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Controller wants feds’ help in Sheriff’s Office audit

City Controller Alan Butkovitz wants federal prosecutors to follow up a forensic report alleging widespread financial irregularities in the Philadelphia Sheriff's Office under former Sheriff John Green.

City Controller Alan Butkovitz wants federal prosecutors to follow up a forensic report alleging widespread financial irregularities in the Philadelphia Sheriff's Office under former Sheriff John Green.

"We need access to information that is beyond our reach, specifically to bank accounts that are not in possession of the sheriff or the City of Philadelphia," Butkovitz told reporters Wednesday, announcing that he had given the U.S. Attorney's Office a 149-page investigative report prepared for the controller's office by Deloitte Financial Advisory Services.

The report focuses on the role of a private firm, Reach Communications, that handled more than $200 million in proceeds from city sheriff sales from 2005 through 2010.

The firm is owned by James R. Davis Jr., one of Green's top political supporters and a personal friend, who was responsible for selling Green his home in East Mount Airy.

Reach had handled advertising for sheriff sales since shortly after Green took office in 1988, and in recent years its role had expanded to include distribution of millions of dollars in sheriff sale proceeds.

Reach performed those jobs, Butkovitz alleged, "under mom-and-pop contracts that didn't include the right to audit. So the hundreds of millions of dollars that Reach handled, we don't know how much of that was paid to the lienholders and other people to whom it was supposed to be paid."

Deloitte's investigation turned up no evidence that Green profited personally, but Butkovitz delivered a scathing evaluation of the former sheriff, regardless.

"I think he abandoned this office, turned it over to a private company, and basically let them take whatever they wanted to take, let them charge whatever they wanted to charge, let them have unsupervised access to millions of dollars, and, as a result, there are many people in Philadelphia who have lost their homes, and lost everything, who didn't have to," Butkovitz said.

Peter J. Scuderi, a Chester lawyer representing Green in a federal probe of the Sheriff's Office that was already under way, protested that Butkovitz had refused to provide an advance copy of the Deloitte report in time to address its details.

"Without reading it, I disagree with its conclusions," Scuderi said. "I called up the guy [Butkovitz] and he didn't call me back. . . . If he wants to withhold evidence until after he makes his speech, it's not fair to Green and it's not fair to taxpayers."

A spokeswoman for the U.S. Attorney's Office declined to comment.

Deloitte began its investigation early this year under a contract that will cost taxpayers $642,000, according to the controller's office. Butkovitz lobbied for the special investigation after he became convinced sheriff's aides were trying to mislead his auditors during a more routine look at Sheriff's Office financial records last year.

"I thought John Green was a good man," Butkovitz said. "I thought, as we indicated in our last audit, that there were some shoddy practices in the Sheriff's Office. . . . But we did not have any indication about potential fraud until March 2010."

Depending on the interpretation of two contracts that have surfaced for the sheriff's advertising work, the Deloitte report alleges the Reach firm was overpaid at least $6.2 million and as much as $11.6 million for publicizing sheriff sales, running websites, and producing handbills to identify sheriff sale properties, among other jobs.

Deloitte also raised questions about larger amounts - at least $135 million - that Reach was supposed to be redistributing to third parties. A relatively tiny spot check suggested that Reach had failed to forward money to the Philadelphia Gas Works for nine out of 10 unpaid gas bills for which Deloitte had carefully tracked payments.

An attorney for Reach, Thomas S. McNamara, told The Inquirer earlier that Reach had contracts or other written agreements covering virtually all its dealings with the Sheriff's Office, as well as documentation for the payments the firm received.

Green and Reach have been cooperating with the U.S. attorney's probe, according to their lawyers.