Accounting errors at Pittsburgh PD investigated by the FBI

Each year, millions of dollars flow from private companies to Pittsburgh's Bureau of Police to pay officers who work private security details arranged through the bureau's Special Events Office.

But scour the city's budget and annual financial report and you won't find a line item with the $7 million or so in payments, nor a record of the nearly $800,000 in city surcharges to businesses that employ police officers through the Special Events Office.

There is rough accounting of that money elsewhere -- on city ledgers that record "negative expenditures" and in the bureau -- but the picture of how that money moved from businesses, through the city and into officers' paychecks is disjointed and incomplete.

That flow of money -- from dozens of bars, restaurants, construction companies and other businesses -- to the bureau and to the city's coffers is now under scrutiny as the FBI and Internal Revenue Service probe the allegations that funds from the Special Events Office were misappropriated. Federal investigators have visited the police bureau's North Side headquarters and the Greater Pittsburgh Police Credit Union in the West End, where city money has been deposited in accounts not authorized for such funds.

The lack of oversight means that money meant to be handled by the Special Events Office could be diverted before it makes it to the city, and that co-mingling of overtime pay and city surcharge money once it hits city coffers could make such diversions harder to catch.

PG graphic: How the money flows

(Click image for larger version)

City controller Michael Lamb said he would audit the Special Events Office after he learned the city's accounting did not segregate surcharge revenue from money due to officers.

Mr. Lamb in his investigation indicates that the city surcharge revenue generated each year by the Special Events Office is recorded along with the money due the officers in a premium pay line item intended to pay officers for off-duty security details and on-duty overtime.

Neither the city controller, the city finance director nor the city treasurer were keeping tabs on the millions of dollars of checks received by the bureau's Office of Special Events to ensure they were all being deposited into city coffers or that the surcharge money was properly accounted for.

And ask who's responsible for tracking that money, city officials point fingers at each other.

Mr. Lamb has been critical of the mayor for not having information on the accounts. The mayor's spokeswoman, Joanna Doven, Wednesday retorted that Mr. Lamb, as controller, should have come across the discrepancies. City finance director Scott Kunka said he was relying on others to ensure the money was accounted for.

The money trail

The trail starts in the Special Events Office in the Pittsburgh Bureau of Police, which organizes the jobs for officers and is in charge of billing businesses, including for a city surcharge for administrative costs.

The office issues a monthly invoice to businesses for the surcharge -- called the cost recovery fee -- of $3.85 per officer per hour. Some businesses are also billed for the officers' wages, while other businesses pay the officers directly -- with cash or a check.

Businesses then write checks to either the City of Pittsburgh or the Treasurer of the City of Pittsburgh and send them to the Special Events Office, which is located in the bureau's Western Avenue headquarters on the North Side.

Documents show that there is some accounting that is done in the Special Events Office. A printout from the secondary employment website used by the bureau, created by North Carolina-based Cover Your Assets LLC, shows invoice numbers, business names and what those businesses owe, as well as what they've paid. But it's unclear whether the office is recording the receipt of checks or their deposit in the city's bank accounts. Assistant Chief Regina McDonald, the newly appointed acting chief who oversees the office, did not return calls for comment.