SWAMPSCOTT — A complete audit of the town’s Recreation Department, prompted by allegations from one of its vendors that town assets from Recreation-sponsored events were misappropriated, has turned up no evidence of fraud.
But the audit, which cost the town $13,000, recommended that the town update its policies and procedures for Recreation-sponsored events, which includes the Farmers Market, Strawberry Festival, Car Show and Fourth of July Festival.
In multiple cases, the audit found that the Recreation Department violated Massachusetts Municipal Finance Laws.
Certain complaints have been made against the town’s recreation director, Danielle Strauss, regarding the handling of funds related to those events, reads the audit, which was conducted by a town-hired firm, CliftonLarsonAllen.
“Overall, the internal controls and documentation surrounding these events is insufficient and, as a result, records are not available to reconcile cash deposits to individual events to determine if the fees collected and deposited with the town treasurer were appropriate,” reads the audit report.
“However, nothing during our period of engagement has come to our attention that is indicative of fraud related to these events,” it continued.
Dina Maietta and Ricky Prezioso, a Swampscott couple, have claimed Strauss had been treating them unfairly and charging them more than other vendors. They alleged they have also been charged a mandatory donation over the years for town events and that they have been “bullied,” saying the situation has caused them both emotional and financial harm. Maietta said she thinks Strauss’ position with the town should be terminated.
Maietta and Prezioso run Cannoli Corner and More and have been vendors at the Swampscott Farmers Market for five years.
Town Administrator Sean Fitzgerald said there were inconsistencies with the amounts vendors were charged over the years at the Farmers Market, which can be avoided by updating policies.
Strauss said the fee schedule at the market was that it was $20 for one tent size and $40 for two tent sizes, but there may have been instances where market managers would waive a fee for a crafter who didn’t make any sales that day. She said it didn’t happen very often, maybe once during a season.
According to the audit, participant and vendor fees are typically paid in the form of cash or check at the time of the town events. But cash receipts supporting payment were not pre-numbered and were not provided consistently between events.
“Furthermore, excluding the Farmers Market, cash collected is not immediately secured (such as a lockbox or deposit bag), which can create a perception of possible misappropriation of assets,” the audit report reads.
The report identified that the secured plastic bags used for collecting funds at the Farmers Market were consistently thrown away by Strauss after the bag was unsealed by her for deposit purposes, which eliminates evidence of the total funds collected at the Farmers Market.
Immediate disposal of the bags is not compliant with the Massachusetts Record Retention Law, which requires retention until a satisfactory audit has been completed.
In addition, the audit found that there was no deposit for the Oct. 26, 2014 Farmers Market.
Farmers Market Committee members interviewed could not recall the specific event, but indicated that they would not be surprised if vendors weren’t charged since it would have been the last outdoor market of the season — they said there were several seasons where vendor appreciation days would be held.
A financial analysis conducted by the firm of the 2014-2017 Farmers Markets identified that there were eight Farmers Market dates where there were no deposits — based on documentation, the audit found it appeared reasonable that seven out of the eight dates may not have deposits due to poor weather conditions and/or a holiday weekend.
The analysis also found a significant decline in Farmers Market revenue in 2016, which, according to Strauss, was impacted by poor weather — the market generated $9,560 in 2014; $7,577 in 2015; $4,892 in 2016; and $8,511 in 2017.
Cannoli Corner and More out of Farmers Market
Recently, the town has informed Maietta and Prezioso that they cannot be vendors at the Farmers Market this year until they obtain a valid food permit.
Maietta said she believes the decision was retaliation for the complaints they have lodged against Strauss and the recreation department, as they were able to use the same permit throughout their time at the Farmers Market. The issue, she said, is that their food permit is for a commercial kitchen they rent, Vinny’s Variety, which is based in Somerville.
“It’s not that they’re not allowed,” said Strauss. “An issue came up about their food permit. It wasn’t a valid food permit so there wasn’t a choice and that was the city of Somerville that said they couldn’t use the food permit.”
Fitzgerald and Strauss said the decision was a result of updating policies and procedures for the Farmers Market.
“We would love to be in the Swampscott Farmers Market,” Maietta said. “We have a great following and we love our customers … All they did was keep the thief and get rid of the good guy.'”
Massachusetts Municipal Finance Laws Violations
According to the audit, Town Treasurer Ronald Mendes indicated during an interview that within the past six to nine months, he learned that proceeds collected the day of the Farmers Market were used to pay the band that played during the event, which is a violation of the Massachusetts Municipal Finance Laws. The laws require all payments to be made by the treasurer.
While the audit was being conducted, the firm became aware that a Park League supervisor, or town employee, was selling popsicles to participants in the Park League summer program.
Based on an interview with the employee, it was determined that the funds collected were never deposited with Mendes and the sales proceeds were used to purchase more popsicles, cases of water, snacks, and prizes for certain games for the Park League, which is also violation of the Massachusetts Municipal Finance Laws that requires all funds collected to be deposited with the treasurer.
In a further violation, the audit found the activity was not approved by Strauss or the town.
Fitzgerald said the town did confirm the employee was selling popsicles and after it became known, the person resigned and is no longer employed with the town. Strauss said the popsicle sales came to her attention last summer and she asked the woman to stop.
“I think it’s important to understand that while this was clearly inappropriate and a violation of municipal policies and finance laws, the person who was doing it, I think, felt as though they were just offering a few popsicles for the Rec participants,” Fitzgerald said. “It was important to kind of reinforce that these type of activities would be serious violations of town policy and I think it has been addressed appropriately.”
Updated Policies
The audit recommended that the town develop and implement formal, detailed financial policies to improve and standardize procedures and eliminate inconsistencies in the Recreation Department’s financial operations. In addition, it was recommended that all payments for events be made by check or online using a credit card, rather than cash.
Fitzgerald and Strauss say some policies have already been updated — for instance, cash is no longer accepted for the market and the application process is more rigorous.
Strauss said the complaints and audit process has been “upsetting.”
“I’ve learned a lot through this process,” she said. “There were practices that we had that I had no idea that it was the wrong way to do it, but we corrected those things. So it’s been a learning experience, but has it been difficult for me and my family to have such public allegations. Yeah, I think it’s been difficult, not just for me, but for my co-workers.”
Fitzgerald said it’s important to acknowledge that some of the complaints that were presented were legitimate and there were things that needed to be evaluated and changed, but took issue with some of the “character attacks” and “unfair aspersions” that have been made throughout the process.
