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Butkovitz Urges City to Recoup $236,535 in Illegal Bonuses

For Immediate Release:      
July 20, 2010

Contact: Harvey Rice
215-686-6696

Butkovitz Urges City to Recoup $236,535 in Illegal Bonuses
Controller’s Library audit uncovers illegal bonus payments
paid to former Library president
  

Click here to view Library audit

Click here to view Controller's letter to City Solicitor

PHILADELPHIA – Along with releasing his audit of The Free Library of Philadelphia, City Controller Alan Butkovitz today sent a letter to the City Solicitor urging her to use all legal options to recover the $236,535 paid in illegal bonuses to the Library’s former president by the Library’s Board of Trustees.

In the course of the Controller’s FY09-08 Library audit, auditors uncovered two bonus payments totaling $65,000 given to the Library’s former director, Elliot Shelkrot.  These bonus payments were paid through the Library’s trust fund and in addition to Shelkrot’s City Salary.

As a result of the audit, it was found that an additional $171,535 in bonuses paid to Shelkrot dating back to 2001 violated the Philadelphia Home Rule Charter.

“Because the City Solicitor’s opinion supporting our audit findings that Mr. Shelkrot’s $236,535 in bonuses from 2001 through 2008 violated City law, I request the City explore all legal options for retrieving these moneys back from Mr. Shelkrot,” said Butkovitz.

Along with the recent legal opinion, a prior City Solicitor’s opinion in 1999 made the same determination that Mr. Shelkrot’s simultaneous service to, and compensation by, a separate, non-City entity in addition to his Library service and salary violated City laws.

Additionally, Mr. Shelkrot listed outside income on his financial disclosure statements from the Osterhout Free Library in Wilkes-Barres, Pennsylvania for three of the same years he received bonus payments from the Free Library of Philadelphia. 

“The Free Library of Philadelphia is a department within the City of Philadelphia and it circumvented internal appropriation systems by paying Mr. Shelkrot directly from library trust funds,” said Butkovitz.  “It also put the City at risk by not complying with IRS regulations and possibly subjecting the City to IRS fines.”

Library management reported the bonus payments on a 1099 form as “nonemployee compensation” to an independent contractor instead of wages to an employee on a W-2 form.

“We recommend the Free Library of Philadelphia stop making these bonus payments to any of its employees,” said Butkovitz.  “Continuing to provide bonus payments through this manner is a clear violation of the Home Rule Charter and tax law.”

To view the FY09-08 audit of The Free Library of Philadelphia, please visit the City Controller’s website at, please visit www.philadelphiacontroller.org

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