A financial investigator hired by a bipartisan majority of the Upper Darby Council said Wednesday the township commingled federal funds it received, causing accounting confusion and raising the possibility that some of the money may have been used to backfill a pension payment.

The email from investigator Chris Boggs to the Upper Darby Township Council Finance Committee stressed that the investigation and report underway are “still incomplete and more information may be uncovered.” The complete text of the Boggs email is appended to the bottom of this report.

The two warring factions in the months-long fight — a group of six who say more financial transparency was needed, versus Mayor Barbarann Keffer’s administration and the remaining five Democrats on council backing her — are both claiming to be vindicated by the interim update.

Boggs was hired to do an independent analysis of the township’s financial accounts when a controversy erupted in February after Upper Darby received federal funds from the American Rescue Plan, or ARP (also sometimes ARPA), in late 2021.

In February, township Treasurer David Haman gave a presentation showing various fund balances, highlighting that one account which should have held roughly $20 million in ARP money had briefly dipped below that amount, raising questions as to whether the money had been moved or spent without council approval.

That presentation set off a quake creating an immediate schism on the council, with five Democrats backing Keffer (D) and her top deputy, Chief Administrative Officer Vince Rongione. The bipartisan group of six, who voted to fire Rongione just two months ago, include the Democrat president and vice-president of the council.

With the battle lines drawn, both sides created and paid for independent investigations.

In the Wednesday email, Boggs told the finance committee that the handling of the ARP money created at least two problems.

“When the ARP funds were received it would’ve been most prudent to put them into a separate account but this is not required,” he said. “However, if this was done we would not be in the current position.

“The second mistake was that the ARP funds were put into the General Fund over cash flow issues. There would not have been any cash flow issues if the Township had applied for the TRAN loan [a low-interest loan provided by the state]. It’s as if the finance department opted for the ARP fund use instead of applying for the TRAN, which is the historical tradition of the township.”

TRAN stands for tax revenue anticipation note, and helps smaller governments get through periods of low cash flow, such as in fall or winter months when real estate taxes will start to flow in the spring.

In explaining why the commingling of funds was problematic, Boggs used an analogy in which he said the township’s general fund should be thought of as a large bucket of water, and the ARP funds were a small glass of water.

“Once you throw the glass into the bucket there is no way to know what happens to it once the bucket starts getting dumped on flowers, in troughs, or drank by the farmer. That glass could still be in the bucket or could’ve gone to any of the places where the water was dumped.”

Rongione said commingling funds is “not against any law, regulation, and/or official guidance/guidelines,” and said the report commissioned by Mayor Keffer didn’t find any fault with any fund transfers.

The commingling issue is also driving the still undetermined issue of whether ARP funds could have been used to backfill the township’s pension obligation it made in October of last year, according to Boggs’ email.

Boggs said the township made its payment out of the General Fund, but, “[d]ue to the theme of this update – the commingling – it is impossible for Fran [a colleague investigator] to be able to tell if ARP money was used to make the pension payment, but he said it is very possible.”

Yet another issue raised by the bipartisan group of six dealt with an asset forfeiture account. The account holds money seized from persons arrested but not yet convicted, and it is under the joint custody of the township as well as the county district attorney. 

In a previous council meeting, Councilwoman Meaghan Wagner (R) noted that at one point the account had been zeroed out. Rongione said the account was being moved to a different bank.

Boggs certified Rongione’s version of events, but with caveats.

“There was about a four day period where these funds would have been in limbo (without a court order) and would not have been able to be accessed,” he noted. 

“They were moved, without a court order,” he said, adding “that is deeply concerning to the district attorney, but candidly, as it turns out, not as important to movement of the ARP funds.” 

Mayor Keffer, Rongione, and their backers have complained through the entire controversy that the group of six have refused to allocate any of the ARP funds to the many projects selected by the mayor.

That same group now says the new information from Boggs should end the fight.

“In the end, Council’s personal hatred of me and the Mayor was no match for the facts and the only people they hurt were the residents of Upper Darby,” Rongione told Broad + Liberty in a text. “Most conspiracy theories don’t add up and this one was no different. It is long past time to put this all behind us and get back to the important business of serving our community.”

A press release disseminated by Democratic Councilman Andrew Hayman said the Boggs email “concluded that the ARPA funding was never missing and that there is no evidence the funds were spent on pension payments, as was also previously alleged.”

“The residents of Upper Darby Township deserve a recreation center,” said Councilman Hafiz Tunis Jr., claiming that “the irresponsible and outrageous actions of some members of Council have put this project in jeopardy.” 

Hayman went a step further, however, saying the delay of allocating any ARP funds has already created dire consequences.

“We’ve had at least four gun murders in the township since members of Council fabricated this incident,” Hayman said in the release. “People’s lives are literally on the line. We have a million dollars for gun violence prevention that has been held up because of this lie.”

Councilman Brian Andruszko, one of the three Republicans in the larger group of six, said efforts by Hayman and the others backing the administration are off base.

“The main finding thus far shows the incompetent handling of these funds from the administration. To start, the money was moved without council approval,” Andruszko said. “It was commingled to the point where it can not be distinguished in our accounts what is ARP money and what is general township funds. Now it’s nearly impossible to track how the money was spent and if it was spent within the guidelines provided by the Federal Government.”

Andruszko added he believed there was a strong possibility for legal repercussions for moving the restricted funds in the asset forfeiture account.

Councilwoman Meaghan Wagner was incredulous that the group backing the mayor was claiming victory.

“First of all, this is not a report,” Wagner said. “It’s an email indicating an update in an investigation that isn’t completed yet. Second, are Mr. Hayman and Mr. Tuniz reading the same email I am? This email indicates that money was moved without council approval and seriously commingled to the point that no one knows what was spent, when and where.”  

Mayor Keffer said the new information had her “looking forward to…to sort of healing and we really need the council to come together and work together to release funds so that they can be spent in the community.”

When asked if moving ARP funds without council approval was an issue, Mayor Keffer said it’s a matter of jurisdiction.

“I think moving money is part of — [it] is an administrative function,” Keffer said. “I’m not sure where council needs to approve every transfer. I mean, that’s kind of a vague statement coming from council. So, I don’t know where council thinks that they have administrative powers here.”

Wagner staunchly disagrees.

“This is sheer incompetence and, to be clear, a blatant violation of the home rule charter. Mr. Rongione has forfeited his office,” Wagner said. “Let’s get the ARP funds in the hands of someone Upper Darby taxpayers can trust.”

Wagner also took issue with the release of the Boggs email, which originally had only been sent to members of the finance committee.

“[I]t is absolutely reprehensible that Councilman Hayman would disclose communication regarding an on-going investigation in a vile attempt to mislead the public,” Wagner said.

The financial investigation launched by Mayor Keffer and carried out by national accounting group Marcum LLP ended in mid-May. Among the findings was a determination that “[a]t all times the general fund bank account balances exceeded $20.88 million,” meaning that the funds had not been inappropriately spent or moved. 

But the opposition group of six said the Marcum report had access to only one of the township’s funds, and was therefore incomplete.

Boggs told the finance committee his full report should be ready in September.

Below is the full email from Chris Boggs to the finance committee.

+++

Subject: Executive Session Information

Finance committee: 

I just got off the phone with Fran. Given that the meeting is canceled tonight I wanted to give you the update we would have given tonight. I will also email Lisa separately, because I told her that I would.

Our investigation essentially breaks down into three areas with one major theme. The areas are: 

1. ARP Fund Movement

2. Restricted Fund Movement

3. Pension Fund Treatment

The one major theme is comingling. If, the ARP funds were put into the general fund, they would be forever tainted. Once in there, the art funds could easily be used to pay or cover almost anything. Fran’s analogy was the art funds are glass of water and the general fund is a big bucket. Once you throw the glass into the bucket there is no way to know what happens to it once the bucket starts getting dumped on flowers, in troughs, or drank by the farmer. That glass could still be in the bucket or could’ve gone to any of the places where the water was dumped.

1. The ARP funds were moved into the general fund. There were two “mistakes” here. When the ARP funds were received it would’ve been most prudent to put them into a separate account but this is not required. However, if this was done we would not be in the current position. The second mistake was that the ARP funds were put into the General Fund over cash flow issues. There would not have been any cash flow issues if the Township had applied for the TRAN loan. It’s as if the finance department opted for the ARP fund use instead of applying for the TRAN, which is the historical tradition of the township. There also was never an ordinance about the use of the funds so when they went into the general fund, it is possible, but unknown, whether they were in actuality spent immediately, later on or never at all. Fran also said that the Marcum Report was not as off-the-wall as he originally thought. Whenever, funds are commingled there are two schools of thought – one is Gary and one is Marcum. One says that there is a huge problem if you do not know what funds are being used where. The other says that it’s the total amount of the fund that controls. I think Fran is being incredibly fair to the Marcum (absent the cost – he is floored by that), but I think a very legitimate concern for Townships, that deal with multiple types of funding sources, is to not know where specific federal funds are.

2. The Restricted Accounts – it appears that the Confiscated Funds account at Wells Fargo was zeroed out and placed in an account at Santander. There was about a four day period where these funds would have been in limbo (without a court order) and would not have been able to be accessed. It does not appear that any of these funds were spent. They were moved, without a court order, and we’re in accessible for a period of time. This is something that is deeply concerning to the district attorney, but candidly, as it turns out, not as important to movement of the ARP funds.

3. The Pension Fund – as you are aware the township typically pays its pension contribution with the state in October of each year. In 2021, the state portion of the payment was made, in October. The Township waited to make its payment and made the payment out of the General Fund. Due to the theme of this update – the commingling – it is impossible for Fran to be able to tell if ARP money was used to make the pension payment, but he said it is very possible. I asked Fran if he could see any money coming back out of the Pension Fund and he said he would specifically look for that but that he did not remember seeing that so far.

This is still incomplete and more information may be uncovered, but both Fran and I are confident in a final report being ready by early September.

+++

Todd Shepherd is Broad + Liberty’s chief investigative reporter. Send him tips at tshepherd@broadandliberty.com, or use his encrypted email at shepherdreports@protonmail.com. @shepherdreports