Sunday, May 17, 2015

Beyond Redemption - Conspiracy & Dirty Politics of "No-Kill"

New Castle County Audit

Recently there has been quite a bit of ruckus about casting some sunshine on the deep dark hole of New Castle County Auditor Robert Wasserbach's emails, especially because of what a county councilman described as concerns "that there could arguably be ethical, professional, and criminal violations of the law" in the emails. The council meeting discussion can be heard and read about on the Delaware Way blog.

I've previously addressed the fact that the audit of Kent County SPCA (now known as First State Animal Center and SPCA) by New Castle County, at the request of Mr. Wasserbach, appeared to be a conflict of interest because of Mr. Wasserbach's board position with Faithful Friends, and that it was extremely odd that the scope of the county audit focused almost entirely on the state law of CAPA when Mr. Wasserbach's handpicked auditor found clean conditions at the shelter.

In recent weeks, an anonymous whistle blower provided a number of people with emails that are clearly concerning regarding the audit of KCSPCA. What makes this person a whistle blower, rather than a leaker, is the fact that not only were county tax dollars (at least $10,000) wasted on an audit that appears to have been done to satisfy a political agenda of Mr. Wasserbach and Faithful Friends, but may also be a part of a bigger plan to put KCSPCA out of business to drive up the cost of dog control services that the county tax payers fund.  If KCSPCA was no longer around, it would cost more money to entice another shelter to take on the contract, or for the county to provide those services.

While these emails were apparently not released to the KCSPCA by Mr. Wasserbach's employer the New Castle County Council, and more specifically the council's legal representative Carol Dulin when a FOIA request was made back in 2012, the whistle blower has provided us with an opportunity to see some alarming information that should be of concern to all taxpayers in that county and across the state.

The county council needs to provide oversight over their employees if they don't want to end up implicated in the shenanigans that appear to have taken place.  If they truly represent the taxpayers of their districts, they should be sending this situation to the Attorney General for a complete investigation regarding possible antitrust violations that may have been engaged in against their constituents interests.  These emails also bring into question every audit that has been performed under Mr. Wasserbach's watch during his tenure with New Castle County, and as such, the county should also request that the Delaware Board of Accountancy who oversees accountants in Delaware investigate this matter.

CAPA Legislation Signed July 23, 2013

Not only does it appear that the audit of KCSPCA was a regular topic of discussion between Mr. Wasserbach and Jane Pierantozzi of Faithful Friends for 2 years prior to the actual audit occurring, but the discussions go at least as far back as just 7 days after CAPA was signed ceremoniously by Governor Markell.

7 Days After CAPA Signed, A Complete Outline For An Audit of KCSPCA was sent to Wasserbach by Jane Pierantozzi

Given how quickly discussion of the audit happened after the signing, it wouldn't be outside the realm of possibilities that the audit was already planned as one of several ways to use CAPA as a weapon against KCSPCA when Faithful Friends and company proposed CAPA as legislation.  This may be the reason the audit seem so focused on this state law, and not focused on ensuring county funds were being used for the services contracted that most reasonable people would expect of a county audit to do.

Keep in mind, that Faithful Friends is another animal shelter in our state, and that all shelters not only compete for the same sector of donation funds, but also have the ability to bid on the same dog control contracts.  In what world is it appropriate for an auditor to get advice on doing an audit from a competing business, let alone a shelter director who has been openly hostile to the KCSPCA.

There are thousands of shelter directors across the country if Mr. Wasserbach didn't have the first clue how to audit an animal shelter, even though county audits should have the same scope as any other audit in ensuring that the county is receiving the services it has contracted for. But instead Mr. Wasserbach chose the path that not only appears to be highly biased, but also a path that appears to be self serving given the fact that the shelter director he sought advice from appears to have had a vested financial interest in the outcome, not to mention Mr. Wasserbach's own interest as a board member of that organization.

In this email below from Mr. Wasserbach in August of 2010, the following statement was made - "I am also going to suggest to someone who has complained about the KCSPCA to file a report on my Fraud, Waste and Abuse Hotline, so that I have even more reason to do this audit".  In his email to shelter directors Jane Pierantozzi of Faithful Friends, and Anne Cavanaugh of Delaware SPCA, it appears that Mr. Wasserbach is eliciting a complaint be made on his hotline to help him make a case to the county that an audit is needed, so he can then use the complaint to provide Chris Coons with reason to not extend the contract.

Even the statement that he wants someone to "pose" as his assistant sounds like he is working hard to make the audit appear genuine, Maybe it's just me, but if the assistant is going to actually provide assistance, wouldn't most people state "act as my assistant", rather than "pose as my assistant".  But then again, maybe he really did just want the person to "pose" for appearances, especially since Ms. Pierantozzi had already provided Mr. Wasserbach with an outline for the audit a month earlier.

In that audit outline, Ms. Pierantozzi also told Mr. Wasserbach to "pretend your may want to help them with cats". I can't imagine audit 101 teaches accountants to lie during an audit process, but let's be honest, "pretending" is just a pretty way to say LIE.

A month later in September of 2010, it appears that Mr. Wasserbach is still trying to elicit a complaint from his friends through his hotline. Encouraging complaints certainly doesn't seem unbiased or independent to me, and most reputable auditors place great value on an audit being both unbiased and independent.

Part of a Discussion About Auditing KCSPCA

So at least the public now has an opportunity to see that the complaints on Mr. Wasserbach's hotline didn't just come in as many have portrayed in the past, instead it appears that they were encouraged to be made.

In the email from Jane Pierantozzi of Faithful Friends on June 15, 2012 you can see that Faithful Friends, who Mr. Wasserbach is on the board for, is talking to New Castle County officials about the future possibility of working with the county if the shelter gets land from the county.  She also mentions that another shelter Safe Haven, who Ms. Pierantozzi references as "partners", was attempting to get the Sussex dog control contract "away from KCSPCA".

Two years later, land was eventually given to Faithful Friends for $1 by the State of Delaware,   While Safe Haven ended up losing the bid for Sussex, they did eventually end up with the Kent County contract., which you will see later was discussed as the higher paying county on a per capita basis.  What's also noteworthy about this email on 6/15/12 below, is the fact that was sent just one day after the audit notice was sent by Mr. Wasserbach to KCSPCA.  Coincidence? Maybe, but the timing of this discussion certainly seems suspect to me.

State of Delaware Land Giveaway

In 2014, as noted earlier, the state legislature did eventually hand the shelter that Mr. Wasserbach is board president of a valuable piece of land in New Castle County for $1.   The fiscal note for the complete property, that was also partially given to Colonial District, was valued as follows:
 "Using the assessment-to-sales ratio provided in the above mentioned report, the estimated market value of the 40 acres to be transferred is $4,623,030. - Fiscal Note
This was a luxury that no other nonprofit had an opportunity to bid on, and unlike Delaware SPCA who was granted property in Sussex County many years ago, Faithful Friends wasn't providing a public service (dog control, animal cruelty investigations, handling livestock at large) for local taxpayers as Delaware SPCA was at the time of their land deal.

And worse yet, what reasonable legislator gives land to a nonprofit who owed the state $21,029.31 for almost 3 years without any state follow up in the court system,  I don't imagine it was coincidence that Faithful Friends magically paid off the debt just before the bill is introduced to give them land.

And also concerning is the fact that at the time the property was handed to Faithful Friends by the state of Delaware in July 2014, Faithful Friends last financial statement on record was for the year ending 6/30/11.  Given the restrictions built into this land conveyance below, it would certainly seem prudent for our legislators to have a more recent financial statement on hand, but then again, fiscal stewardship is a trait we rarely see in Delaware.

"No deed shall be executed until the Colonial School District has received a copy of Faithful Friends construction plans for the new parcel along with written confirmation of construction financing, or other adequate funding source for the entire Pet Adoption and Community Resource Center from the Faithful Friends no later than July 1, 2019. At the time of conveyance of the land to Faithful Friends from the Colonial School District, Faithful Friends must agree to accept the new parcel in "as is" condition, after which Faithful Friends shall be legally permitted to use the new parcel for a Pet Adoption and Community Resource Center, and for no other use. After conveyance of the new parcel, Faithful Friends intends to construct a building(s) of not less than 20,000 square feet in total size upon the new parcel for use as a Pet Adoption and Community Resource Center, and to construct not less than one-hundred parking stalls upon the new parcel to serve the aforementioned use. The building(s) and parking stalls shall be constructed in accordance with the then applicable provisions of the New Castle County building code, State drainage code, State critical natural area regulations, State wetland regulations, and federal wetland and floodplain regulations. The deed to Faithful Friends shall set forth the restrictions and covenants expressed in this act."

Miraculously, Mr. Wasserbach did manage to finish Faithful Friends financial statement for their year ending 6/30/12, just a month after the land transfer deal was signed into law, and this financial statement showed that Faithful Friends net assets or fund balance as negative at -$8,147 for that period.  So it's not surprising that this financial statement didn't become public until a month after the land deal on 8/25/14, 2 years after the fiscal year end for that period.

The state auditor should really look at deals like this, because our legislators either don't have a financial bone in their bodies, or they just don't care when it comes to taking care of their friends. We certainly saw that was the case when it came to the Tigani land deal a few years back, and yet despite Mr. Tigani ending up in jail, it appears we are going down the same path with friendships trumping good financial sense on the part of our legislature.

The Plot Thickens Even More

If the actions surrounding the New Castle County audit weren't bad enough, emails that have been received more recently through FOIA, paint an even more nefarious conspiracy that has been taking place.

While I have previously discussed the concern that CAPA was born out of and being used in a manner that pointed to collusion, I think that cause for concern is even greater after seeing some of the emails that were taking place, with a combination of shelters involved and with some individuals in positions of power at the state and county levels.  There are  publications that talk about the fact that nonprofits can also be involved in antitrust violations, and more specifically the Sherman Act, so make no mistake that antitrust only applies to for profit corporations.

So first lets start with the most damning of the emails that was found.  The players in this drama are based on the email:
  • Senator Patricia Blevins - State Senate President, Board Member of Delaware Humane
  • Anne Cavanaugh - Executive Director of Delaware SPCA at the time, Board Member of Delaware SPCA now
  • Jennifer Ranji - Governor Advisor that wrote CAPA, per Jane Pierantozzi in an article was a previous board member of Faithful Friends, later promoted to Secretary of Child Services for the State of Delaware
  • Jane Pierantozzi - Executive Director Faithful Friends
  • Kathleen Gallagher - wife of Delaware SPCA Board Member, supporter of Faithful Friends
  • Robert Wasserbach - New Castle County Auditor, Faithful Friends Board Member (now President of the board)
The complete email with our annotations and questions in red is at this link, but as you can see from this portion below, there does appear to be a plot to destroy the Kent County SPCA.  This plot involved several representatives of other shelters colluding to try and use political power and underbidding to put KCSPCA "underwater", but what's just as alarming is the fact that people in positions of authority took place in writing and introducing CAPA in Delaware were also involved. So it would certainly seem feasible that this same group plotted to pass CAPA for the very purpose of destroying Kent County SPCA (KCSPCA).

Seriously, what kind of senator thinks it's appropriate to encourage underbidding to put a business in her state "underwater"?  Should she be Senate President after this comes to light?  And it's shameful that she has a position on the senate ethics committee.

Email acquired as NCC releases PART of the documents in FOIA request of Robert Wasserbach emails.

And in what world is it appropriate for a senator, a governor's advisor, and a county auditor to take part in actions like this that wreak of suppressing competition and predatory pricing?  Was the purpose of trying to harm Kent County SPCA to get them out of the dog control business so they could drive up prices for dog control services and force more funding out of the counties for their own shelter's financial interests once they destroyed Kent County SPCA?  

That's how it appears to me given there are also a number of emails where it was discussed that the county contracts are under funded.  It's no surprise that this is why Kent and Sussex contracts were targeted, while no shelter is willing to bid for the contract in New Castle County. 

The counties should be appalled at this behavior, especially since CAPA was enacted just after the state dumped that responsibility off on the counties, making it even more shameful that state officials would take part in what appears to be a conspiracy to drive up the price of dog control for the counties.

I also find the actions of these board members and shelter directors to be extremely reckless given that they have a responsibility in protecting their organization's reputation, and ensuring the shelter's financial well being by avoiding any behavior that could result in litigation if a complaint were made under state or federal laws, especially given the fact that the law frowns on conspiracies that manipulate prices and attempts to suppress competition.

Although Delaware's antitrust law is pretty weak, I'm not sure if it matters since in the past we've seen the previous Attorney General Beau Biden's office accommodate this same senator by doing multiple opinions to ensure other shelters weren't impacted by the original request against KCSPCA.  I guess we can only wait and see whether Matt Denn has more integrity and independence than his predecessor.  Here is the state statute:

"§ 2103 Restraint of trade unlawful.Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce of this State shall be unlawful." - Title 16

Here is a typical definition of Restraint of Trade:
restraint of trade
n. in anti-trust law, any activity (including agreements among competitors or companies doing business with each other) which tends to limit trade, sales and transportation in interstate commerce or has a substantial impact on interstate commerce. Most of these actions are illegal under the various anti-trust statutes. Some state laws also outlaw local restraints on competitive business activity. (See: monopoly, trust)

Task Force Confirmed to Be A Sham

And lastly, not only were New Castle County taxpayer funds wasted on a sham audit of the KCSPCA, but Mr. Wasserbach's emails show us that state taxpayer funds were also wasted on a long series of Task Force meetings at taxpayer's expense to pretend like the state was involved in a discussion about bettering animal welfare, when the fact is that Senator Blevins and friends already had a plan in place and were merely creating the hand picked Task Force to create the public perception that the legislature was getting input from outside of this small cartel of conspirators that we referenced above.

In this 11/22/11 email, that was part of the same thread as the "underwater" comment, it is mentioned what in the end was almost entirely identical to the final recommendations that were proposed by the Task Force.  This email was 7 months before the Task Force was even put in place, and 1-1/2 years before the recommendations would be publicly posted as being the result of the Task Force on 4/30/13, but now we can see from the emails that this plan had already been hatched by the political cartel in their own private meetings that took place back in November of 2011.  

Keep in mind that many legislators who passed the legislation to create the new Office of Animal Welfare were probably also under the mistaken impression that these recommendations came out of the Task Force, rather than this small cartel of conspirators.

I doubt most legislators were aware that the agenda in adding the enforcement provisions that previously didn't exist and in creating a new agency, was to finally use their weapon of mass harassment CAPA against the KCSPCA even more, in hopes that they would go away and give the "No-Kill" shelters the leverage to gain more funding from the counties. This would allow them to have budgets similar to "No-Kill" communities like Austin where prices have increased $500,000-$1 million every year for animal services

And remember that this new agency that was hatched in a backroom meeting, also comes at a cost of $700,000 to the taxpayers.

Cape Gazette Headlines of May 1, 2013
Senator Blevins having a discussion with Anne Cavanaugh & Jennifer Ranji


While the cabal of conspirators referenced above didn't destroy KCSPCA with their unethical, immoral, and possibly illegal actions, the shelter did face financial losses the year that CAPA was enacted and also when the shelter lost the Kent County contract in Kent County, so I guess part of the goal of putting the shelter "underwater" was attained for those periods, even if it didn't put them underwater completely into insolvency. As a result of the political games, and the fact that the audit continues to be used by the shelters enemies, each and every time the biased audit resurfaces the result is that the shelter faces actionable harm.

I'm sure the shelter is grateful to the many supporters that have stood by them despite the political nonsense and campaign of destroy them.  Obviously the shelter is and continues to be harmed by these political games, and Mr. Wasserbach's sham audit continues to be used as one of the tools in the arsenal against them in addition to CAPA, but there are fortunately many supporters who see through the smoke and mirrors and continue to support the shelter.  

Hopefully the county commissioners and council persons now understand why they have to listen to the constant attacks against the shelter, and now realize that these attacks will also cost them and their constituents dearly if KCSPCA is ever pushed out of dog control, because the counties will then become the objects of the conspirators attacks and attempts to drive up prices and budgets. 

County officials would be foolish to enter into a partnership that was proposed earlier this year by the state, because as they can now see, the state officials involved and their partners in collusion will eventually pass on the higher costs to the counties. Given what county officials have now had the opportunity to see in the full light of sunshine, they would have to be foolish to believe that Senator Blevins is acting in their best interest or that of their county constituents.  

In addition to KCSPCA, there are many others who have suffered as a result of theses political games.  
  • The employees at KCSPCA that lost their jobs when the conspiracy resulted in Safe Haven taking over the contract in Kent County. 
  • The Safe Haven employees that may have left other positions to end up losing their jobs when the ill prepared Safe Haven went bust within 18 months.  
  • The many creditors of Safe Haven who were left with Safe Haven debts, from the USDA to the many kennels, vets, and others.  Many companies and individuals, both in state and beyond our state boarders were impacted.
As you can see in the conspirator's discussion surrounding Safe Haven's demise, the only concern is whether their agenda has been lost.  There doesn't appear to be any regret or concern about the many people and pets that their actions have harmed with underbidding contracts to try and prove that people are wrong when we said that "No-Kill" was costly and unsustainable.  This is the reason I used the title beyond redemption, because obviously there can't be redemption for people that ignore and deny their own culpability.

Unfortunately the political games also extend beyond animal welfare, and I suspect that every audit performed during Mr. Wasserbach's tenure will also now be suspect.  I don't know what the situation was at Police Athletic League, but that audit by Mr. Wasserbach should also be questioned given the appearance of impropriety involved in Mr. Wasserbach announcing the audit to Jane Pierantozzi before it occurred, and what appears to be excitement about the fact that he will be auditing another nonprofit whose accountant may have issues with Faithful Friends as well.  

Let's hope that the shelters who have board members or executive directors involved in this mess eventually understand that these individuals are not only placing their own shelters in danger of litigation and possibly criminal investigations, but also hurting animal welfare in our state, and that these individuals are also part of the reason that nearly every shelter is suffering financially.  We certainly don't need to see another Safe Haven debacle.  Bankrupt shelters don't save any animals in the end.  

Until shelter boards and leadership roles are cleaned up of the corruption and back room conspiracies, things will never improve for animals in our state, so shining some sunlight on what has occurred will hopefully make shelter boards consider the need to clean up their own ranks so we can eventually move forward for the sake of the animals in our state.