City of Binghamton – Apparent Misappropriation of Parks and Recreation Department Funds (2013M-169)

Issued Date
October 03, 2013

Purpose of Audit

The purpose of our audit was to ensure that the former Director properly deposited receipts and that disbursements were for appropriate Department purposes for the period of January 1, 2007, to January 5, 2013.

Background

The City of Binghamton is located in Broome County and has 47,400 residents. The seven-member Common Council is the City’s legislative branch. John Whalen was a City employee for 39 years. He was scheduled to retire from his position as the Director of Parks and Recreation in March 2013 but resigned on November 27, 2012 when irregularities related to cash receipts and disbursements were identified that were directly related to his operation of the Department. On April 11, 2013, John Whalen was charged with grand larceny in the second degree, a class "C" felony.

Key Findings

  • The former Director operated an extensive adult and youth recreation program from which he misappropriated program funds totaling at least $107,984. Specifically, we found that the City could not account for $36,234 in fees that should have been paid for the various recreation programs and employee uniforms. In addition, the former Director made $71,700 in payments that either did not appear to be related to the program, were payments for his family members or his own personal creditors, and other purposes not related to proper program functions.
  • The former Director deposited more than $340,000 and made 427 disbursements totaling approximately $344,000 from a separate bank account titled the “Binghamton City Sport Leagues” for the period of January 1, 2007, to November 27, 2012. He was one of the two signatories on this account and the bank statements were mailed to his home address. Even though the account was titled in the City’s name and used the City’s Federal identification number, no one in the City knew this bank account existed because none of this activity was recorded in the City’s accounting records.

Key Recommendations

  • Take appropriate action to recover the unaccounted for moneys.
  • Deposit and disburse all receipts and disbursements from a bank account that is controlled and monitored by the City Comptroller’s office. Require that all City bank accounts be established by the City Comptroller’s office and require dual signatures for transactions.