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$145K missing from MCK housing department

The first report on the housing fiasco in Kahnawake was released last week with interim Housing Department director Davis Montour, MCK executive financial officer Paul Rice, council chief Carl Horn and Kevin Kennedy, MCK’s executive operations officer, fielding questions and explaining the ongoing process. (Marisela Amador, The Eastern Door)

It can’t happen again.

That was a common refrain from four officials gathered for a press conference at the Mohawk Council of Kahnawake on Wednesday, regarding the ongoing Housing Department investigation.

It has yielded alleged fraud of $145,000 to this point – and it is far from over.

In fact, there are two investigations ongoing, including the criminal complaint made to the Peacekeepers, where charges are expected to be laid once it is completed.

“As a result of an initial review and collection of evidence, the Social Housing Administrator (SHA) was terminated in June and a criminal complaint was lodged with the Kahnawake Peacekeepers for the alleged fraud and misappropriation of over $110,000 at the start of July,” the Housing Department assessment summary report reads.

Initially, management of the Housing Department brought forth the concern of “the absence of certain reports that were not being put forward through the social housing administrator. A red flag went up,” said Kevin Kennedy MCK’s executive operations officer.

“The Mohawk Council of Kahnawake has its own personnel administration policy,” he said. “There are provisions in there that deal with behaviour in the workplace, that deal with conduct in the workplace, and these are the things that will make those types of determinations.”

Under the executive summary’s strategic findings, the document states: “The Housing Department has proven incapable of managing client relationships and financial accounts. The Department needs to be restructured with a focus on client needs.”

MCK executive financial officer Paul Rice elaborated.

“We discovered that the management was not up to the standards that we were expecting. In terms of financial functions, all of those will be taken away from the Housing Department and Finance (Department) will take over all of that.”

A forensic accountant was hired to look deeper into the issue of mismanagement and independently review the files, and “we had the entirety of the housing active files put into a database by another outside company,” said Rice.

“We provided that information to the independent forensic accountant and he reviewed all of those files from the period of 2008 to 2018 to come up with that figure, without influence or correspondence with the assessment team – he did that independently,” he said.

The amount of $145,000 represents roughly 40-60 clients who were interviewed by the investigator, Rice said on Wednesday.

To get a bigger picture, Rice is encouraging all clients who could potentially be affected – renting, with a mortgage, both past and present – to come forward to review their files.

Inquiries had been made from the Finance Department from the period of 2012 to 2018, asking why certain payments were not made. They were told certain individuals were in the case management process and it was “being worked on.”

“That’s one of the primary reasons why the recommendation is to create an independent authority for the finance department, so this doesn’t happen again,” said Rice.

Up to this point, $30-$40,000 has been spent on the investigation, which has a budget of $100,000.

“Clients who were victims of fraud will not be held responsible for payments,” Rice said, adding he understands most clients probably did not keep old receipts over 10 years.

“That’s part of the reason why we structured the interview process. We want clients to come in, tell us what happened to them, what their experience was, if they feel that they’re victims of misappropriation of funds, to at least document, and to give us the relative information in terms of what occurred to them.

Rice said the investigation will be concluded when the annual audit for the fiscal year is completed March 31, 2019.

“It’s obviously going to have an impact,” he said, on the Housing Department’s bottom line, “but not a significant impact.”

Rice met with his executive assistant the morning of the press conference to plan follow up meetings with about 100 clients for various concerns, including repairs and their statements of account.

Clients have been asked to recount their story and sign an affidavit affirming their story is true.

As of April 1 of this year, clients were expected to make prompt and full payments.

Recommendations were made to the MCK’s Chief and Council on Monday, including improved controls for housing payments and cash controls of the entire MCK, and an urgent need to restructure the Housing Department.

Davis Montour, interim general manager of the Housing Department who came in to replace Iris Jacobs (who is on leave) told the media the start point is to establish a baseline for all of the social housing properties. That includes “a series of comprehensive inspections to cover all the structural and mechanical elements of the various dwellings,” he said.

“From there, we can more or less establish a current state of where all the facilities are at, what their needs are, and to move forward with any repairs, maintenance calendar and things like that.

“Things need to change and if an event like this is not enough to change the way we do business, then I’m not sure what will be,” said Rice.

“There’s an abundance of responsibility and blame that can go around in here and we will deal with those matters,” said Kennedy.

Kim Diabo has met with an investigator a half-dozen times, starting August 24 (one time for five hours), with the latest meeting yesterday (Thursday). The goal was to go over her file to get to the bottom of things.

Diabo’s case, which was reported by The Eastern Door this summer, has recently revealed more damning statements that call into question how the Housing Department administered her payments.

Diabo has now found roughly $32,000 in receipts, out of the $48,045.53 Housing says she owes.

Another issue is the interest calculated on the statements. It is unclear what is paid where, and the arrears she owed are listed as “late payments” or “advance fee”, but the line marked interest is $0, and on top it says, “Interest rate 0.00%.”

Another strange entry is on her notice of arrears dated November 25, 2011, the amount is $1,160, but fast-forward to April 30, 2012 – five months later – and the notice of her mortgage in arrears ballooned to $2,100 – even though she was paying the same amount of $400 a month, to try to catch up – $50 extra towards her arrears from her $350 regular payment.

Also, “after I put $10,000 down, they are still charging me the “advance fee” of $25. It makes no sense,” she said.

Diabo took her mortgage out in 2000 (she put $5,000 down initially, to make her mortgage $65,000), yet the statement from 2015 said she stills owes $49,362. Meaning she had been credited, up until that time, with paying $15,638, 15 years later.

From June 29, 2017, when she paid the large amount, listed as “Payment: Balloon,” she was still charged late fees for 10 months, until March 31 of this year, with an entry on that date: “Advance: Fee: Other,” listed as $2,560.84; bringing an initial June 2017 balance of $45,153.69 all the way back up to $48,045.53 by March 2018.

In the last three years, her balance sheet said she had only paid $1,316.47.

She felt like she was going backwards in mud.

In fact, in none of the statements is interest populated with an actual number beyond $0, while “Late fees” seem to have taken its place.

Diabo spent many hours, including an entire weekend digging through paperwork trying in vain to find receipts so she could clear her name.

“When I brought everything into the investigator they were blown away with how much I have,” she said. “They told me I was one of the lucky ones to have a lot of documents to back up my story.

“What if I didn’t have all of these receipts? I feel bad for the ones who didn’t keep any receipts. If they paid, they shouldn’t have to pay again,” she said.

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