Tag: Payroll Fraud

Deconstructing the Denardo Payroll Fraud: A Detailed Look at the Transactions

I bring many years of experience auditing to this project and that is how I approached the Denardo payroll fraud story. Before an auditor can assess individual transactions, professional standards require gaining an understanding of the internal control environment surrounding the transaction stream. Internal controls are the policies and procedures an entity uses to conduct business, in this case being the policies and procedures Bay St Louis used to generate payroll. Auditors gain this understanding by reviewing written policies and procedures, interviewing people involved in the internal control process along with a walk-through. It makes sense because to breathe life into financial transactions it helps greatly to understand the process that creates them. I relied on interviews with two former employees that have requested anonymity who have a detailed knowledge of the City’s payroll processes dating to the time Chief Denardo took his own life and what follows is directly based on those interviews.

The first step to being able to draw a paycheck is being listed on the annual payroll ordinance and I examined those going back to the year ended September 30, 2013 and sure enough Patricia Denardo was listed as a reserve police officer without fail. With that basic step understood the payroll process at Bat St Louis consists of two major parts.

Part 1 – Departmental time keeping:
1. The Employee turns in a time sheet to their supervisor, in the case of the Bay PD that would have been the Patrol Captain.
2. After approval the time sheet was sent to the Records Clerk for entry.
3. The Chief of Police approves and sends to City Hall for payment.

Part 2 – Finance Department
1. The time is received by finance, balanced, prepared for payment and sent to the Mayor for Approval.
2. Once approved by the Mayor, the payroll is generated including a direct deposit file which sent to the bank for payment.

In the case of the paychecks that I scheduled for Patricia Denardo, no less than 5 people would have been involved in the processing. The checks and balances are such that no one person can generate a paycheck. It is why the mechanics of the fraud required collusion, or in this case collusion by silence thus the audit finding in part 1. Continue reading “Deconstructing the Denardo Payroll Fraud: A Detailed Look at the Transactions”

Deconstructing the Denardo Payroll Fraud: The Mechanics Require Collusion

So who are we to believe folks, the 2016 Auditors or the Outgoing City Attorney? This is what the draft 2016 audit report says:

Excerpt from City of Bay St Louis draft 2016 audit.
Excerpt from City of Bay St Louis draft 2016 audit.

And per Cassandra Favre this what Board Attorney Trent Favre said the FBI said at the last City Council meeting:

Their findings were that fraud had occurred, that the fraud was committed by Chief De Nardo through the processes of payroll to his personal account. They cleared Patricia De Nardo in their investigation, she was not complicit in the fraud. They determined that there was no other person involved in the fraud.

Did the FBI truly tell Trent Favre that Denardo acted alone with “no other person involved in the fraud”? My informed opinion is no way folks as Favre was whitewashing what happened and blamed the dead man, which is easy to do considering the circumstances plus he is contradicted by the City’s own audit firm who used the term “collusion” to describe the events.

Slabbed New Media is conducting its own investigation into the events leading to the suicide of Mike Denardo as a police department that was seething with corruption imploded under the weight of years of lies and deceit. I have interviewed sources close to the investigation as well as several former City employees that have requested anonymity due to the sensitive nature of the subject matter and fear of reprisal. I also spent the better part of Wednesday at the Bay St Louis Council chambers combing through years of official Council minutes. I’d like to personally thank Mayor Mike Favre, who ultimately declined to be interviewed about this topic but who ensured the complete and total cooperation of the City and Deputy Council Clerk Caitlin Thompson, who assisted on Wednesday fetching the 8 or 9 minute books. The City Council has two keepers in Council Clerk Tilley and her Deputy Clerk Ms. Thompson.

Ultimately I scheduled payroll transactions that were done in Ms. Patricia Denardo’s name stretching back to 2014 and it was very clear from the annual salary ordinances that she was being paid back to the previous City Council in 2013. Those early records were fragmentary but I still managed to schedule 65 paychecks totaling $78,209.71 gross payroll that were issued in her name. We also obtained Ms. Denardo’s salary history from FEMA dating to 2008 which indicate she started with FEMA in late 2007 at GS-11 on the federal salary scale. Notably Ms. Denardo’s own LinkedIn page contains work dates that correspond to the salary information Slabbed obtained via FOIA.

There is much work that remains to duplicate the FBI investigation within the constraints of not being able to obtain warrants so this project is ongoing but we will not stop until the Citizens of the Bay St Louis get some much needed transparency on how the City ran under former Mayor Les Fillingame.

To understand how the auditors came to their conclusion the Payroll Fraud involved collusion is to understand how the City processes its bi-weekly payroll. It is also clear that certain personnel actions taken by new Mayor Mike Favre directly relate to what I think the FBI really told him and the City Attorney a couple of months ago. Continue reading “Deconstructing the Denardo Payroll Fraud: The Mechanics Require Collusion”

Who Dropped the Dime on Chief Denardo? Inquiring Minds Want to Know….

Of all the work she has ever done covering Bay St Louis, yesterday’s story by Cassandra Favre on the latest in the Denardo payroll fraud saga may be her best work yet. And when you couple it with the piece Robin Fitzgerald wrote for the Sun Herald a picture is painted that is both interesting and curious. First a snippet from Cassandra:

Favre said that someone from within the city anonymously reported the fraud to the Hancock County Sheriff’s Office. After the report, the sheriff’s office in conjunction with the FBI conducted an investigation, he said.

“During this period of time, we were asked to basically stand down and let them conduct their investigation,” Favre said. “About a month ago, two months ago, we were contacted by the FBI and asked to attend a meeting. They advised us that they had concluded this investigation. Their findings were that fraud had occurred, that the fraud was committed by Chief De Nardo through the processes of payroll to his personal account. They cleared Patricia De Nardo in their investigation, she was not complicit in the fraud. They determined that there was no other person involved in the fraud. He was approving payroll for Mrs. DeNardo, though she had not worked.”

It’s almost as if the payroll transactions were completed by a magical process that only Chief Denardo controlled yet someone else in the City clearly knew what Chief was doing thus the dime drop. How about a snippet from Robin’s story:

“The FBI determined he and he alone did the payroll fraud and gun sales,” Favre said.

The term “heresay” comes to mind as Robin also snagged a quote from Mayor Favre: Continue reading “Who Dropped the Dime on Chief Denardo? Inquiring Minds Want to Know….”

Probable Cause…….

Low hanging fruit courtesy of Hizzoner without self control:

Bay Council member alleges misuse of funds ~ Stacey Cato

In one instance which councilmen say bolster their allegations, records obtained by the Seacoast Echo show a supporting clerical administrative position within the city of Bay St. Louis has recently been eliminated from the city’s current annual budget.

According to city records, the administrative position was once within the city’s fire station but was removed from the fire department’s payroll at budget time and added to the police department. It has since been eliminated in its entirety by city council members, in a 5-0 vote, from both department’s budgets, but the unnamed employee still apparently works for the city.

“It’s one story after another,” Ward 5 Councilman Joey Boudin said. “It just keeps changing. We just can’t keep dealing with it!”

Bay employee never worked at police station but still got paid ~ Wes Muller

Councilman Joey Boudin said it’s illegal for the city to pay an employee outside the confines of the city’s budget.

“Just because he’s breaking the law doesn’t mean we have to,” Boudin said. “If he needed to change it, he should have brought it to our attention immediately.”

Hows about a comment bump from Duped this afternoon at 2:10PM: Continue reading “Probable Cause…….”

Bay St Louis City Council meeting recap: Mayor Fillingame tries keeping the Denardo Payroll Fraud under wraps

Bad boys bad boys, whatcha you gonna do whatcha you gonna do when they come for you….

According to both news reports Les doesn’t want to protect the tax payers financial interest by placing the Bond Holders on notice. Obviously he isn’t worried about fulfilling the contractual agreement to report a claim or the possibility of a claim. Personally I feel he is culpable with the Police Chiefs going rogue.

Of all the things he is accused of being a good steward of the tax payers interest isn’t one of them.

Les n Lil Daddy Said have some hard decisions to make in the coming weeks.

Indeed they will. In the case of the Denardo payroll fraud, the questions are pretty easily answered but the little Dutch Boy Hizzoner begs to differ:

Bay police chief’s widow implicated in payroll-fraud investigation ~ Wes Muller

However, the mayor believes the council is acting “prematurely” by filing notices with the bonding companies and said he will likely veto its decision.

“We don’t have anything to say if she’s guilty or not guilty,” Fillingame said. “We’ve got nothing to base that on yet except for suspicion.”

Better than a suspicion in a typical payroll fraud case there is actually a money trail as well as a documentary evidence trail in the form of time sheets and other documents used to prepare the fraudulent paychecks. In the case of Ms Denardo, everyone at City Hall knew she no longer worked there given the social media surrounding her leaving the City to work at FEMA and her going away party. Continue reading “Bay St Louis City Council meeting recap: Mayor Fillingame tries keeping the Denardo Payroll Fraud under wraps”

A couple of nuggets from a very somber Bay St Louis Council meeting

Slabbed was there as was WLOX and the Seacoast Echo. The latest meme out of the Fillingame camp involves asking the rhetorical question Who is the Hancock County Alliance for Good Government? It is the exactly the meme the Library folks whipped out after Slabbed pointed out that the Library system and its supporting Foundation had spent $2,400 to Gold sponsor the annual Chamber of Commerce gala, a night of recognition, revelry complete with firewater less than a year after closing East Hancock County Library citing a lack of funds. Since the ideas can’t be refuted when all else fails attack the messenger. A clue for you Facebook Warrior hens, it is possible have an organization without a Facebook page. As an experienced webmaster I’d personally recommend organizations steer clear of Facebook because the company plays too many games with its news feed but that is another post.

Of course it is a very poorly kept secret that the easiest way to find a member of the Hancock County Alliance for Good Government is to attend a meeting of the Bay St Louis or Waveland City Councils, the County Board of Supervisors and the School Districts. Sadly you seldom see the Facebook warriors at any of these thus the need for news organizations like Slabbed, The Sea Coast Echo, WLOX, The Sun Herald, etc. Slabbed was at last night’s special meeting of the Bay St Louis City Council and sure enough I found three members of the Alliance, Co Chairmen Lana Noonan and Ron Thorpe along with Libby Garcia (Miss. Libby), who was giving an interview to Make Lacy of WLOX when I arrived to cover the meeting for Slabbed:

Here is a short version of yesterday’s story and WLOX interviews with Lana and Miss Libby: Continue reading “A couple of nuggets from a very somber Bay St Louis Council meeting”

What’s in the spelling of a surname: No detail is too small to pass over right now in the Bay

And one thing that puzzled me was the spelling of Chief’s last name in the media after his suicide, “De Nardo”, which my rudimentary knowledge of the romance languages indicated as an intentionally changed spelling of Denardo, as we have spelled the Chief’s name here on Slabbed. First up is some linguistic research and for that I used House of Names:

The Denardo surname was a patronymic name, created from the personal name Nardo, which was in turn, a shortened form of Bernardo.

Denardo Early Origins
The surname Denardo was first found in the Kingdom of Naples, formerly Napoli or Neapolis, in southern Italy. There is also a city of Nardò in the province of Lecce, that dates from the Baroque era. Belisario Acquaviva, a nobleman and writer from the Kingdom of Naples became the first Duke of Nardo (Duca di Nardò) in the 15th century.

Denardo Spelling Variations
Spelling variations of this family name include: Di Nardi, Di Nardo, Nardo, Nardone, Nardini, Nardi, Nardis, Nordi, Nordine, Nardino

It no secret that Chief was ethically Italian which is why I wondered why his spelling of his surname would the use the French preposition “de” instead of the Italian equivalent “di” as shown above at House of Names. Maybe Chief changed how he spelled his last name after landing in some hot water over in St Tammany because in the Bay he did spell it “De Nardo”? Or maybe it was another reason. Whatever the reason, there is a younger man by the same name in Wallkill New York that uses the conventional spelling and I have a few press reports that illustrate it.

Head of Wallkill Fire District board charged with stealing nearly $240K from district coffers ~ William J. Kemble Continue reading “What’s in the spelling of a surname: No detail is too small to pass over right now in the Bay”

18 U.S. Code § 4 – Misprision of felony: A primer for culpable Bay St Louis City Employees

I’m writing this post specifically for one group of people, Bay St Louis City employees that knew what was going on and decided to go along to get along in order to keep their jobs. “I was only following orders” is not a legal defense. Knowing of the commission of a crime and doing nothing is itself a felony.

Whoever, having knowledge of the actual commission of a felony cognizable by a court of the United States, conceals and does not as soon as possible make known the same to some judge or other person in civil or military authority under the United States, shall be fined under this title or imprisoned not more than three years, or both.

As a matter of editorial policy, Slabbed New Media is calling for the immediate prosecution of any and all Bay St Louis City Employees that had knowledge of, or any involvement in the payroll fraud alleged by Hancock County Sheriff Ricky Adam.

The Hancock County Alliance for Good Government has released the following letter to the Bay City Council

Lonnie Falgout, President
Bay St. Louis City Council

Dear Councilman Falgout:

On behalf of the Hancock County Alliance for Good Government and in view of the recent and tragic events in the city of Bay St. Louis Administration, we feel a Special Called Meeting of the Bay St. Louis City Council is in order, and are requesting you poll the Council for a Special meeting for the following:

Mayor Les Fillingame in recent statements in the local news media has confirmed that he suspended without pay, late Bay St. Louis Chief of Police Michael De Nardo, because the Mayor had been informed by the Hancock County Sheriff Ricky Adam that De Nardo, was the subject of an investigation.

The Hancock County Sheriff’s Department has now confirmed that the City of Bay St. Louis Payroll Department is the subject of a Federal investigation for Payroll Fraud.

Using the same premise under which Mayor Fillingame suspended Chief De Nardo without pay, we are asking the Bay St. Louis City Council to request Mayor Fillingame, Payroll Clerk Pat Tice, Acting City Clerk Paula Fairconntue, Comptroller Sissy Gonzales, Human Resource Director Gus McKay, and any other city employees or elected officials who either prepare or present payroll and benefits for Council approval, to step down without pay until the Payroll Fraud investigation by the FBI is concluded.

If the aforementioned publicly compensated individuals will not voluntarily step down, we are asking the Council to call a Special Meeting and suspend their pay and remove them from their positions immediately and until the investigation is completed.

Lana Noonan, Chairman
Ron Thorp, Co-Chairman

Updated: Throw Momma from the Train: It’s Screwy in Bay St Louie and its now unraveling like a cheap sweater

What we have here folks is a recurring theme in the human condition when someone without a moral compass leads others astray, dirtying them up in the process. It’s deadly serious now and today the Sea Coast Echo has blown things wide open with some of their finest reporting in quite some time but first guess who is not dead after all? That’s right folks, Chief Denardo’s Mother. And who was it that told the world that Denardo was reeling from his mother’s death? Bay St Louis’ Dishonorable Hizzoner, Les Fillingame:

Asked about possible reasons the chief may have taken his life, he said De Nardo had been “reeling from the death of his mother,” was in a state of personal grief.

Interesting as this was in today’s Sea Coast Echo:

Eubanks said De Nardo is survived by his mother in New York; his wife Patricia; his son Michael, Jr.; his step-daughters Eubanks and Ashley Baradell; nine grandchildren; one great-grandchild; sisters; uncles; and aunts.

The truth is simply not in him folks but its worse because while Fillingame has been maintaining for two days in the media that the legal troubles facing Denardo were outside the scope of his employment with the City it turns out the issues were inherent to his employment and the following three current city employees can now be identified as being involved in the payroll processes that surround these very serious allegations: Continue reading “Updated: Throw Momma from the Train: It’s Screwy in Bay St Louie and its now unraveling like a cheap sweater”