Mayor Rahm Emanuel’s administration is tightening the reins on cash handling to eliminate an embarrassing lack of oversight that allegedly allowed a low-level clerk in the Chicago Department of Transportation to embezzle nearly $750,000 in permit fees over a six-year period.
In a memo to department heads, City Comptroller Dan Widawsky argued that “recent events have highlighted the risks associated with cash management” and the importance of “robust controls to manage” those risks.
“We are the custodians of our city’s resources and you and your finance staff are critical to ensuring that such resources are safeguarded,” Widawsky wrote.
“Each department head is responsible for ensuring that proper controls are in place for any payments received … and that your department’s cash management processes are regularly reviewed to identify areas of risk and adherence to process. If you are concerned there may be weaknesses in your department processes, [the Department of Finance] will work with you to address the issues.”
The memo goes on to demand that cabinet members review cash management processes to make certain there is “segregation of duties” and that those controls “extend to all forms of payment, including checks.”
“No single individual should perform all related elements of a transaction,” Widawsky wrote.
Instead, a “separate person” should be charged with each of the following: invoice creation; receipt of payment; issuance of license, permit or other city service and reconciliation, the comptroller said.
Widawsky’s memo also ticked off other “necessary controls.
They include: directing payments to a lockbox; recording invoices in a “receivable system or other electronic tracking form”; issuing licenses, permit or other services, only after “verification of payment”; making certain payments are “posted to a business source system” and reconciled to revenues recorded by Department of Finance reports and invoices recorded in the receivable system.
Walk-in payments must be confined to sites with cashiers approved by the Department of Finance. And all city materials and web sites “must clearly state” that all checks must be made out to the city of Chicago.
Antoinette Chenier, 50, was accused this week of embezzling $25 to $200 at a time by taking in hundreds of checks that Chicagoans wrote for permits to park moving vans and dumpsters on city streets since 2008, then depositing them into her own accounts.
The long-running petty theft allegedly snagged Chenier $741,000, more than 12 times her $60,000-a-year salary.
It wasn’t until January, when Charter One bank staff noticed the unusual activity on one of Chenier’s accounts and froze it, that she was nailed by a joint investigation that included the FBI, the IRS and Inspector General Joe Ferguson’s office.
Chenier also lived in suburban Homewood, in violation of the city’s residency rule.
An account given in the federal complaint of Chenier’s undoing by a Charter One bank employee showed the alleged theft was stunning in its lack of sophistication.
Chenier had opened a bank account called “OEMC Chenier,” in which she deposited permit checks made payable to the city’s Office of Emergency Management and Communication, according to the complaint. But when quizzed by the bank worker about the deposits, she allegedly claimed they were “all fine.”
Asked if the check makers would have the same response, she allegedly then told the bank worker, “Please don’t call the check makers. I will lose my job.”
She allegedly told the banker she’d be willing to pay back the money and asked the banker “not to report this,” then claimed that her intent in opening the account was to start a cleaning business named “Office of Emergency Management and Cleaning” but that the business had failed, the complaint alleges. When the banker then told her that her actions could be construed as embezzling, she allegedly responded, “Please don’t use those words.”
The alleged CDOT theft is the first major scandal to be handled by Widawsky, whose predecessor Amer Ahmad pleaded guilty to conspiracy and bribery in December for his role in a kickback and money-laundering scheme in Ohio that occurred when he served as Ohio’s deputy state treasurer.
He faces up to 15 years in prison after agreeing to pay $3.2 million in restitution.