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A final report on the four month investigation into the city parks department and the Denton Parks Foundation uncovered several legal and financial problems, but none that required a fraud report to police, according to documents released late Friday.
A 122 page forensic audit report from BKD and an accompanying legal analysis from Fort Worth attorney Julia Gannaway said the parks foundation had been selling ads for placement on city property and also had been collecting fees from youth sports groups without City Council approval.
Gannaway’s legal analysis also said no evidence of crime was uncovered, but it was reasonable for the city to initiate an investigation that encompassed those suspicions.
“Parks foundation expenses that the city incurred ultimately benefited city parks and properties,” she wrote to the City Council.
In addition, the forensic audit found the city’s previous parks director occasionally directed foundation spending and directed city staff to work for the foundation. The audit found the foundation did not accurately represent certain contributions it made to the city.
The foundation released a statement late Friday afternoon through its past president, Tim Crouch.
“The Denton Parks Foundation is pleased that the basic findings of the report proved that there were no penal code violations or violations of city policies as was expected,” the statement read, adding the foundation’s “reputation has been damaged by an anonymous allegation that has now been shown to be more about internal city issues rather than mistakes made by the foundation.”
The investigation began in September when the city received anonymous tips on its fraud, waste and abuse hotline about possible problems between the city parks department and the foundation. The city’s previous internal auditor began an investigation but quit abruptly after news of his work became public.
BKD focused its audit on the period from September 2012 through September 2017, which included the foundation’s campaign to rebuild the Eureka 2 playground at South Lakes Park.
The auditors found far more city resources were directed toward the foundation’s campaign for Eureka 2 than were reported. Although a foundation board member told the City Council the city would be repaid, it never happened.
In addition, parks maintenance staff were put to work on the campaign and other foundation events, diverting time from their normal jobs. One city employee was directed to keep the foundation’s books current and reconcile them with the foundation treasurer. That expectation on the part of the foundation continued after the campaign and caused frustration, according to the report.
The city manager’s office is charged with reviewing the city departments and their staffing each year to ensure limited taxpayer dollars are spent according to priorities set by the City Council. Without a full accounting, neither the City Council nor the city manager can fulfill their financial responsibilities.
Mayor Chris Watts said he would read the report this weekend, even though he and other members of the City Council were updated periodically on the investigation over the past few months.
“I haven’t seen it in this final form,” Watts said. “I want to go back over it word for word.”
The report comes with recommendations on the future relationship of the city and the foundation, but Watts wasn’t sure how that would play out.
“They are an independent [nonprofit] and they can raise money for whatever they choose to fund,” Watts said.
The two groups could re establish a formal partnership with different parameters, “and avoid the informality and the blurred lines in the future,” Watts said.