City Grilled On Credit Card Spending

Those three $505.95 Madison Stop & Shop gift cards?

That was the best way to buy Halloween candy.

The Harp administration offered that explanation and others during a tense hearing at City Hall Monday night over how it uses and accounts for credit cards.

The hearing, held by the Board of Alders Finance Committee in the aldermanic chambers, grew out of two embarrassing incidents: The arrest of a mayoral staffer who allegedly racked up $13,000 in fraudulent charges on her boss’s card. And a broader release of information about the city’s sometimes high-flying credit-card spending and lack of documentation, as originally reported and detailed here.

Questions about trust and transparency arose as alders interrogated city officials about the controls on credit-card usage. The meeting also offered new details about several suspicious charges.

East Rock Alder Anna Festa and Downtown Alder Abby Roth had requested the hearing.

The hearing left many more questions on the table, especially about hotel stays and online purchases. Mostly, the discussion illustrated a divide between the executive and legislative branches of government over who should control spending, especially as the city budget tightens.

Department heads said they want the leeway to decide how to spend the money they’ve been allocated, while alders said they want more detail about each transaction to know if their budgets accurately reflect their spending priorities.

Last month, through a public-records request, the Independent obtained 227 pages of credit-card transactions, from May 2016 through August 2018. The records indicated that the city’s top officials haven’t been disclosing thousands of dollars in travel to the alders, as required by city ordinance.

The three employees who testified Monday night — Controller Daryl Jones, Budget Director Michael Gormany and Purchasing Director Michael Fumiatti — said the six current cardholders are doing a good job of vetting every purchase, and they’re tightening oversight even further.

The three said they ask department heads to justify each expense and match it with a line item in the budget. They added that alders find out about any overspending in the monthly financial reports.

But with one city employee already facing felony charges for misusing a card (she has pleaded not guilty), several alders said they doubt the city is doing enough to track where the money’s flowing. Amid all the shopping on Amazon, money transfers on PayPal and meals at local restaurants, are officials really sure all the charges were legitimate? the alders asked.

And perhaps more importantly, they added, can officials prove it?

“I appreciate what someone said about the large structural deficit we’re facing, these aren’t huge sums of money,” Alder Roth said. ​“I just want to make sure everything’s being scrutinized carefully.”

“My intent wasn’t to minimize that. Every single charge, every single expense is important. After 28 years of working here, I kind of get that,” said Fumiatti, who oversees the city’s procurement. ​“We do take them all seriously.”

The alders said they want more details to be disclosed each time a credit card is swiped; city officials said that would be hard to produce. While no action was taken at Monday night’s meeting, a leader on the board said he expects the city will begin posting its credit-card statements online soon.

Check or Credit?

Since the $13,000 fraud was discovered, city officials have said that they’re trying to streamline their processes for checking charges.

With a new software program, they said, they’ll conduct a ​“real-time” review each time an employee swipes the card. They said they’re also tightening reporting practices for city travel by asking everyone to fill out a standardized form after each trip. They asked alders not to stop a credit-card program that saves the city money on rebates and time on invoice processing because of an ​“isolated” incident.

Gormany argued that the city had caught the unauthorized charges coming from the mayor’s office quickly. He said that ​“the bulk” of the alleged fraud happened in July and was spotted as soon as that billing statement came in.

“That’s where some of the misrepresentation comes in,” Gormany said. ​“It wasn’t a big lag in timing.”

But, in their application for an arrest warrant for the alleged $13,000 theft, New Haven cops said they found evidence of 35 unauthorized charges, spanning from mid-May through late August.

Some questionable charges on the stolen card go back even earlier, like $31.50 at the Criterion Cinemas on Mar. 30, 2018, which as Roth pointed out, was Good Friday — a legal holiday when City Hall wasn’t open.

Outside the meeting, Gormany clarified that he did not know the exact time frame when the alleged fraud began.

That made some alders wonder if there should be more disclosure for each charge, especially when employees are traveling, eating out or buying items off the web.

At a prior job, ​“I had a company credit card. I travelled extensively and I had to document every little thing. If I went out to dinner with coworkers and my manager might ask me to pick up the tab for dinner, I put every person’s name on the back of the receipt. Alcohol was not included,” said Alder Festa. ​“For some of these on-the-plane charges [in the city’s billing statements], it could resemble maybe a glass of wine, we don’t know. There’s a ton of Amazon bills. How do you reconcile that? What is actually being charged?”

Fumiatti called the credit card statements a more transparent way of sharing the city’s bills than the old check register, because they immediately indicate who spent what.

“I want you to understand that if there’s $2.60 for a cup of coffee, if it wasn’t on the P‑Card” — a name for the city-issued cards — ​“it would have been on their own card and they would need to request reimbursement,” Fumiatti said. ​“This way is far more transparent.”

Gormany added that’s because the city’s checks might group expenses together with even less detail. ​“You might have a check for Amazon reimbursement with 37 invoices,” he said.

Festa argued that neither of those systems is transparent enough. Either way, she said, she wants to see each transaction that city employees spend money on.

“I should not have to ask for invoices. You should be showing us that on the monthly expenses. ​‘This Amazon package included x, y, and z,’” she said. ​“I don’t have a problem with you looking for a bargain; that’s not the question. How do I know from looking at this statement what we’re charging?”

Gormany said that the city currently has too many expenses to document each month. He could fill stacks of pages with transactions.

But after the meeting, the board’s majority leader, Alder Richard Furlow, said he expects that the city will move towards more proactive disclosure of its statements, once it has finished completing a promised new five-year budget plan.

Tricks For Treats

As the city has learned from releasing years’ worth of bills, the spare details in the credit card statements usually lead to more questions than answers: Who was this membership for? How long was that hotel stay? How many people attended that dinner? What really came in that package?

The problems with disclosing only the date, vendor and price were illustrated when Fumiatti was asked about several big buys from local retailers, including a series of transactions at a suburban supermarket.

Roth asked him to explain three purchases, all on Oct. 6, 2016, for $505.95 each from a Stop & Shop in Madison. Several Independent readers suspected an employee bought gift cards, which are sometimes used for money-laundering because they’re difficult to track and can be resold for cash.

Fumiatti said that he did indeed buy a bunch of Visa gift cards, but they weren’t used for anything nefarious.

He said the parks and rec department needed to buy cartloads of candy for a Halloween parade. Employees were unable to find good prices online, Fumiatti said, so he needed to figure out a way for them to buy the treats in a nearby store.

“I had to buy a card with a card,” he said. ​“I wasn’t going to give them my city card to show up at Wal-Mart, and Wal-Mart wouldn’t allow [charging a card over the phone]. But they did take a Visa card. They did provide receipts for all of the candy.”

Roth also asked about an $18,839.96 online purchase from Wal-Mart on July 24, 2017, which she said seemed ​“high.”

“It is, it is,” Fumiatti said. He explained that the Board of Education had a grant for early childhood learning that was about to expire. To make sure the city got its money’s worth, the school system asked Fumiatti to place an order for ​“high-chairs, strollers, car seats,” he recalled. ​“If I didn’t spend the money by that deadline, they would have lost the grant money.”

Throughout the hearing, city officials said they would have preferred if alders had submitted a list of charges for which they had questions. They said they felt put on the spot to recall the thousands of expenses put on the city’s plastic over the past two years.

They added that they’d share any details alders want to know, and they welcomed alders to stop by the Hall of Records to see how the invoicing process works.

But so far, city officials haven’t responded to inquiries from reporters about multiple charges. For instance, on Monday night, a month after he was first asked, the city spokesperson still couldn’t explain to reporters why a mayoral assistant took solo trips to Palm Beach, Florida, and Birmingham, Alabama, that still have not been disclosed to alders.

Roth said complained that the city still isn’t disclosing accurate figures on travel spending. The latest monthly financial reports listed a three-day trip to New Orleans for only $168 and a three-day trip to San Francisco for only $239, which looked too low to Roth.

For a month, the city spokesperson also hasn’t produced missing statements from January 2017 that included only two of the seven cardholders in the initial batch of records. Gormany said the missing pages were just an ​“oversight” that the city plans to rectify with a release. ​“We have them,” he said.

Mayor Harp also discussed the credit card and financial reporting issue, among other topics, on her latest appearance on WNHH FM’s ​“Mayor Monday” program. Click on the video to watch the full episode.

This episode of ​“Mayor Monday” was made possible with the support of Gateway Community College and Berchem Moses P.C.