In the ongoing drama, Police Accounts of Our Lives, City Controller Michael Lamb today denied any knowledge of potentially fraudulent or unauthorized slush accounts and theorized that the city's finance department misrepresented funds.
He also used the press conference to launch an anti-fraud hotline.
"The need here is obvious," he said at a press conference, citing the federal investigation into the city's police bureau that led to the resignation of former police chief Nate Harper and questions about funds in the bureau's special events department. "This administration's response has been to look for who to blame."
Lamb denied that he knew as recently as three months ago about potential fraudulent accounts at the Greater Pittsburgh Police Federal Credit Union. Lamb said that a member of the Fraternal Order of Police, Officer Bob Swartzwelder, came to him in November for a "general discussion" on how funds come into the city, where they go and who handles it.
Swartzwelder returned to the office in December, Lamb said, "with more sort of detailed information."
"Then we began our initial questions over at the bureau and based on the answers to those questions that we decided we should go over and audit," Lamb said.
"Again we weren't looking at fraud at that point," Lamb said. "We were looking at what we thought were questionable management practices."
Lamb said Swartzwelder "had no suspicion" of fraud. "I think he's just as surprised about this whole thing as anybody."
Lamb said his auditors first had to do a required audit of the bureau's property room which is "an all hands on deck kind of thing." Then, as he went to conduct the audit for the special events office, "the FBI seized many of the files we need".
Lamb said that his office isn't responsible for tracking city revenue: "Any incoming money is audited and accounted for by the treasurer's office and finance department."
Lamb said that the treasurer's office and the city finance department should have noticed funds "that should have been identified as city revenue were misidentified as overtime reimbursement. Those funds went into the premium pay account when some of the money was taxpayer money."
By Lamb's theory, the improper channeling of money to questionable credit union accounts "basically padded the [premium pay] account so there was money available in that account, so if someone were going to pilfer checks, it would have gone unnoticed." But he says his theory still has to be proven by his audit and the investigation.
Lamb says the padding may not be the result of a nefarious plot but unintentional misrepresentation of funds.
"Our original intent...was to look at what we think is the mismanagement of the money which led to the padding, not a conspiracy to commit fraud. ... This, we think, provided the opportunity for fraud, but maybe was not the fraud itself."
Lamb also announced the formation of a fraud hotline in his office, so city employees, vendors and public can report fraud, waste and abuse of city tax dollars.
The hotline launches this Friday. Those with tips or complaints can call 412-255-4777.
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