state auditors.

The evidence establishes that when Ms. Polizzotto became aware that the SAO auditors were examining detailed receipts of her expenditures, she reviewed them as well and repaid some of the disallowable or questionable charges. In the memoranda that she attached to each reimbursement, some of which she most likely created two months after the date on the memos, she attempted to make it appear that she was the one who ordered the audit of her own expenditures, and that the repayments are a direct result of her ordering that self-audit. She included several other self-serving statements in the memoranda which mask the nature of the charges and the reasons for the reimbursements.

The evidence strongly establishes that Ms. Polizzotto did not direct her staff to audit her expenditures, as she falsely claimed in the memos. Rather, the SAO auditors expanded their audit and requested Finance staff to obtain detailed receipts directly from the vendors. When Ms. Polizzotto learned of the more detailed scope of their examination, she went through her expenditures, repaid the ones she knew were not allowed, and created memoranda for the files to conceal the true facts around the repayments.

III. BACKGROUND AND POLICIES

The following facts are materially undisputed unless otherwise noted.

A. CityofMillCreekPoliciesRegardingReimbursementofExpenses

During the periods examined by the SAO, 2015 through November 2017, the City’s policies governing expense reimbursement and the use of credit cards included the following:

1. Ordinance No. 91-252 – Travel and Expense Reimbursement Policies and Regulations for City Employees and Officials Acting on Official Business.

Established in 1991, the policy sets forth, in pertinent part, the following regulations regarding travel and expense reimbursement: (Emphases added)

Section 1: Authorized the reimbursement of actual and necessary expenses incurred while on official business.

Section 2: Reimbursement Policy.

Reimbursable expenses must be directly related to the conduct of business... for the City, and be actual, reasonable and necessary. Unnecessary or excessively costly expenditures will not be reimbursable.

Section 3: Documentation of Expenses. Receipts Required.

“No claim for reimbursement shall be paid unless it is accompanied by a bona fide receipt. Receipts should show the date, a description of the purchase, vendor identification and amount paid. Credit card receipts are required where available.”

Section 4: Reimbursement for Meals.

This section does not establish limits on the cost of meals. Rather, it states, “The actual and necessary cost of meals incurred while conducting official business is reimbursable.” This section also establishes that a tip of no more than 15% of the cost of the meal is reimbursable.

The section establishes that, when a receipt is unavailable, the employee may claim a certain amount for each meal, not to exceed $30 per day, including tip.

This section identifies unauthorized and unpermitted meal costs as “liquor and expenses of a spouse or other person not authorized to receive reimbursement under this ordinance.”

Section 11: City Credit Card.

The City credit card may be used solely for covering actual and necessary expenses incidental to official business.

The City credit card shall not be used for personal use or the purchase of personal items, whether or not repaid to the City at a later date.

A receipt shall be obtained for each purchase made and shall be submitted with a fully itemized travel expense voucher to the Clerk-Treasurer... Any charges which are not documented on the travel expense voucher, or which are disallowed by [City officials] shall be immediately reimbursed by the user....

2. CCP 96-002 – City of Mill Creek Policy for Procurement of Goods and Services

This policy, called an “Administrative Procedure,” was created in July 1996 and amended in November 2011. Its purpose, in part, is to ensure compliance with policies, laws and regulations, and ensure internal control. The following section applies to the use of credit cards.

Credit Card Purchases for Travel, Supplies, Materials and Equipment

(3) Travel expenditures paid with a City credit card may be made in the amount of actual expenditures. “(See Ordinance No. 91-252 Section 11)”

(5) Any employee using the City’s credit card to make a City purchase shall submit receipts for said purchases to the Finance Department the next business day.

(6) In no event shall the City’s credit card be used for the acquisition of personal travel, supplies, materials or equipment.

3. RCW 42.24 – Payment of Claims for Expenses

This chapter of the Revised Code of Washington sets forth requirements for reimbursement of expenses. Municipal governments generally base their business expense policies on these sections.

RCW 42.24.090 Reimbursement claims by officers and employees.

No claim for reimbursement of any expenditures ... shall be allowed ... unless the same shall be presented in a detailed account. (Emphasis added). The legislative body of any municipal corporation ... may prescribe by ordinance or resolution the amounts to be paid ... in lieu of actual expenses incurred for lodging, meals or other purposes.

RCW 42.24.100 Certificates need not be sworn – Penalty for false claim.

The certificates required by RCW 42.24.80 through 110 need not be sworn, but any person certifying a claim or making a claim, knowing the same to be false or untrue, shall be guilty of perjury in the second degree.

RCW 42.24.110 Approving or paying false claim – Penalties.

Any person who knowingly approves or pays or causes to be approved or paid a false or untrue claim shall be guilty of a gross misdemeanor ....

RCW 42.24.115 Charge cards for officers’ and employees’ travel expenses.

(2) ... the officer using a charge card shall submit a fully itemized travel expense voucher. Any charges against the charge card not properly identified on the travel expense voucher or not allowed ... shall be paid by the official....

B. Staff History

1. Rebecca Polizzotto, City Manager

Ms. Polizzotto was hired as Mill Creek city manager in or about April 2015, and started work in June. She came from Alaska where, for 12 years, she was an assistant attorney with the Attorney General’s office. Prior to moving to Alaska she was in Conyers, Georgia, first as a police officer and eventually as city manager. Ms. Polizzotto has a master’s degree in public administration and a law degree from Georgia State University.2

2. Peggy Lauerman, Finance Director

Ms. Lauerman was hired by Ms. Polizzotto in May 2016 as the Mill Creek Finance Director. She was initially also assigned as the City Clerk and given supervision of IT, among other duties. Previously, Ms. Lauerman had owned her own consulting firm, where she provided financial, accounting and management services to a variety of private sector clients and industries. From 1993 to 2009, Ms. Lauerman was controller and vice president of finance for private sector entities in the Seattle area, and prior to 1993 she was a tax supervisor for a private CPA firm.

3. Jodie Gunderson, Accounts Payable Specialist

Ms. Gunderson began working for the City of Mill Creek in 1991. She has always worked in Finance, first in permits and licenses, and for the last 25 years, until August 2017 when she was named Administrative Coordinator, as an accounts payable specialist. She also manages the Passport team.

4. Gina Pfister, Executive Assistant

Ms. Pfister was hired in Passport Services in 2012, and worked part time for two years until she was promoted to a full time receptionist. When Ms. Polizzotto came to the City, Ms. Pfister said she “took to me,” and Ms. Pfister became an administrative assistant and sat outside Ms. Polizzotto’s office. Less than a year later, Ms. Polizzotto promoted her to Executive Assistant. Currently she is also the acting City Clerk. She said she provides support to the entire leadership team.

C. Accounts Payable Process

Ms. Gunderson, who has been handling accounts payable for over 25 years, told this investigator that credit cards are issued to each director and the City Manager. Their practice has always been to submit detailed receipts reflecting the business purpose of each expenditure charged to the card. Sometimes, if someone loses their receipt, Finance will go back to the vendor to obtain one. If they can’t obtain the receipt, the employee signs a memorandum certifying the business purpose of the expenditure. The staff member is required to indicate on their receipts the business purpose, including the name of others in attendance and what was discussed. She said that is a state requirement, and she said historically every director followed this procedure.

2 Some of the background information for Ms. Polizzotto came from an article in heraldnet.com by writer Amy Nile dated April 21, 2015.

Ms. Gunderson said that when Ms. Polizzotto became the City Manager in 2015, that practice changed. Ms. Gunderson said Ms. Polizzotto had more business lunch meetings than they were used to, and she did not like to indicate who she met with. She would just say “lunch meeting” with no name. Ms. Polizzotto told them she did not want to reveal who she met with, and Ms. Gunderson did not take it any farther than that. Ms. Polizzotto told this investigator and others that, for various reasons, she did not want some people, including the union and the media, to know who she was meeting with. Ms. Gunderson said Ms. Polizzotto is the City Manager, so Ms. Gunderson would take what documentation she could get from her, with whatever general purpose she provided, and use her language on the forms she filled out for approval.

Ms. Gunderson said that it was difficult to get paperwork from Ms. Polizzotto. Landy Manuel was Finance director for approximately six months during Ms. Polizzotto’s tenure, and during that time Ms. Polizzotto had a couple of business meetings that Ms. Gunderson did not feel were adequately supported by the documentation she provided. Mr. Manuel told Ms. Gunderson that he would talk to Ms. Polizzotto. According to Ms. Gunderson, he gave Ms. Polizzotto the City policy regarding expense reimbursements and told her she needed to provide detailed documentation. Later, Ms. Polizzotto went to a conference, one of the first conferences she attended, and Ms. Gunderson noticed that a meal charge, which she indicated was a networking meal with a business colleague, was over $100. She again took it to Mr. Manuel, who reportedly talked to Ms. Polizzotto again but did not get more detail from her. Ms. Gunderson said he ultimately accepted what she wrote on the receipt.

Ms. Gunderson said that she and Mr. Manuel discussed how difficult it was to get receipts from Ms. Polizzotto. Ms. Gunderson said she was frustrated at this shift in culture. She said everyone else turned in detailed receipts except Ms. Polizzotto. She said that, clearly, it was a pattern for her.

When Peggy Lauerman became Finance director, she initially did not focus on the details of the accounts payable process and continued the practice of signing off on Ms. Polizzotto’s credit card charges without detailed information. She told this investigator that there were several factors which influenced her decision to continue the current practice regarding detailed receipts: no red flags in the credit card charges were brought to her attention (until the Ruth’s Chris charge in November 2017); she was initially assigned as City Clerk and was given oversight of IT for a period of time, on top of her Finance responsibilities, and because of the additional duties she mostly left the accounts payable process to Ms. Gunderson; and she believed that the City’s expense reimbursement policy did not explicitly require detailed receipts at the time.3

3 Many, including the SAO, believed the City policies did not explicitly require detailed receipts, even though they call for “a fully itemized travel expense voucher.” (Ord. 91-252 Section 11). Per the policies, receipts must “show the date, a description of the purchase, vendor, and amount paid; credit card receipts are required where available.” (Ord. 91-252 Section 3). According to Ms. Gunderson, for the most part, everyone except Ms. Polizzotto submitted the original detailed receipts. (See SAO Audit Results below.)

In the spring of 2017, the 2015 SAO audit results were presented, recommending stronger internal controls and monitoring of expenditures. As a result, Ms. Lauerman said she suggested instituting the practice of reviewing Ms. Polizzotto’s credit card receipts, and having Ms. Polizzotto review hers and other directors.4 Ms. Polizzotto’s credit card statements from May through October 2017 reflect Ms. Lauerman’s signature along with Ms. Polizzotto’s. Ms. Lauerman did not sign the November 2017 statement containing the Ruth’s Chris charge. This new review practice notwithstanding, it does not appear that anyone demanded detailed receipts from Ms. Polizzotto.

D. The State Auditor’s Office Audit Results and Findings.

1. SAO Audit of the City’s 2015 financial statements and accountability

In or about November 2016, the SAO conducted their audit of the City’s financial statements and accountability for 2015. They presented their report to the City in or about March 2017.

a. Findings

The SAO issued a Management Letter faulting the City on its lack of policies on employee recognition and appreciation, meals with meetings5 and volunteer compensation. They also examined the procedures and controls governing use of City credit cards. They cited inadequate “monitoring of credit card transactions to ensure that employees maintain all receipts and support to verify the validity and business purpose of each transaction.” The SAO did not conduct a detailed examination of credit card charges, but rather, using a random sampling, focused on the lack of effective policies and inadequate controls over the process, which created the opportunity for misuse of public funds.

The results of the 2015 audit, which were provided to Ms. Polizzotto in or about March 2017, specifically identified the following weaknesses among the sample they examined:

? Two purchases did not have receipts to support the validity of the transactions.

? Twelve instances where employees purchased meals for people who did not work for

the City. The City does not have a policy regarding meals with meetings and the auditors

were unable to verify the business purpose of these transactions.

? Two instances where employees over-tipped on meals. Per City policy: “...a tip ... may

not exceed 15% of the ... price of the meal.”

4 Ms. Polizzotto claimed it was at her direction that this practice was implemented.

5 This refers to a policy governing the reimbursement of expenditures for business-related meals involving third parties.

? Two instances where the City compensated volunteers for a basketball tournament with gift cards and food totaling $845. The City did not have a policy for volunteer compensation.

? The City spent $3,535 on employee recognition and appreciation gifts such as gift cards, pens and jewelry. The City has no employee recognition policy, therefore, “such recognition and appreciation is a potential gift of funds or prohibited extra compensation.”

b. Recommendations

The SAO made two recommendations resulting from their audit of the 2015 finances:

? Update and/or develop formal written policies that govern the use of City funds to purchase items for employee appreciation and recognition, meals with meetings and volunteer compensation.

? Perform adequate monitoring of credit card transactions to ensure that employees maintain all receipts and support to verify the validity and business purpose of each transaction.

2. SAO Audit of the City’s 2016 financial statements and accountability

In or about November 2017, the SAO began their audit of the 2016 year. They specifically focused on charges for meals, employee recognition and travel-related expenses.

a. Findings

The SAO noted that they previously reported concerns related to the City’s policies and procedures governing credit card usage and lack of detailed support for transactions tested in the prior audit. The current audit “found that the City continued to have inadequate internal controls over monitoring credit card usage, including ensuring all charges are adequately supported and represent a valid business expense.” They specifically noted that the City did not require detailed or itemized receipts, nor explanations of the charges’ public purpose. They found that the highest dollar volume of these instances occurred on the credit card issued to the City Manager.

The auditors initially found that, of 24 purchases tested in their random sample of all 10 credit cards issued to directors and the City Manager, $2,048 did not have itemized receipts. Of that amount, $992 was charged on the City Manager’s card.

The SAO Accountability Audit Report for the period January 1, 2016 through December 31, 2016 states: “Because the card assigned to the City Manager had the highest dollar volume lacking detailed support, we expanded our testing of this card and reviewed 52 additional purchases occurring between 2015 and 2017.”6 Their results for the audit of City staff’s credit card purchases are summarized below:

Purchases with unclear public purpose

City Manager’s Credit Card

9 Other Credit Cards

Alcoholic Beverages

$ 269

$0

Meals

955

86

Employee Recognition Items

398

789

Total Purchases With Unclear Public Purpose

$1,622

$ 875

The audit found that the City’s policy “does not provide clear instructions for purchase limitations or required documentation.” They further found that, “through lack of monitoring and enforcement, the City did not ensure employees and officials used credit cards for valid public purposes.”

The auditors specifically noted the following:

? 59 purchases (on all 10 credit cards) did not originally have itemized receipts: $1,055 from nine staff members and $2,719 from Ms. Polizzotto. After requesting itemized receipts for these purchases, $201 still could not be validated on the nine staff members’ cards, and $560 could not be validated on Ms. Polizzotto’s.

? $269 was spent on alcohol purchases on the City Manager’s credit card.

? Purchases for meals with unknown people or an unknown public purpose totaled $86 on

the nine staff members’ cards and $955 on Ms. Polizzotto’s. The SAO stated, “We were

unable to validate the business purpose as no names were provided on the receipts.”

? $85 was charged for lunches and breakfasts during a conference the City Manager was

attending. However, meals were provided as part of the conference. Documentation was not provided to clarify the reason the additional meals were purchased.

b. City’s response

The SAO report included the City’s response to the audit findings.7 Ms. Polizzotto wrote that the City attorney provided an opinion that Ordinance 91-252, the policy in effect during the period under audit, “explicitly provided authority to reimburse employees and officials for meals with business meetings;” and “provided authority to reimburse employees and officials for meals with

6 The accountability audit extended through the date the auditors began their field work, which was November 2017.

7 According to Ms. Lauerman, the City Manager wrote the City’s response to the audit report.

business meetings without detailed receipts.” She added that the City attorney also opined that RCW 42.24.115(2) permits employees or officials to reimburse the City for disallowed expenses charged to a City credit card in lieu of adopting a separate policy. (See below for details of the opinion from the City attorney.)

The City’s response also stated that, after issuance of the SAO management letter for the 2015 audit in March 2017, the City took steps to respond by updating internal controls and rewriting their policy. Two steps are listed, one of which was initiated soon after the audit report in the spring of 2017, and the other which was not accomplished until spring of 2018:

? “The Finance director was tasked with reviewing and approving the City Manager’s credit card receipts, and the City Manager was tasked with reviewing the Finance director’s receipts.” Ms. Lauerman told this investigator that she suggested they initiate that practice, and Ms. Polizzotto said she directed Ms. Lauerman to institute that practice. We could not resolve the difference in perspectives, but as of May 2017, Ms. Lauerman was signing the credit card statements along with Ms. Polizzotto. However, Ms. Polizzotto continued to withhold detailed receipts, and it does not appear that Ms. Lauerman pressed her to submit them.

? “The City conducted a comprehensive review and rewrite of its policy governing all business-related expenses, implementing a per diem allowance in lieu of requiring detailed receipts.” This business expense policy was adopted by the City council on March 27, 2018, after the SAO completed their field work but before they issued their results. The SAO noted that as of the date of their report, the City still had not updated their policies regarding meals with meetings, employee appreciation and recognition, and volunteer compensation, as had been recommended in the audit for 2015.

c. City attorney’s opinion letter

In the City’s written response to the SAO, Ms. Polizzotto refers to an opinion by the City attorney, which she had requested after the SAO issued their preliminary findings for the 2016 audit in or about May 2018. She asked for his opinion on three issues that were raised by the auditors: (Emphases added).

? Does the City policy (Ord. 91-252) allow business meals with meetings, and was it thus permissible for the City’s Finance Director to approve expenses for meals in connection with business meetings?

? Was it permissible for the City’s Finance Director to approve expenses for business meals without detailed receipts?

? Was it permissible for the City to rely on the state law [authorizing reimbursement] for disallowed expenses...?

Ms. Polizzotto appears to have attempted to place the responsibility for the SAO findings on the Finance director, Ms. Lauerman. Further, her questions to the City attorney do not address the issue of whether she provided enough documentation to allow the Finance director to validate the business purpose of the expenses.

In a letter dated June 7, 2018, the City attorney opined that the ordinance 1) explicitly permits reimbursement for meals with business meetings, and other “actual, reasonable and necessary” expenses related to official business; 2) provides authority to reimburse for meals with business meetings without detailed receipts, limited to the amounts listed in the ordinance: $6 for breakfast, $8 for lunch and $16 for dinner. “Thus, the City does have the authority to reimburse employees and officials for meals with business meetings without detail [sic] receipts, however, such expense reimbursement is capped at [$30 per day].” 3) State law provides authority to permit [staff] to reimburse the City for disallowed expenses.

d. Auditors’ remarks

The SAO provided the City attorney’s analysis to their Director of Legal Affairs, who found that the City’s policy does provide clear authority for employees to buy [business-related] meals with their City credit card. “However, we found the policy to be ambiguous, and that the policy doesn’t provide clear instructions on meal limitations, guidelines and required documentation.”

The SAO auditors replied to the City’s response, stating that the basis of their finding was not reimbursements, but charges to City credit cards. “When the public’s money is spent directly through the use of city credit cards, internal controls are essential to prohibit or detect charges that aren’t for a public purpose.” They added that the RCW Ms. Polizzotto cited, 42.24.115, which directs employees to repay unallowable charges, “exists as a remedy for recoupment only... strong policies and procedures would prevent unallowable expenditures from occurring, eliminating the need for repayment.”8

IV. CHRONOLOGY OF EVENTS A. Discovery of First Questionable Expenditure

The SAO auditors came to the City in November 2017 to conduct their field work for the 2016 audit. They identified and requested documentation for a random sample of credit card charges they wanted to examine to follow up on their findings from the 2015 audit.

1. Ruth’s Chris and Marriott meals for “Informal Roundtables”

8 It should be noted that Ms. Polizzotto did not repay the disallowed charges until she was confronted with them, first in December 2017 and then on January 30, 2018. Further, she did not provide sufficient documentation to allow City reviewers to validate the business purpose of the charges.

On November 14, 2017, the City received the credit card statement for Ms. Polizzotto’s October expenditures, consisting mostly of expenses related to an ICMA9 conference in San Antonio, Texas. The expenditures included a $158.14 charge from Ruth’s Chris Steakhouse. Ms. Polizzotto had provided a credit card receipt to support the charge which reflected only the subtotal, a 19% tip, and the total. The receipt does not indicate the number of guests or any other details of the expenditure. Ms. Polizzotto wrote on the receipt: “Credentialing dinner.”

Further, the hotel bill reflects several room service charges, which Ms. Polizzotto identified as “Informal Roundtables,” totaling $191.07, in addition to other meal charges. There was no indication of who Ms. Polizzotto met with or the business purpose of the meetings. The total meal charges reflected on the hotel bill were $408.19.

Ms. Lauerman told this investigator that this was the first time she noticed red flags regarding Ms. Polizzotto’s expenditures, even though she was aware that for several years Ms. Polizzotto refused to provide detailed receipts. Jodie Gunderson, the accounts payable clerk, said that they thought, since the Ruth’s Chris amount was so high, there must have been two people at the dinner. She said that by policy they can’t pay for a spouse’s or friend’s meal. There was no name on the receipt indicating who Ms. Polizzotto met with, and no one in her office knew what “credentialing” meant. She said that after her office keyed in the charges, in late November 2017, she left the statement with Ms. Polizzotto on three separate occasions asking for her to approve it for payment. Ms. Polizzotto returned it three times without signing it. Ms. Gunderson finally took the statement to Ms. Lauerman, who reviewed it and took it to Ms. Polizzotto.

Ms. Lauerman asked Ms. Polizzotto about the room service “informal roundtable” charges. Ms. Polizzotto told her the roundtables were networking meetings for which the participants split the bill. Ms. Lauerman asked for the names of who she met with, but Ms. Polizzotto did not recall.10 Ms. Lauerman said that Ms. Polizzotto signed the credit card statement during this meeting, approving payment. Ms. Lauerman did not sign the credit card statement, which she had been in the practice of doing since the spring of 2017. The credit card bill was paid on November 30, 2017. Ms. Lauerman did sign the packet that went to the council, as did Ms. Polizzotto, which included all of the expenditures for the period. On December 10 the council audit committee approved the expenditures.11

Sometime after Ms. Lauerman’s first meeting with Ms. Polizzotto in late November 2017, Ms. Lauerman directed Ms. Gunderson to contact Ruth’s Chris and the Marriott Hotel in San Antonio to obtain the detailed receipts. The Ruth’s Chris receipt showed that the charge was for one meal for one person and included $28 for alcohol. Ms. Gunderson said that in all of her 25+

9 International City/County Management Association.

10 The meetings took place between October 20 and 25, 2017. Ms. Lauerman met with Ms. Polizzotto sometime between November 14, when they received the credit card statement, and November 30, when they paid it.

11 The SAO identified one of the control weaknesses as follows: “Although council reviews purchases... they are less likely to question costs as detailed/itemized receipts are not always provided and the detailed support is not requested.”

years in Accounts Payable she only saw alcohol on receipts twice, and on one of those occasions the employee had crossed it off the bill and paid for it personally. She said the policy is very clear that employees cannot charge alcohol to the City and she said every employee knows that.

Ms. Gunderson also obtained the details for the room service charges reflected on the hotel bill. Those room service charges, all of which were for one guest, included $94 for alcohol and a $29 charge for desserts ordered after the Ruth’s Chris meal.

After she obtained the detailed receipts, on or about Friday, December 15, 2017, Ms. Lauerman met again with Ms. Polizzotto and asked for more details about the expenditures. Ms. Polizzotto said the credentialing dinner was a meeting about City Manager credentialing, and repeated her explanation for the roundtable meetings. Ms. Lauerman told her that they had the detailed receipts which did not support her explanations. She showed Ms. Polizzotto the receipts, including the Ruth’s Chris receipt for one meal and the hotel bill, which showed the room service details. Ms. Lauerman said that Ms. Polizzotto’s face went white and she said, “What are we going to do?” Ms. Lauerman said, “What are you going to do?” Ms. Polizzotto thought she would try to get Ruth’s Chris to rebill the charge to her personal credit card, and she took the statement with her. She also told Ms. Lauerman that if she paid for it personally, the auditors did not need to see the statement or receipts.

2. SAO auditors process

When she met with Ms. Polizzotto, Ms. Lauerman had already shown the auditors the detailed receipts. Ms. Lauerman told this investigator that they asked her if she wanted to act as a whistleblower and she said she would rather have these issues just come out through the audit.12 She told them that Ms. Polizzotto had taken the credit card statement and was going to try to get the charges rebilled to her personal card. She said she told the auditors they had better retrieve the statement from Ms. Polizzotto, which they did.

The SAO report titled “C.5.PRG – Credit Card ML Follow Up” p. 7, reflects that the auditors had identified alcohol purchased on the City Manager’s credit card and also identified meals where there was an unclear public purpose. For this reason, according to their report, they expanded their testing and selected all of the CM’s credit card transactions for FY2017 (January through November). They also tested Ms. Polizzotto’s 2016 transactions, selecting eight random purchases to determine if detailed receipts (which they asked Finance to obtain) supported a public purpose. They identified additional alcohol purchases as well as meals with an unclear public purpose, and employee recognition items (for which the City had no clear policy). The report states that since they noted a trend of purchasing alcohol and meals with an unclear public purpose, the auditors referred the findings to their Fraud and Audit divisions. The Fraud

12 We did not interview the SAO auditors and did not corroborate Ms. Lauerman’s characterization of her conversations with them.

manager and assistant Audit manager did not suggest a fraud review. However, they suggested that the auditors expand their testing to include all of Ms. Polizzotto’s credit card purchases since 2015 and confirm that “all risky purchases from the City Manager’s start through the current date were being tested.” The auditors obtained confirmation from the SAO Assistant Director and Audit Manager that they were to expand their testing and include 2015. The auditors requested that the City provide all credit card transactions for the City Manager, including 2015 purchases, along with itemized receipts.

B. Ms. Polizzotto’s Reimbursement of the Ruth’s Chris and Room Service Charges

At some point after the Friday, December 15, conversation between Ms. Lauerman and Ms. Polizzotto,13 Ms. Polizzotto left a check, which Ms. Lauerman found on her chair the morning of December 18. The check was for the reimbursement of the Ruth’s Chris meal cost of $158.14 and all of the meal charges on the Marriott bill, which totaled $408.19. These charges were all for one person but Ms. Polizzotto made them appear to include other business associates. Additionally, many of the charges included alcohol, which was not revealed in the documentation Ms. Polizzotto originally provided. According to Ms. Lauerman, Ms. Polizzotto did not leave any memoranda or other documentation along with the check.

Ms. Polizzotto was entitled to a portion of the meal costs during this conference since she was on official business, but she chose to repay the entire costs. Ms. Lauerman told this investigator that Ms. Polizzotto told her she thought if she paid back the entire amount, the auditors would not have to see the receipts. She was not aware that Ms. Lauerman had already shown the Ruth’s Chris and Marriott receipts to the auditors.

Ms. Polizzotto told this investigator that she intended to repay the personal portion of those costs all along, but the auditors were conducting their audit and there was “a delay in me getting receipts to review because the auditors had it.” She told this investigator that she recalled telling the auditors that she had not reviewed that package yet and she was anticipating making some reimbursements “just like I did with 2015.” In 2015, Ms. Polizzotto went to a conference in Seattle and paid for the hotel with her personal credit card. She told this investigator that this was an example of taking the conservative route and paying for a travel expense personally. However, the hotel was not a reimbursable expense because that conference was considered local travel.

Ms. Polizzotto told this investigator, “I knew I’d have to go through and figure out what to repay the City. Normally I did that at check-out.”14 Ms. Polizzotto did not explain why she didn’t conduct such a review when she was emailed the detailed hotel receipt after the trip, nor why

13 Ms. Lauerman said the check was not left with her on December 15th and when she came to work on Monday the 18th, the check was on her chair. She presumed it was left over the weekend.

14 It was very rare that Ms. Polizzotto charged certain hotel meal costs on her personal card and others on her City card. We found only one instance: the Davenport Hotel in August 2017, when she charged all dinner charges to her personal card.

she submitted the charges to the City for payment without conducting such a review, since she knew there were disallowable charges.

Ms. Polizzotto acknowledged to this investigator that she wrote “Credentialing Dinner” on the Ruth’s Chris credit card receipt and submitted it for payment. She also acknowledged that after she submitted the receipt, as “part of the process of going back to the vendor,”15 she wrote an additional explanation on the detailed receipt: “Mill Creek Hosted dinner, hosted pending adoption of new business policy.”

Ms. Polizzotto told this investigator that the current policy did not clearly identify what was allowable for business meeting charges. She said after submitting the receipt, she planned to look at a draft of an updated policy which she thought Ms. Lauerman had drafted to guide her on how much she was allowed to charge, which would inform her how much she needed to repay. But she said she found out there was no such policy, so she “decided to take the conservative route” and pay back the entire amount.

Ms. Polizzotto’s explanation is not reasonable. She had been charging alcohol and undocumented business meals without regard for the policy since 2015.

C. Ms. Lauerman Obtained Detailed Receipts for Other Charges to Ms. Polizzotto’s City Card and Reviewed Them With Ms. Polizzotto

Ms. Polizzotto told this investigator that on December 15, 2017, she directed Ms. Lauerman to conduct a retroactive review of all of her expenses, and that as a result, Ms. Lauerman obtained the detailed receipts for other charges to her City-issued credit card. The SAO report refutes this claim, stating that they directed the City to obtain itemized receipts after finding alcohol and purchases with an unclear business purpose in their initial testing.16 Additionally, Ms. Lauerman confirmed to this investigator that after she provided the Ruth’s Chris and Marriott Hotel receipts to the auditors, they expanded their audit and requested that the City obtain any missing detailed receipts for Ms. Polizzotto’s credit card transactions from 2015 through November 2017.

Ms. Lauerman said that on or about December 21, 2017, the SAO auditors presented a list of additional credit card transactions for which they wanted detailed documentation. Ms. Lauerman told this investigator that Ms. Polizzotto was aware around this time that the SAO auditors were requesting detailed receipts. She said Ms. Polizzotto asked her to conduct the search herself and send the results to her (Ms. Polizzotto’s) personal email account.

15 Ms. Polizzotto claimed that she directed Finance to contact vendors to obtain itemized receipts of her credit card charges. The evidence does not support this claim.

16 Their initial testing included the detailed receipts for the Ruth’s Chris and Marriott room service charges made in October 2017.

Ms. Lauerman told this investigator that when she informed Ms. Polizzotto of that fact, Ms. Polizzotto decided not to have Ms. Lauerman do that.

From mid-December through January, both Ms. Lauerman and Ms. Gunderson contacted the vendors and obtained many of the original detailed receipts. Ms. Lauerman could not be certain when Ms. Polizzotto was provided copies of the receipts but she thought she had given many or most of them to her prior to January 30.

On January 30, 2018, Ms. Lauerman met with Ms. Polizzotto and went through each questionable expenditure, showing her the detailed receipts which revealed several unallowable charges to be detailed below. Ms. Lauerman told this investigator that she “again tried to get her to recollect” the names of who she met with, and Ms. Polizzotto could not provide them.

Ms. Polizzotto told this investigator that Ms. Lauerman told her to just make up a name and that Ms. Polizzotto refused to do that. Ms. Polizzotto felt Ms. Lauerman wanted her to make up names because Ms. Lauerman did not want to get a finding from the auditors. Ms. Polizzotto was not aware that Ms. Lauerman was working with the auditors and had already provided them with the Ruth’s Chris, Marriott and other detailed receipts. Additionally, Ms. Lauerman adamantly denies telling Ms. Polizzotto to make up names, saying she was offended that Ms. Polizzotto was trying to make her complicit in her activities.

Ms. Lauerman gave Ms. Polizzotto copies of the detailed receipts. Ms. Lauerman told this investigator that Ms. Polizzotto told her she was going to review them and repay the expenditures that didn’t look appropriate, and that any receipts she paid back should not go to the auditors.

On February 11, 2018, Ms. Polizzotto repaid several of the questionable charges, including two restaurant charges, a room service charge for alcohol, another restaurant charge for alcohol, and two excess tip amounts, all totaling $127.70. She submitted, along with the reimbursements, several memoranda explaining the purpose of the repayments. Additionally, it appears that she backdated and placed memos into the file containing the credit card statements relating to the Ruth’s Chris and Marriott reimbursements. The details of the memoranda and her reimbursements are addressed below.

D. Ms. Polizzotto Created Memoranda for the File

On February 11, 2018, after the January 30 meeting between Ms. Lauerman and Ms. Polizzotto and after Ms. Polizzotto had the opportunity to review the receipts in detail, Ms. Polizzotto repaid several additional charges for which she could not verify a legitimate business purpose.17

17 There are still several charges for which a legitimate business purpose cannot be validated because of lack of sufficient documentation.

She included with her repayments several memoranda which appear to be an attempt to put the circumstances of the discovery of these charges in a light more favorable to her.

On February 11, 2018, along with checks reimbursing the City for disallowable charges, Ms. Polizzotto submitted a memo titled “Business Expenses,” dated December 15, 2017, addressed to Ms. Lauerman. This memo indicates that Ms. Polizzotto had initiated an audit of her own expenditures and as a result, the disallowed charges were discovered. She also produced memos dated February 11, 2018, for each of the reimbursements made on that date, explaining why she was reimbursing the charges.

Ms. Lauerman had not seen the December 15 memo prior to February 11, 2018. Additionally, at some point after this date she had reason to access the November 2017 credit card file pertaining to the Ruth’s Chris and Marriott charges and discovered that the December 15 “Business Expenses” memo addressed to her was included in that file. She had not seen that memo in the file previously. She also found included in the file another memo addressed to her titled “Credit Card Expenses,” and one Memo to File, also titled “Credit Card Expenses.” The memos were all dated December 15, 2017. Ms. Lauerman had not seen any of these memos prior to February 11, 2018. The memos, which Ms. Polizzotto created to support her reimbursements, are described below.

1. Ruth’s Chris and Marriott reimbursements

Between the evening of December 15 and the morning of December 18, 2017, Ms. Polizzotto left a check for $566.33 in Ms. Lauerman’s office to repay the Ruth’s Chris and Marriott meal charges. There was no other documentation accompanying the check. In or about February 2018, when Ms. Polizzotto repaid other disallowed charges,18 Ms. Lauerman discovered three memoranda in the file relating to the Ruth’s Chris and Marriott meal charges that had not been there previously. Ms. Lauerman had not seen the memos before and did not know when or how they ended up in the file. The memos were all dated December 15, 2017, the same date as the reimbursement check.

a. December 15, 2017 Memorandum to Peggy Lauerman, subject: Business Expenses

Ms. Lauerman told this investigator that she was first aware of the “Business Expenses” memorandum on February 11, 2018, when Ms. Polizzotto presented it to her along with checks for reimbursement of several charges to the City credit card unrelated to the Ruth’s Chris or Marriott reimbursements. This memo was not provided to Ms. Lauerman with the Ruth’s Chris and Marriott reimbursement on or about December 15, 2017. Further, Ms. Lauerman said she had not seen this or the other two December 15 memos in the packet relating to the Ruth’s Chris and Marriott charges until sometime on or after February 11, 2018.

18 Ms. Polizzotto repaid the other credit card charges on February 11, 2018, which was the first time Ms. Lauerman said she saw the memo addressed to her titled “Business Expenses.”

In this memorandum, Ms. Polizzotto states that they are in the process of drafting an updated Business Expense policy. She also states that she is requesting that Ms. Lauerman conduct “an independent and retroactive review of her business expenses, using the new policy as a guide, to ensure compliance with the spirit and intent of the proposed policy.” She claimed that there was a “lack of guidance” regarding business expense reimbursement and for this reason she was requesting the self-audit.

In addition to being retroactively inserted into the credit card file for the November 2017 statement, this memo was included with each of Ms. Polizzotto’s reimbursements to the City on February 11, 2018, and made it appear that the disallowed charges had been discovered because she had directed the audit of her expenditures.

b. December 15, 2017 Memorandum to Peggy Lauerman, subject: Credit Card Expenses

This memorandum specifically addresses the reimbursements for the Ruth’s Chris and Marriott room service charges. Ms. Lauerman said she never received this memo addressed to her, and only found it sometime after February 11, 2018, when she went back into the credit card statement file for the October 2017 charges, which included the Ruth’s Chris and Marriott charges. She said that the only thing she found on her chair on the morning of December 18, 2017, was the check from Ms. Polizzotto to reimburse the City for those charges.

Ms. Polizzotto stated, in this memorandum to Ms. Lauerman, that “even though meals during travel are reimbursable, given the increased costs associated with conferences, I would prefer to pay for these types of expenses myself until the new policy is finalized that provides appropriate guidance (e.g. implementation of per diems).”

The existing policy explicitly prohibits charging alcohol on a City-issued credit card, and it also specifically states, “Reimbursable expenses must be directly related to the conduct of business... for the City, and be actual, reasonable and necessary. Unnecessary or excessively costly expenditures will not be reimbursable.” (Emphasis added).

Even though the policy does not clearly define “excessively costly,” or provide guidance on how much is considered reasonable, Section 3 of Ordinance 91-252 states: “No claim for reimbursement shall be paid unless it is accompanied by a bona fide receipt. Receipts should show the date, a description of the purchase, vendor identification and amount paid.”

Further, at the time she made this reimbursement, Ms. Polizzotto had already submitted the claim for payment, knowing that she had charged alcohol and other potentially disallowable meals to the City card. She only made the reimbursement after she was confronted with the disallowable charges.

c. December 15, 2017 Memorandum to File, subject: Credit Card Expenses

Seabold Group 19

Fisher Phillips: City of Mill Creek Summary Report of Investigation September 29, 2018

This Memorandum to File was also found with the credit card statement of charges for the October 2017 San Antonio conference. It was not provided to Ms. Lauerman at the time Ms. Polizzotto repaid the Ruth’s Chris and Marriott meal charges on or about December 15, and Ms. Lauerman did not see the memo until she went back into that statement file sometime after February 11, 2018, when she also found the two other memos.

Ms. Polizzotto states in this Memo to File that, while performing the 2016 annual financial audit, the auditors pulled for review the credit card statement and associated documentation for the period October 7 through November 6, 2017, “while the City Manager was in the process of reviewing said charges. The auditors asked if the City Manager could suspend her review in order to allow the auditors to complete the credit card compliance review. Thus, the City Manager’s review could not be completed until after the auditors were finished with the paperwork.” (Emphasis added)

Ms. Polizzotto makes it appear that the auditors kept her from making a timely reimbursement, but the evidence does not support this claim. The auditors had not pulled this statement for review, but rather Ms. Gunderson and Ms. Lauerman initially had several concerns about the expenditures after receiving the credit card statement in the normal course of business. After getting unsatisfactory answers from Ms. Polizzotto, Ms. Lauerman asked Ms. Gunderson to contact the vendors for detailed receipts. Upon getting the detailed receipts, which revealed several disallowable and questionable charges, Ms. Lauerman contacted Ms. Polizzotto again for an explanation. Ms. Polizzotto could not provide justification for the expenses. According to Ms. Lauerman, Ms. Polizzotto took the credit card statement with her to attempt to contact the vendors to rebill the charges to her personal card. While the statement was in her possession at this time, the auditors asked her for the file.

Ms. Polizzotto added in the Memo to File that the hotel was provided two credit cards at check- in for the segregation of personal and professional expenses. She claimed that the Marriott San Antonio does not print paper receipts and that receipts are emailed to the traveler. “It was [sic] until after check out the Traveler learned that not all charges had been appropriately segregated.” There is no evidence that Ms. Polizzotto provided two separate credit cards or that she ever told hotel staff to charge any meal costs to a card different than her City-issued card. Ms. Polizzotto told this investigator that she usually “eyeballs” the charges on check-out and divides charges between personal and business. But even though she received the hotel bill via email and presumably had the opportunity to segregate personal charges prior to receiving the credit card statement, she submitted the entire Ruth’s Chris bill and all of the hotel room service meals for payment, knowing that they included disallowable charges, including alcohol. Further, she wrote on the receipts she submitted to the City that the expenses were for hosting business associates, when in fact they were for meals for one person.

Further, Ms. Polizzotto’s debit and credit card records,19 which she provided to this investigator, reflect that no charges were made to her debit card between October 19 and 29, and none to her credit cards in the entire month of October 2017.

In this memo, Ms. Polizzotto also stated, “Because the City’s new Business Expense Policy had not yet been adopted by Council, and given some charges were not appropriately segregated, Traveler decided to pay for all material meal costs herself.”

There is no evidence that the auditors impeded Ms. Polizzotto from reviewing her credit card charges. She had ample opportunity to review those charges before she originally submitted them for payment by the City. At that time, she had access to the detailed receipts, even though she did not provide them to the City. Additionally, the City received the credit card statement for those charges on November 14, 2017, and that bill was paid on November 30. During that time, Ms. Gunderson left the statement on her desk three times for her signature, which she failed to provide. Finally, Ms. Lauerman took the statement to Ms. Polizzotto and asked about the charges, for which Ms. Polizzotto provided a vague answer with no specific names to allow Finance to validate the business purpose.

Ms. Polizzotto reimbursed the expenses from Ruth’s Chris and the Marriott after she was shown the detailed receipts by Ms. Lauerman. Ultimately, according to Ms. Lauerman, Ms. Polizzotto reimbursed all of the meal costs – even though she may have been entitled to some – because she thought, if she did so, the auditors would not have to see the detailed receipts. At the time Ms. Polizzotto reimbursed all of the meal charges, she was not aware that Ms. Lauerman had already provided the auditors with the detailed receipts.

2. February 11, 2018 reimbursements

On February 11, 2018, Ms. Polizzotto submitted checks to Ms. Lauerman for repayment of other charges that, after she reviewed the detailed receipts provided by Ms. Lauerman, she felt were personal or disallowed. These reimbursements included charges for alcohol at Lombardi’s, the Davenport, and the San Antonio airport ($35.25), a McMenamin’s dinner for two ($82.45, which included $15.75 of alcohol), and excessive tips at the Davenport of $10. These payments are set forth in detail at the end of this report. Along with each of these reimbursements, Ms. Polizzotto included memos to explain and support her payments.

She submitted the December 15, 2017 “Business Expenses” memo addressed to Peggy Lauerman, indicating that she had directed Ms. Lauerman to conduct an audit of her credit card expenditures. Even though this memo was addressed to her, February 11, 2018 was the first time Ms. Lauerman saw this memo. Ms. Lauerman told this investigator she did not see the other two December 15, 2017 memos until she went back into the November 2017 credit card

19 Credit union debit card purchases, heavily redacted, from 8/29/2016 to 11/28/17 and credit card summaries for two accounts for 2015 through 2017.

statement file (containing the Ruth’s Chris and Marriott charges) sometime after February 11, 2018.

Ms. Polizzotto also included with the reimbursements additional memos dated February 11, 2018, for each of the reimbursements, explaining the particular reasons for the reimbursements. These explanations are included in the detail of charges and reimbursements included at the end of this report.

3. Factors suggesting the December 15, 2017 memos were backdated

Several factors indicate that the memos dated December 15, 2017 were in fact written closer to February 11, 2018, when she repaid several of the charges, and that some of the information they contain is not factual.

? Ms. Polizzotto did not direct Ms. Lauerman to conduct an audit of her expenditures. Ms. Lauerman obtained the original detailed receipts for the Ruth’s Chris and Marriott meal charges of her own volition, because of the high amount of the Ruth’s Chris bill, the questionable nature of the “Informal Roundtable” room service charges, and because Ms. Polizzotto would or could not provide the names of the people she met with on those dates, which were no more than one month earlier. After the SAO auditors were made aware of the detailed charges for the Ruth’s Chris and Marriott meals, they expanded the audit and requested detailed receipts for all of Ms. Polizzotto’s credit card charges. On December 21, 2017, the auditors submitted a list of itemized receipts they wanted the City to provide, and Ms. Polizzotto would have become aware of the expanded audit on or about that date. According to Ms. Lauerman, after the auditors expanded their audit, Ms. Polizzotto asked her to obtain those detailed receipts herself and send them to her personal email.

Ms. Lauerman told this investigator that she told Ms. Polizzotto what Mr. Missall said and Ms. Polizzotto dropped that request.

? In mid-January, after Ms. Lauerman returned from a vacation, she and Ms. Polizzotto met at La Palmera for drinks. Ms. Lauerman told this investigator that during this meeting, Ms. Polizzotto told her, “I think I’ll have you go back and self-audit.” According to Ms. Lauerman, Ms. Polizzotto was fully aware that the auditors already had most of the detailed receipts. This was the first time she heard of this idea from Ms. Polizzotto. Ms. Polizzotto told this investigator that she specifically told Ms. Lauerman on December 15, 2017, to conduct an audit of her credit card expenditures. She said when she got the receipts, she determined what needed to be reimbursed and she made those reimbursements in February 2018. “That’s a [direct] result of [my] asking for that” on December 15. As set forth above, this statement is not supported by the evidence.

? Ms. Lauerman said that February 11, 2018, was the first time she saw any of the memos, even though several of them were addressed to her. Further, on February 15, 2018, Ms.

Lauerman documented a meeting she had with Ms. Polizzotto in which they discussed the dates of the December 15 memos. According to Ms. Lauerman, she told Ms. Polizzotto that it was the auditors who had requested the expense detail when they were at the City during their field audit, and she said the memos are not accurate. Ms. Lauerman told this investigator that she questioned why the memos were dated December 15, 2017, and Ms. Polizzotto reportedly told her they had to have some date on them. Ms. Lauerman told this investigator that she suggested February 11, the date they were presented to her, but ultimately Ms. Polizzotto left December 15 on the memos.

When asked about the December 15 memos, Ms. Polizzotto told this investigator she had talked to Ms. Lauerman on December 15 about drafting a new business expense policy and directed her to conduct an audit of her expenses. She said that on December 15, 2017, “I specifically told her to go back and pull those receipts” relating to her credit card charges.20 As set forth above, the evidence does not support this claim.

? In May 2018, Ms. Lauerman submitted a Public Records Request to obtain the metadata for the memos Ms. Polizzotto included with the reimbursements. IT Manager James Busch conducted a comprehensive search and could not find any responsive records. The memos dated December 15, 2017 were not written on that date, or any date, using the City system. They were likely written elsewhere. But even though two of the three December 15 memos were addressed to Ms. Lauerman, the “Business Expenses” memo was not presented to her until February 11, 2018, when Ms. Polizzotto included it with her repayment of the other disallowed charges, and the others were later found attached to the credit card statement for the Ruth’s Chris and Marriott charges.

V. MS. POLIZZOTTO A. Ms.Polizzotto’sExplanations

In the memoranda Ms. Polizzotto drafted to accompany her reimbursements and in her interview with this investigator, Ms. Polizzotto provided explanations for charging disallowed expenditures to the City.

1. Ms. Polizzotto said the City’s policy was not clear and did not give sufficient guidance about what is allowed.

20 At the time of the interview with Ms. Polizzotto, this investigator did not have all the pertinent information about the timing of the memos and did not pursue this matter further with her. However, it should be noted that when asked about the December 15 memos, Ms. Polizzotto turned the subject back to how Ms. Lauerman had become more defensive and difficult, and she felt Ms. Lauerman was concerned about receiving a finding from the SAO. She blamed Ms. Lauerman for not having a policy update, which Ms. Polizzotto said prohibited her from adequately reviewing the October 2017 San Antonio charges. She raised several other issues, mostly to put negative attention on Ms. Lauerman.

This explanation does not support Ms. Polizzotto’s charging alcohol on the City credit card and submitting those charges for reimbursement. Nor does it support her failure to provide adequate information or documentation to validate the business purpose of her expenditures. Ms. Polizzotto had been informed at least as of March 2017 of the SAO’s expectation that she provide documentation to validate the business purpose of her expenses and yet she intentionally failed to provide it on many occasions. Additionally, according to Ms. Gunderson, Ms. Polizzotto was informed in late 2015 by Ms. Gunderson and Mr. Manuel of the need to provide detailed receipts and more detailed information to allow them to validate the business purpose of her expenditures, but she failed to comply. She failed to provide detailed receipts, which would have revealed charges for alcohol, and potentially reveal meal charges for family members. She mischaracterized the nature of some expenditures to make them appear to be business-related, and failed to provide adequate documentation to allow City staff to validate those expenditures.

Ms. Polizzotto said, if the 2017 San Antonio conference were removed, the resulting alcohol charges to the City credit card are around $100, which is de minimis over a three year period.

Ms. Polizzotto charged approximately $122 in alcohol to the City credit card during the San Antonio conference. State auditors found a total of $269 in alcohol charges to the City card over the three year period. The policy clearly prohibits the purchase of alcohol with the City card: “Liquor and expenses of a spouse or other person are not authorized to receive reimbursement...” It also clearly states: “The City credit card shall not be used for personal use... whether or not repaid to the City at a later date.” (Ord 91-252 Sections 4 and 11). Further, Ms. Polizzotto made no attempt to reimburse the City for any alcohol purchases until the auditors obtained detailed receipts and those purchases were revealed.

Ms. Polizzotto said that Finance was responsible for reviewing her expenses and notifying her if they found any problems. She told this investigator many times that she relied on Finance to tell her if they needed more information or had any concerns about her expenditures.

Ms. Polizzotto did not provide sufficient documentation for Finance to make that determination. Additionally, some members of Finance were intimidated whenever they asked for detailed receipts or for more specific information to validate the business purpose. Notwithstanding, if a more detailed policy were in place, they may have had more support to stand up to Ms. Polizzotto.

Ms. Polizzotto said she split costs during business travel between personal and business, and she said her personal credit and debit card statements would support that. She added that, when she checked out of a hotel after a conference, she “eyeballed” amounts to determine what she would charge to personal versus business expenses.

The overwhelming majority of charges during Ms. Polizzotto’s business travel were put on the City credit card and were not split. Further, this explanation does not establish why Ms. Polizzotto charged alcohol to the City credit card, failed to provide detailed receipts which would have revealed those charges, and failed to provide detailed information regarding her business meetings to enable Finance to validate the business purpose of the expenditure.

Ms. Polizzotto expected Ms. Lauerman to develop an updated policy, and when she didn’t, it prohibited Ms. Polizzotto from reviewing her October 2017 San Antonio charges.

There is no evidence that Ms. Polizzotto was prohibited from reviewing her expenditures because of a lack of an updated policy. Additionally, Ms. Polizzotto was not reviewing her expenditures for that period, rather, she was attempting to get them rebilled to her personal card after the personal expenditures were revealed. The evidence establishes that Ms. Polizzotto did not make any efforts to respond to the auditors’ prior recommendations regarding policies until after the details of the Ruth’s Chris and other San Antonio expenditures came to light.

Ms. Polizzotto explained to this investigator that she did not want to reveal the names of the people she met with because she did not want the union or public to learn of them. She said her meetings related to contracts and other City business that she felt would be compromised if made public.

However, when asked why she did not reveal the names of the business associates she provided meals for at conferences, Ms. Polizzotto told this investigator that there was no reason and it was not a “conscious thought.” She then said she didn’t think she had to provide names. She said she only began to question whether she should be providing names when the audit was taking place in late 2017 and early 2018, when they asked for detailed receipts. She said that when she learned they were asking for detailed receipts from the vendors, she asked Ms. Lauerman whether she should have been providing that information and Ms. Lauerman told her, “No” because the auditors had not asked for it previously, in the audit of the 2015 finances. Ms. Polizzotto added that the City had a legal opinion that detailed receipts were not required.21 Ms. Polizzotto said that the City’s policy only required the date and the name of the restaurant.22

These statements are not supported by the evidence presented elsewhere in this report. Ms. Polizzotto knew since at least March 2017 (from the SAO) and probably since 2015 (from the accounts payable specialist and her own Finance director) that she needed to provide more documentation to substantiate the public purpose of her expenditures.

21 The only legal opinion provided to this investigator was the June 7, 2018 letter referenced earlier in this report. To my knowledge, there was no prior legal opinion regarding this issue.

22 The policy also requires a description of the purchase.

Regarding the meetings at the fall 2015 ICMA conference that Ms. Polizzotto indicated were with ICMA officials, Ms. Polizzotto told this investigator, and Ms. Gunderson and Mr. Manuel at the time, that she could not recall who she met with.23 She also told this investigator that the SAO audit of the 2015 year covered the charges for that conference and no issues were raised.24 However, she also told this investigator, when asked about a charge at the Cheesecake Factory during that same conference three years ago, that she specifically recalled that meeting, and she named the person she met with and described what they discussed.

Ms. Polizzotto told this investigator that she relied on the internal audit process to identify and bill her for any discrepancies in her charges. She said she did not get billed by the City Finance department for any of the charges found in the SAO audit, but she reimbursed certain charges of her own volition. She said usually if she didn’t get a bill from Finance to reimburse questionable charges, she assumed they reviewed everything and there were no problems. She said it was only when the auditors came and asked about the charges, “It alerted me to a problem, that’s when I asked for the review,” referring to the internal audit she claims she asked Ms. Lauerman to conduct on December 15, 2017. The evidence establishes that Ms. Polizzotto did not request an audit of her credit card charges, and that she typically did not provide sufficient information to allow the Finance staff to validate whether her charges were for a legitimate business purpose.

Regarding the San Antonio ICMA conference in October 2017, Ms. Polizzotto told this investigator, “I think Peggy got me the hotel receipt, they [the hotel] went green and didn’t give me a receipt. I evaluated this the same way I did for the 2015 conference [Motif Hotel in Seattle]. The language is ambiguous in the policy, ‘actual vs reasonable and necessary.’ I just evaluated what I thought I should pay. I picked up a lot of the food costs.” Additionally, Ms. Polizzotto stated that she planned to reimburse any alcohol charges, and that “normally, I’d do that at check out. Clearly some things were missed. I use my best efforts, I don’t get into the granular level. I’d rely on the internal audit functions at the City if I missed anything.”

The evidence establishes that Ms. Polizzotto did not ask Ms. Lauerman to get the original receipts, rather she was confronted with them after Ms. Lauerman had already obtained them. Additionally, Ms. Polizzotto provided records of her personal credit and debit card expenditures and there are no personal charges for any San Antonio expenditures. If Ms. Polizzotto “picked up a lot of food costs,” she did not provide the documentation to support that claim. Further, she said that “normally” she segregates personal or disallowable charges at check out, but we could identify only a couple of instances in the charges we

23 Ms. Gunderson told this investigator that she asked Ms. Polizzotto about those charges when she submitted the receipts in 2015, and that Mr. Manuel also asked her, and that Ms. Polizzotto failed to provide the names or details of those meetings at that time, when she would presumably have a better recollection of the events.

24 The SAO audit of the 2015 year did not request detailed receipts. However, they examined the City’s processes for expense reimbursement and identified weaknesses, which included the City’s lack of requirements for detailed support to validate the business purpose of expenditures.

reviewed when she did that. And those instances do not impact the SAO’s findings regarding charges with an unknown business purpose. Finally, Ms. Polizzotto’s claim that she relies on the internal audit functions at the City to pick up anything she missed are not supported by the evidence. Ms. Polizzotto did not provide the City enough information to properly validate her claims. The City Finance staff would not be able to identify disallowed expenditures, such as alcohol or other personal expenditures, without the detailed receipts. And the evidence establishes that Ms. Polizzotto failed to provide that documentation to her Finance staff, even after being asked for it, and being told by the SAO that it was required.

10. Ms. Polizzotto told this investigator that she thought there had been an initial complaint made to the auditors about her, and that’s why they did the credit card review and got the fraud division involved. “After they came back with no fraud finding, Peggy started digging more. I don’t want to ascribe those kinds of devious maneuvers, but I think she had reason to be concerned about having an audit finding and have it come back on her.”

The evidence does not support this claim. The evidence does establish that Ms. Lauerman unilaterally obtained the detailed receipts for the Ruth’s Chris and Marriott expenditures, which contained charges for alcohol and other questionable items, and shared those with the auditors. But the evidence also establishes that it was her duty as Finance director to follow up on red flags and reveal discrepancies such as questionable or disallowed charges to the City. She did not fabricate those charges, but rather, Ms. Polizzotto made them and charged them to the City. Further, the SAO’s records reflect that after they initially became aware of alcohol and other charges for which they could not validate a legitimate business purpose, with guidance from at least four upper-level managers at SAO, decided to expand the audit and obtain the details for all of Ms. Polizzotto’s credit card purchases. As part of her duties as the Finance director, Ms. Lauerman worked with the auditors to fulfill their requests for detailed documentation of Ms. Polizzotto’s credit card expenditures.

B. Ms.Polizzotto’sKnowledgeofSAO’sExpectations

The evidence establishes that Ms. Polizzotto was fully aware that Finance and the SAO expected her to submit detailed receipts, and was fully aware that the expenditures she charged to the City credit card were not allowed.

1. March 2017 SAO findings

In March 2017, the SAO issued a finding regarding weaknesses in internal controls over the City of Mill Creek’s policies and procedures for tracking and monitoring the use of its credit cards during 2015 and 2016. Ms. Polizzotto provided this investigator with a copy of the SAO’s Management Letter, dated March 16, 2017, which included a summary of specific matters the SAO identified in planning and performing their accountability audit for 2015. Ms. Polizzotto had yellow-highlighted several key findings and recommendations in the summary, indicating that she had read the entire summary. It is not known when she highlighted the document, but she did have possession of the document at the time SAO presented the results, in March 2017.

Ms. Polizzotto’s highlighted portions in the SAO’s summary are as follows:

[The City has not updated its policy... for credit cards since 1991 and] it does not include language for paying credit card bills and recovering disallowed charges.

Though the City does review credit card purchases, the review process is not adequate to determine whether each purchase represents a valid use of public funds and that underlying records provide adequate support.

The City does not have a policy for having meals with meetings and we were unable to verify the business purpose of these transactions.

We recommend: [that the City strengthen its internal controls over the safeguarding of public resources by] performing adequate monitoring of credit card transactions to ensure that employees maintain all receipts and support to verify the validity and business purpose of each transaction.

Ms. Polizzotto used the sections above to support her claim that Finance, and in particular Ms. Lauerman, was at fault for not adequately reviewing her credit card expenditures. She claimed that Finance did not do their job because they never asked her for her detailed receipts. She also claimed that detailed receipts were not required by the existing policies.

However, as of March 2017, Ms. Polizzotto was aware that the State Auditor’s Office expected that she and other employees submit detailed receipts to support their expenditures and on at least seven occasions after March 2017 she failed to provide detailed receipts to support her credit card expenditures. Those expenditures included at least $141 in alcohol, and several meals for which a business purpose was not substantiated, including a $158 meal at Ruth’s Chris Steakhouse, which she attempted to conceal by indicating it was a business meeting regarding “Credentialing.”

2. Prior high-cost meals and alcohol charged to personal credit card

In April 2017, Ms. Polizzotto, Ms. Lauerman and the City HR director went to a conference in Long Beach, California. They had one expensive meal that, according to Ms. Lauerman, Ms. Polizzotto said they should all put on their personal credit cards because of the high cost of the meal. Ms. Lauerman provided the detailed meal receipt from the restaurant. Ms. Polizzotto told this investigator she did not recall how they decided to pay the bill. Her personal credit card statements reflect the charge, and she said it looked like they decided to split the bill among them, but she did not recall doing that because of the high cost of the meal.

Further, Ms. Lauerman told this investigator that she, Ms. Polizzotto and the Chief of Police had traveled to conferences out of town and they all charged their alcohol to their personal credit cards. She said it was always done that way and no one, including Ms. Polizzotto, suggested putting alcohol on the City credit card.

3. Finance personnel requested additional documentation since 2015

Ms. Polizzotto told this investigator that no one ever asked her for detailed receipts or additional information. She said she submitted her receipts to Jodie Gunderson, and if Ms. Polizzotto did not have receipts, Ms. Gunderson would go directly to the vendor. Ms. Polizzotto said several times that she relied on Finance to audit her expenditures and inform her if there were any problems, and she said they never did.

Ms. Gunderson told this investigator that on several occasions since Ms. Polizzotto came to the City, Ms. Gunderson attempted to get additional information from her to be able to establish a business purpose for an expense. She said Ms. Polizzotto told her on several occasions that she would look for her receipt, but ultimately never provided her with detailed receipts when asked. She also said that her supervisor prior to Ms. Lauerman, Landy Manuel, informed Ms. Polizzotto of the policies requiring documentation, and asked on at least two occasions for details regarding business meals she had charged to the City credit card. Ms. Gunderson said that Mr. Manuel eventually told her to just accept Ms. Polizzotto’s word that the expense was business-related. Ms. Gunderson told this investigator that she was intimidated by Ms. Polizzotto and eventually stopped asking for detailed information.

Ms. Lauerman, who came to the City in May 2016, continued the practice of not asking for detailed information until November 2017 when she noticed the “Informal Roundtable” meals and the high cost of a Ruth’s Chris meal charged to the City Manager’s City card during an ICMA conference in San Antonio.

Whatever the reasons Finance had for not requesting additional documentation, Ms. Polizzotto knew it was prohibited to charge alcohol to the City, she knew she had charged it to the City and that the City paid for it, on numerous occasions. She also knew she needed to provide enough documentation to validate the business purpose, whether Finance asked her for it or not.

4. When confronted with the Ruth’s Chris and Marriott charges, Ms. Polizzotto immediately attempted to get them rebilled to her personal card. She ultimately reimbursed the City.

When Ms. Lauerman showed Ms. Polizzotto the detailed invoices reflecting alcohol purchases and questionable meal charges, Ms. Polizzotto did not try to explain or provide more information to establish a business purpose. Rather, she immediately thought of how to rebill the charges to her personal card. Ultimately, within a couple of days of seeing the detailed receipts, Ms. Polizzotto repaid the charges. She knew at the time she charged those expenses to her City credit card that they were disallowable.

VI. DETAIL OF CHARGES AND REIMBURSEMENTS A. DocumentationofChargesReviewedbySeaboldGroup

Following is a list of credit card purchases for which the original documentation was lacking in sufficient detail to allow a reviewer to determine whether there was a legitimate business purpose.25 At the time she incurred these expenses, Ms. Polizzotto would have been aware of the nature of the purchase and with whom she met, but she failed to provide adequate documentation to validate the public purpose.

Date

Vendor

Nature of Expenditure

Original Receipt

Detailed Receipt

Repaid by CM

Alcohol

9/2015

Motif Hotel, Seattle (ICMA Conf)

Meals and alcohol.

(Local conference so hotel not allowable expense. CM paid for the hotel room with personal card.)

4 meals shown as meal with “ICMA officials.” Detail of the meals was not shown on original receipt.

Meals, including 4 room service meals which were originally shown as meals with “ICMA officials.” CM did not provide ICMA officials’ names.

CM’s husband with her at conf.

One meal marked “Dinner with ICMA Officials” (plural) was room service for 2 people, cost $126.70, including a bottle of wine ($35).26 It appears she charged her husband’s dinner on the City credit card.

Another room service meal is shown as “Lunch with ICMA Officials.” It was for 1 guest and included 2 Cosmos ($37).

$ 72.00

25 These include receipts and reimbursement documentation that was provided to this investigator by the City. The SAO reviewed additional documentation, which is detailed in their work papers.

26 The Motif meal charge for $126.70 caught the attention of Ms. Gunderson, who told this investigator she reported it to Finance director Landy Manuel. They reportedly asked for the names of the ICMA officials but the CM did not provide them.

Date

Vendor

Nature of Expenditure

Original Receipt

Detailed Receipt

Repaid by CM

Alcohol

Room service dinners on 2 separate nights for $78 each were marked “Dinner w/ICMA attendee,” (singular) but the dinner for $126.70 (see above) was marked “Dinner w/ ICMA Officials,” plural. The room service detailed receipt shows only two guests. It appears CM was attempting to distract from the high cost of the meal by indicating that there were more than two diners.

4/19/2016

Lombardi’s Restaurant27

Meal, alcohol

“Business lunch”

2 meals; 1 Peroni draft ($5.50); 1 Bombay martini ($10.25).

On 2/11/18 CM repaid the alcohol charges which she said were “inadvertently charged to the City credit card.”

$ 15.75

$ 15.75

7/25/2016

McMenamin’s Restaurant

Meal, alcohol

“Business Dinner Meeting”

2 meals; 2 Absolut vodkas ($17); 4 Ports ($14).

On 2/11/18 CM paid back entire bill, saying it was a personal meal inadvertently charged to the City card. However, she originally submitted the receipt to the City

$ 82.45

$ 31.00

27 All reimbursements but the Ruth’s Chris and Marriott repayments included the December 15 memo and a memo dated February 11, 2018, which provided Ms. Polizzotto’s explanation for the reimbursement.

Date

Vendor

Nature of Expenditure

Original Receipt

Detailed Receipt

Repaid by CM

Alcohol

for payment, indicating it was a “Business Dinner Meeting.”28

4/11/2017

Rebel & Rye (NW Regional CM Conference)

Meal

“Dinner w/ Oregon CM)

Not CM’s signature, no tip. The City credit card bill is signed by someone other than CM. Potentially family member.

CM told investigator her husband may have picked her up at the restaurant, they were in a hurry, and he may have signed the City credit card receipt, or their daughter.

She did not provide the name of the Oregon City Manager she said she met with.

7/21/2017

Frost Donuts

Donuts for staff

“Employee recognition, bargaining team after AGSCME negotiation.”

Receipt showed a latte and an iced caramel macchiato along with the donuts.

CM and her daughter brought the donuts to the office, each carrying a coffee. When asked about that during the audit, CM added “Coffee: Meeting with employee who requested confidential mtg

28 Ms. Polizzotto wrote “Business Dinner” on the receipt at the time of the dinner, and submitted it to the City for payment. However, during the audit process she said this dinner was inadvertently charged to her City card, that it was actually personal and she tried to void and rebill on her personal card. She said the server charged her personal card but failed to void the City bill, so there was a duplicate billing. There is no such charge on any of the personal cards for which Ms. Polizzotto provided statements.

Date

Vendor

Nature of Expenditure

Original Receipt

Detailed Receipt

Repaid by CM

Alcohol

with CM.” CM could not provide the name of the employee to this investigator.

8/25/2017

Davenport Hotel (WCMA Conference)

Meals, alcohol

Original receipt was the hotel bill, showing room fee and room service charges.

Daughter accompanied CM to conference.

Detailed receipts for room service show $7 for wine (CM repaid on 2/11/18), $20 in additional tips (hotel added 18% gratuity and service chg, and CM tipped $5 on top of that, resulting in tips from 29% – 43%. CM repaid $10 of the tips on 2/11/18). Also, receipts reflect potential meals for CM’s daughter.

CM paid for 3 dinners personally ($238.32) but charged all other hotel meals to the City, including 2 lunches and a breakfast, meals that were also provided by the conference. The SAO pointed this out as an issue in their audit findings.

In 2/11/18 memo included with the reimbursement of the wine ($7) and tips ($10), CM stated that all charges for her daughter were segregated to the CM’s personal credit card. In fact, three dinners were charged to the CM’s personal card ($238.32),

$17.00

$ 7.00

Date

Vendor

Nature of Expenditure

Original Receipt

Detailed Receipt

Repaid by CM

Alcohol

but all other hotel charges, including meals ordered during times the conference was in session or was providing a meal, were charged to the City card.

On 8/24, room service breakfast was ordered at 11:03 AM for 1 guest, during which time a conf presentation was occurring. At 12:27 PM a lunch of salmon fettucine and diet Pepsi was ordered from room service. CM did not deny that one of these meals was for her daughter, but said there’s no rule that says you have to eat the meal provided at a conference, and also that she “eyeballed” meal charges upon check-out and split them using her best judgment. Using that criteria, she paid for dinners personally and the other meals she charged to the City.

2/11/18 memo accompanying the reimbursement states: “all charges pertaining to CM’s daughter were segregated to the CM’s personal credit card. For breakfast and

Date

Vendor

Nature of Expenditure

Original Receipt

Detailed Receipt

Repaid by CM

Alcohol

lunch charges, when dining with her daughter, the CM charged the City for the least expensive meal.” There is no instance where this occurred.

8/25 restaurant breakfast at 11:02 AM, 2 guests; CM wrote “Breakfast meeting Lean presenter re: Lean training for dept. directors.” CM did not provide the name to PL after several attempts.

10/25/2017

Marriott Riverwalk Hotel, San Antonio (ICMA)

Meals, alcohol

Hotel bill showing 4 “Informal Roundtable” room service meals.

All detailed receipts show room service meals were for 1 guest, $94 in alcohol. CM repaid entire meal charges after PL showed her the detailed receipts.

Ms. Polizzotto would be entitled to charge certain meals related to business travel, excluding alcohol, but she chose to repay all of the meals, stating in the memo she wrote in February 2018: “Given the increased costs associated with conferences, I would prefer to pay for these types of expenses myself until... a policy is finalized that provides appropriate guidance (e.g.

$408.19

$ 94.00

Date

Vendor

Nature of Expenditure

Original Receipt

Detailed Receipt

Repaid by CM

Alcohol

implementation of per diems.)”.

10/23/2017

Ruth’s Chris

Meal, alcohol

“Credentialing dinner”

Original receipt was the credit card receipt showing no details.

“Mill Creek Hosted dinner”

$158.14 meal for one person, including $28 for 2 cocktails and cre?me brulee.

CM repaid entire bill after PL showed her the detailed receipt. 3 memos dated Dec 15, 2017 were later included in the file, indicating that CM initiated a self-audit which uncovered the erroneous charges.

$158.14

$ 28.00

10/23/2017

Marriott Riverwalk Hotel

Dessert

Included in hotel bill

After $158.14 meal at Ruth’s Chris, CM returned to hotel and ordered room service dessert for $29.23, including 2 S’mores cupcakes and 1 kids ice cream scoop.

This was repaid with the other food charges on the Marriott bill.

10/25/2017

La Gloria Airport

Meal, alcohol

“Dinner”

Detail shows dinner and a margarita ($12.50).

CM reimbursed alcohol, said it was another person’s drink that was inadvertently charged to her City credit card.

$ 12.50

$ 12.50

Date

Vendor

Nature of Expenditure

Original Receipt

Detailed Receipt

Repaid by CM

Alcohol

Totals

$ 694.03

$260.2529

29 The SAO found $269 in alcohol charges from their full review of CM’s credit card charges.

Seabold Group 37

 

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