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Controller Butkovitz Refers Findings of Forensic Investigation of Sheriff’s Office to United States Attorney

For Immediate Release:    
November 16, 2011

Contact: Harvey Rice
215-686-6696

Controller Butkovitz Refers Findings of Forensic Investigation
of Sheriff’s Office to United States Attorney
Controller says, “investigation uncovered people getting rich at the expense of the poor, & Sheriff John Green turned a blind eye.”

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PHILADELPHIA – City Controller Alan Butkovitz today released his Forensic Investigative Audit of the Philadelphia Sheriff’s Office and referred the findings to the United States Attorney.

According to Butkovitz, “Sheriff John Green abandoned his responsibility to protect the public interest. He disgraced his office – by allowing private parties to improperly benefit financially – at the expense of the most vulnerable -- those who lost their homes.”

“The victims were real people – real families -- families who had hit financial bottom and could no longer afford to keep their homes,” he said.
From 2006 through 2010, the Sheriff’s Office conducted over 61,500 property sales. 

The Real Estate Division of the Sheriff’s Office was responsible for conducting these sales, and processing and authorizing disbursements for them.

Crystal Stewart was the Director of the Real Estate Division.  She is married to Darrell Stewart, who was the Supervisor of the Real Estate Division.  She is also the sister of James Davis, Jr., owner of both Reach Communication Specialists, Inc. and RCS Searchers, Inc.

Reach Communication Specialists provided advertising services to the Sheriff’s Office for Sheriff’s sales for over 20 years – ending in January 2011. 

RCS Searches is a title insurance company that provided distribution title insurance, settlement closing services, sweep account services, and deed related services to the Sheriff’s Office. 
The Sheriff’s Office paid Reach/RCS $206,110,116 from 2005 to 2010 for advertising services, settlement “pass-through” disbursements, related services, and fees.

During an interview, Sheriff John Green told investigators that he did not recall who made the decision to hire Reach or RCS. He did not know if Mr. Davis owned Reach and RCS.

Sheriff Green also said he had “no idea” of the amount of advertising expenses his Office paid. He also did not know if RCS had a contract with his Office, but suspected they did. He said Reach never had an advertising contract and he did not know how much Reach and RCS were paid.

Mr. Davis was the largest outside vendor for the office, and according to Acting Sheriff Barbara Deeley, Mr. Davis helped write the Sheriff’s Office response to our 2010 audit report. 

Reach continues to be listed as a $30,000 creditor on the Sheriff’s campaign finance report from June 14, 2007.

The investigation uncovered two near-identical – but different -- signed contracts for Reach to provide advertising services.  One allows for a 15% commission for Reach – the other allows for a commission based on a “2.9 lines per writ, plus one line to cover production costs in one newspaper.”
 
“When you examine both contracts, Reach/RCS either overcharged the Sheriff’s Office $7.4 million under the 15 percent commission contract, or $11.6 million under the ‘2.9 line per writ’ contract,” said Butkovitz. 

The letter agreement contracts were not prepared or reviewed by the City’s Law Department as required by the Home Rule Charter.  In addition, the contracts where companies earned between $2 -$3 million a year were not competitively bid, which is a best practice to ensure the best price.

Due to a lack of proper oversight, some of the Sheriff’s Office overcharges made to Reach/RCS included the following:
-$2.9 million for posting properties on a website from 2005 to 2010
-$1.1 for advertising that never made its way to the newspapers for publishing ads
-$616,728 in 2010 for unpaid gas bills on 273 auctioned off Sheriff’s properties

“This investigation uncovered people getting rich at the expense of the poor,” said Butkovitz.  “They overcharged for items and charged excess fees for services they were not contracted to perform.  And John Green turned a blind eye.”

Butkovitz’ investigation also found that private finders were given access to lists of people who were owned money from Sheriff’s sales.  Claude Carter, who had a close relationship with the Stewarts, was reported charging a fee as much as 35 percent for returning monies to former property owners.  He earned an estimated $1.5 million from homeowners from 2004 through 2010.

“These were homeowners who lost everything and then were forced to pay up to 35 percent in exorbitant fees to get their money,” said Butkovitz.

Another finding from the Controller’s investigation included six suspicious checks totaling $389,742 to three companies with little or no connection to the Sheriff’s Office.  These included:
-two suspicious checks totaling $161,567 paid to an antique dealer in Media, PA
-two suspicious checks totaling $147,555 paid to a company that provides specialized sports and entertainment management services designed to cater to the needs of high-profile individuals

“We have turned our report and our findings over to the United States Attorney,” said Butkovitz.

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