No Stone Unturned?

It certainly is a big bun. It's a very big bun!  A big fluffy bun. It's a very big, fluffy bun! Where's the beef? Hey, where's the beef?  - Wendy's 1984 commercial 

The phrase "Where's the beef?" first came to public attention as a television commercial for the Wendy's chain of hamburger restaurants in 1984. In the ad an elderly lady receives a burger with a massive bun which causes her to exclaim angrily, "Where's the beef?"

That was my reaction having heard Chief Michael Sullivan's report at the Town workshop of Tuesday, April 23, 2013 on his investigation of police overtime charges following the resignation of Officer Sherwood for filing for four hours of overtime he did not work.  

My expectations had been raised by an editorial in The Journal News of February 07, 2013 which stated:

The Town of Clarkstown has announced an audit of Police Department overtime after an officer resigned rather than face departmental charges for receiving payment for overtime he did not work.  The inquiry shouldn’t end there. In a town where six-digit police salaries are the norm, the probe should come as part of a larger examination of police staffing needs and overall compensation. This inquiry should be conducted by outside experts on police operations and management. The editorial concluded that taxpayers deserve nothing less than an independent review.

The Journal News went on to provide some facts about police costs in Clarkstown:

The average salary in 2012 for a Clarkstown Police Department member was better than Gov. Cuomo’s at $179,000.  Seven of the twenty highest-paid workers in local government in New York are Clarkstown Police Department employees. Recently Officer Sherwood left the department having earned more than $81,000 in overtime in 2012.  He was paid a salary of $125,166 in 2012, but his total income for the year, according to SeeThroughNY.net/payrolls/towns/, was $206,237, including overtime. Police said he filed for about $400 in overtime he did not work.

In addition to the huge amount of overtime Officer Sherwood accumulated, it might come as a matter of amazement to taxpayers that William Sherwood’s father was a former police chief of Clarkstown. Chief Sherwood served two years in Clarkstown's top spot and 32 years with the department overall retiring in 2004. His pension which was mentioned in a NY Times article entitled Crime May Not Pay But Fighting It In This Town Sure Does may shock you.  In its article the NY Times delineated the outrageous salaries and gross abuse of overtime, especially in the final years of a Clarkstown officer's service, to pump up pension payments.  Clarkstown Captain Purtill was paid $543,415 before his retirement making him "by far" the highest-paid public employee in New York.  Purtill retired with the highest Rockland pension at $162,614.  Guess what - the second highest pension is being received by Purtill's former boss, ex-Chief William Sherwood, who receives only a couple of hundred dollars less than Purtill at $162,037.

In his opening statement preceding the report on his findings Chief Sullivan began his presentation by saying:

Nobody asked us to do this - we decided to do this on our own. Now when I talk about this overtime 'audit' - really, it was not an 'audit' - it was more of an 'investigation' - an audit slash investigation - and when you talk of overtime abuse most people think of working overtime that is not needed to enhance income or for pension padding. Those are all important issues to be sure but that was not the purpose of this 'audit' .... the purpose of this 'audit slash investigation' was to determine if any officers were putting in for overtime that they were not working. 

He then continued to deny that an external auditor could have done this job by declaring:

This was something that we had to do ourselves.  I don't think an outside independent auditor could have done this particular investigation in the way that we did it.  First of all you would have to have really detailed knowledge of the police department, the court system, you would have to know the people ... and an outside auditor would not have had access to the outside records, the audiotapes from the courts that we examined over painstaking hours of examination.  They just would not have had that so I'm satisfied that it was the right decision. 

All of this presumes that an external auditor could not request and receive any information from the police department or the court system and that the police department could not provide access to any records that an external auditor wished to examine. This is, of course, preposterous.

I pointed out earlier in the article StoneTurn Could Turn Stones that Clarkstown has not been immune to past problems with its police department and its present problems are not unique to the Town of Clarkstown either. For example in March 2013 an external auditor found there should be complete overhaul revamp of Worcester's police-detail payment system. The auditor tested a sample of police detail payroll transactions during fiscal year 2012. It found that for one of twenty transactions tested, the police detail hours worked as listed in the payroll journal (source document for payroll charges to the general ledger) did not reconcile to the related time sheet signed by the police officer and direct supervisor. It also found that for two of the twenty transactions tested, time sheets were not signed by a direct supervisor. 

The type of audit which could remove future suspicions that will possibly hang over the internal "audit slash investigation" that was conducted by the Clarkstown PD is described in an article about a case in Vermont involving a police officer's fraudulent timesheets. The forensic auditor, StoneTurn, was retained after a Vermont State Police trooper filed fraudulent timesheets which resulted in his imprisonment.

StoneTurn used forensic data analytics — algorithms and analyses of data to identify indicators of fraud, waste and abuse. The study determined that the department under investigation did not have adequate internal controls across the process of approving, reporting, processing and monitoring overtime. StoneTurn gave the State a list of recommendations for tightening oversight of employee reporting. Their analysis showed that 85 percent of the department’s 800 employees were at very low risk of abusing the overtime system. Sixteen individuals showed patterns of overtime use that the department had to investigate. Ninety-five individuals, or about 12 percent of the workforce, exceeded the average overtime percentage total by more than 50 percent.   Significantly, 88 individuals reduced their overtime by 20 percent after the announcement of the criminal investigation using StoneTurn.

This ‘audit slash investigation’ which Sullivan conducted leaves numerous questions unanswered such as:

1) How can a subordinate officer not feel his career to be in jeopardy if he were to report to his superior that he knew of similar overtime charges as were made by Sherwood had been filed by other officers?

2) What do we expect a superior officer to do if he has approved overtime that was illegitimate either knowingly or unknowingly? 

3) How does a subordinate officer who may know that a superior officer has been signing improper overtime sheets report this knowledge?

4) How are the squads made up and what is their supervision?  Do officers have their overtime sheets signed by a sergeant? Do sergeants have their overtime signed by another sergeant or a lieutenant? Are there any lieutenants who have their overtime signed by a sergeant or other subordinate?

5) Do supervisors set up prearranged details to earn overtime? If there is nothing for a supervisor to do, will they make something up?  Presumably, patrol officers do not need much supervision which raises the question of how many supervisors are assigned to each squad?  Could work that is being done on overtime just as easily be performed while working the regular shift?

6) Sherwood is suspected by the public of just being the tip of an iceberg. Few believe that he resigned from a $200,000 a year job for a four hour overtime miscue.  How many charges did Sherwood have pending against him? Was it just the one, ten, fifty or maybe there were eighty-nine? Was he "allowed" to resign and multiple charges dropped against him because those in the Town government didn't want his overtime problems to get out? Sherwood belonged to the SWAT team; was Sherwood's overtime in line with the other members of this group?  How does the overtime of the SWAT team compare with a cross section of non-SWAT team members?

7) Given Chief Sullivan's statement - honestly the system that monitored overtime submissions was basically one relying on "the honor system" - raises the question of what business management controls, routinely used in all external businesses to monitor, check and control employee submissions for reimbursement, need to be instituted in the police department?

An outside auditor group not previously associated with the Town of Clarkstown should be retained immediately to interview all police department employees individually and in confidence which would alleviate problems such as rumors that one person had 'ratted out' another person in the department.  The group should be asked to examine all invoices for overtime for the years that Officer Sherwood's irregularities were believed to occur.  It should also interview all members of the police department including Chief Sullivan, Captain Ovchinnikoff and the lieutenants who conducted the present internal 'audit slash investigation' about their knowledge of overtime irregularities. 

That Sullivan's 'audit slash investigation' would be "rolled into" the routine annual audit of the Town is not acceptable simply because the Town, its police department members and its local auditor, Korn Rosenbaum LLP of Pomona, are not equipped with the necessary analytics and computer algorithms to properly search a large amount of overtime records to see suspicious patterns.

When asked why investigators did not look at all kinds of overtime, Sullivan said it would have "been too time consuming".

So what is the status at this time of the Town's response to the Journal New's editorial which stated that "taxpayers deserve nothing less than an independent review"?  

New City Patch in its article Clarkstown Police Overtime Audit Presented reported that the police department's internal investigation examined only whether the overtime of officers for court appearances could be confirmed saying:

According to Sullivan the audit included 704 submissions of overtime filed by 95 different officers. There were 236 instances of overtime for Clarkstown Justice Court vehicle and traffic cases, 103 for Upper Nyack Justice Court vehicle and traffic cases and 365 submissions for other matters. The total of court time amounted to 2,778 hours. 

Anne Pinzow writing in the May 01, 2013 issue of Our Town said:

One area where there seems to be a problem was in the verification of attendance for traffic tickets. Chief Sullivan wrote in the audit, "If we found at least one ticket which indicated an officer was present to our satisfaction we did not look at any other tickets for that officer for that court session as they would not provide any greater evidentiary value in terms of the officer's attendance.

This begged question, what if an officer was there for four tickets but only appeared for one?

Chief Sullivan said there was no way to independently verify each single traffic ticket and did not deny that such a thing could happen. He said judges only write the disposition on the ticket, not the name of the officer who is the witness and should be prosecuting the ticket. However if an officer (B) other than the one who issued the ticket (A) is there, because he's not the witness the judge would indicate the court attendance of the officer (B).

He said that if no other officer's name was on a ticket then they had to assume that Officer A was in attendance.

"We investigated it to the point until we could reasonably establish to our satisfaction that the officer was there we would assume that he was there for all of the tickets. While the whole point of an audit is not to assume", Chief Sullivan said, "In this particular case there was no way to absolutely, 100% verify that everybody was there. Certain things we had to take that it was probably correct."

For future improvement in management controls we are told that the department now requires officers making court appearances to sign in and out of its computerized Police Officer Scheduling System (POSS) and has asked the town to have the courts maintain an 'officer sign in sheet'.  

As to the Town's outside auditor, Korn Rosenbaum, the extent of their 'audit' was that they requested 53 overtime sheets and the relevant documentation.

Clarkstown PBA Head, John Hanchar, issued a statement after the release of Sullivan's report saying the PBA members adhere to high ethical standards. After an isolated situation, caught by safeguards already in place and dealt with swiftly and sternly, "our collective integrity was nevertheless challenged by some", he said.

Hanchar should know that standard practice in industry is not to question anyone's integrity without facts but to question every process surrounding a breakdown of the system in which an employee has been found to have abused the process and was fired for that misconduct.  

Chief Sullivan and Mr. Hanchar should take note that when one manages people in industry one routinely audits expense receipts. If something unusual is found an internal investigation is conducted. If something is found to have been fraudulent the person is fired. At that point the manager steps away, brings in a forensic auditor, explains what has been discovered and what action has been taken. The auditor conducts an independent forensic audit of the whole department including the receipts of the department manager himself. As part of the audit the auditor then provides recommendations to the Department Manager's managers for improvement in procedures based on 'best practices' known by the auditor from auditing other organizations.  

In the case of Chief Sullivan his 'management' are the members of the Town Board but their oversight of police overtime charges has been nothing short of abysmal confirmed by the fact that not one question was asked in the public meeting about Chief Sullivan's report by any of our elected representatives.

On opening the meeting to comments from the public I posed two questions to Chief Sullivan. Here is the transcript of that exchange:

Hull:  Chief Sullivan, Officer Sherwood was reported to have resigned with just four hours of overtime improperly charged.  My question is: Were you at any time aware, either prior to Sherwood's departure from the department or following his departure, of other incidents of Sherwood's overtime charges that caused you or any member of your department or any member of the PBA to have suspicions that there were other overtime abuses by Sherwood?

Sullivan: When the issue with Officer Sherwood came up we did a thorough investigation on that particular case and again I will repeat we had what I felt was a preponderance of the evidence, reasonable cause, to believe that that issue did happen, that he did submit for overtime he didn't work. We initiated ... we were ready to proceed on that.  In addition to that we also audited that particular officer's overtime for the last two years and it is an internal affairs matter and basically the officer is no longer working here - it's been concluded - and we're done.  There was no reason to pursue any other investigation because he had resigned at that point.

Hull:  Can I take it from your answer that there were more than four hours of abuse charged by Officer Sherwood?

Sullivan: No, you can't. 

Hull:   Chief Sullivan, a forensic accounting firm uses forensic data analysis to detect patterns of overtime abuse.  They use computer algorithms to look for patterns in the behavior of employees.  What they do is that they look at overtime charges before a particular incident of fraud or abuse and then they look at the same patterns after the incident of fraud or abuse. Normally what they see is, following the exposure of a particular fraud anyone else who is conducting the same fraud  ... the pattern of their overtime changes.  Did you conduct any forensic analytics of the overtime charges before and after Sherwood's event?

Sullivan:  No.  I stated before the purpose of this overtime was not to look at the amount of overtime being worked and performed.  The purpose was to look at overtime and verify that it actually was worked .  I think what you are talking about, Sir, is that you look for patterns to see if abuse is going on  - if overtime is being concentrated in one area or another ... is there .. again that gets back to ...  I think, maybe I misunderstand ..... overtime being worked that shouldn't be worked for whatever purposes  whether it be pensions or just increasing income or whatever it is.  This was much more of a 'meat and potatoes' type of investigation with the lieutenants tracking it down, verifying by any means, and a lot of different means, whether the officer was actually there working. I think the system that you are talking about would be more appropriate in the overtime abuse that we talked about earlier where we had the comptroller come down and do that. They looked at our overtime records and practices and they felt that they were adequate and that there was no abuse happening.   But, no, we didn't use any of the systems that you are talking about. 

Hull:  And the "external auditors" (Korn Rosenbaum LLP of Pomona) did not do a forensic data analysis either, did they?

Sullivan:  The independent auditors reviewed our case and we answered their ... honestly I'm not trying to be flippant here .... we answered their questions, open up our records to them and if they made any suggestions or requests we would provide them but I think we are going to have to wait for their report before we can question it. 

As reported by the Journal News in the article Clarkstown residents skeptical after police report no OT abuse I am not alone in urging the Town Board to retain an independent auditor to perform a complete analysis of the overtime charges by the Town's police department. The Journal News reported:

Some residents concerned about high police salaries and overtime are calling for an independent audit by a company with no link to the town. They are worried not only by the possibility of overtime abuse — police being paid when no extra work was done — but whether overtime is actually needed.  

“Why are we working so much overtime? It does seem to indicate there is a lack of management on the part of the police,” said Gerry O’Rourke, president of the Congers Civic Association. “The taxpayers are saturated with the expense of the Police Department.”   

The department consumes about one-quarter of the town’s $137 million budget, not including health care and retirement benefits. Clarkstown officers’ income, already among the highest in the region, gets a sizable boost from overtime that is paid at 1.5 times of base salary.  Clarkstown had the highest average salary of any local agency, according to 2012 data. Police and fire employees had an average pay of $179,689, and seven town workers were among the 20 highest-paid workers in local government in New York.  Under a clause in every contract since 1995, officers who work on their days off are guaranteed at least four hours of overtime, even if they work less. Overtime cost has risen over the years. In 2007, the department spent $2.8 million on overtime. By 2011, that figure had risen to nearly $4.2 million. In 2012, it was $3.8 million. 

O’Rourke said only an outside audit would quell the questions. “It will relieve the police of this cloud of suspicion,” he said. “People just don’t trust someone auditing themselves.”

Chief Sullivan is to be complimented for monitoring his officers' overtime, complimented for discovering a problem, complimented for conducting an investigation, and complimented for removing the individual from his department. However, Sullivan now needs to step away and bring in a forensic auditor (since a crime was committed) to examine his department from top to bottom as described above.  Chief Sullivan and Captain Ovchinnikoff would also be included in the forensic auditor's examination of practices, procedures and past overtime charges in previous years.

At the end of the audit the auditor will provide the Town Board with 'best practices' from other police departments which Sullivan can then implement.

In summary .....

Sullivan's report only covered an area that was visible to outsiders (DA, court personnel, and judges) where accountability is the greatest while the manner for verifying overtime for non-court matters and ensuring that there are no abuses in this extensive area of overtime was not addressed in the report.

His report made no recommendations as to what could, or was being done, to reduce overtime costs and the Board did not ask for any recommendations.

His report could lead a reader to believe that all court related matters are overtime work. When a police officer is writing a ticket he could have multiple matters set for the same date. Whether that was being done is not disclosed in the report and we don’t know what, if any, control mechanisms are in place for that.

When questioned about the lack of information about Sherwood in his report and whether Sherwood had any other instances of abuse, Chief Sullivan did not provide a direct answer to the question.

Sullivan may have reached the end of his internal process but his report covered only a scintilla of the overtime costs associated with court work - a mere 2,778 hours of overtime which amounts to approximately $200K (6%) of the $3.4 million in overtime payments.  

Sullivan's report is indeed a big report but it is a big fluffy "meat and potatoes" report covering only 6% of the overtime and the public has been left asking: 

Hey, where's the beef?

Michael N. Hull is a retired senior citizen who writes opinion pieces on theology, philosophy and local political issues.