Of the approximately $291,000 embezzled from Centro San Antonio, none were taxpayer dollars, according to a third-party audit firm hired by the City of San Antonio.
The November embezzlement scandal spurred the resignation of its CEO Pat DiGiovanni, who on Tuesday was replaced in the interim with longtime San Antonio business executive Warren Wilkinson.
Both the City and Centro should have had better oversight of the public-private nonprofit’s finances, said Centro board member and incoming chair Trish DeBerry, who attended a presentation of the audit Tuesday. Centro’s own separate audit “found the same thing,” she added.
The nonprofit now performs background checks after it was revealed that an employee, who did not undergo one, allegedly embezzled money over two years through an elaborate scheme.
Founded in 2010, Centro manages the downtown public improvement district (PID), into which property owners pay taxes for improved or additional services such as litter pick-up, graffiti removal, and ambassadors, among others.
The audit, conducted by global auditing firm KPMG for the City, focused on the time period between July 2014 and September 2017, the City’s Chief Financial Officer Ben Gorzell told the Rivard Report Tuesday afternoon.
“During that same period, the City reimbursed Centro approximately $14 million for services provided to the downtown PID,” he said.
“This audit reaffirms what we believed from the beginning – that PID funds were used as intended and that the alleged fraud only involved Centro’s private funding from membership fees and sponsorships,” City Manager Sheryl Sculley stated in a news release.
Also under the Centro Partnership umbrella is Centro Alliance – which advocates for downtown membership interests.
A February San Antonio Express-News investigation revealed that Centro used some PID money for entertainment and lobbying purposes, but that money has since been repaid.
“[The audit] did not include reviewing other accounts or funds managed by Centro other than the PID,” according to the City’s news release. “KPMG did not identify transactions that were proven to be fraudulent. They also noted improvements needed to address deficiencies in the reimbursement packages to include adequate supporting documentation, accounting/clerical errors and general organization.”
The City hired KPMG; Centro hired global auditing firm RSM to perform a more in-depth audit.
“In order to strengthen the reimbursement process, the City has replaced the Department Fiscal Administrator who was assigned to [Center City Development and Operations] with an employee with a strong audit background,” Gorzell said. “In the interim, the review process has also been complemented with the addition of reviews by senior Finance Department staff. The City and Centro will also look for opportunities to streamline and improve the process, including automating the exchange of information and increasing the efficiency and organization of supporting documentation. Proposed improvements in the process will be presented to the Audit Committee at a later date.”
Centro’s former CEO DiGiovanni stepped down after the embezzlement was revealed in November. He has not been implicated in any wrongdoing. Charges have not been filed in the case, according to the San Antonio Police Department, but Centro officials say they know who took the money.
The embezzlement, audits, and negative attention will likely lead to big changes for Centro, DeBerry told the Rivard Report, and the board will go on a retreat to consider “narrowing the focus of the organization” and what that “look[s] like structurally.”
The functions and separations of the Alliance, PID, and Partnership are hard for the public to understand, she said. “It doesn’t need to be that complicated.”
Centro’s function and mission may also be revamped, DeBerry said. “It needs to be less about empire-building and more about brass tacks. … We need to take care of the basics first [like street-cleaning] … placemaking is where the wheelhouse needs to be.”
In the meantime, Centro hired longtime San Antonio business executive Wilkinson to serves as its interim executive director, DeBerry said.
Wilkinson, a San Antonio native, has been retired for almost two years, most recently working as a consultant for Loop Cold Storage. Prior to that he served as executive vice president for Sigma Solutions and other businesses including Alamo Iron Works, according to his resume.
Centro’s board interviewed three candidates, DeBerry said. “He rose to the top because of his business acumen.”
For now, Centro isn’t looking for a “change agent,” she added. “But we need stability and processes set up.”
Centro plans on hiring a new executive director by the beginning of 2019.