Nutter calls Controller 'a snake' after report alleging 'slush fund'

20160817_inq_se1fund17z-b
City Controller Alan Butkovitz questioned several areas of spending at his news conference.

Former Mayor Michael Nutter called City Controller Alan Butkovitz "a liar, a snake, and a hypocrite" Tuesday in response to a controller's report that more than $380,000 in Philadelphia Marathon proceeds were used as a "slush fund" under Nutter's watch.

The report, released Tuesday, said the money was used in part for unapproved grants, a trip to Rome by Nutter and his staff, and an open-bar reception last year.

The spending was approved solely by the chairwoman of the fund at the time, former City Representative Desiree Peterkin Bell, according to Butkovitz, with no oversight by the fund's board of directors, effectively circumventing the board's policies and control checks.

"Instead of making grant awards, it appears the former chairperson used the reserves account as if it were a special slush fund," Butkovitz said at a news conference.

Peterkin Bell denied circumventing the system.

"The fund's executive director, Ashley Del Bianco, signed off on expenditures to indicate her approval that all criteria had been met," Peterkin Bell said in a statement. "I find curious . . . the controller's failure, contrary to his office's own practice, to give me the opportunity to review the preliminary report or to correct its mistaken assumptions."

Nutter, in his own response, was more pointed.

"The controller is a liar, a snake, and a hypocrite," he wrote in a statement. "There is no truth in what he says, every expenditure was proper and for an approved purpose, and he never talked to either Desiree Peterkin Bell or myself about any concerns, which is standard procedure, before releasing this slanderous, libelous, and vicious bile from his mouth. He is a sad and sick person."

Butkovitz said Peterkin Bell and Nutter could speak with his office about the matter. "We're pretty open-minded," he said.

The Mayor's Fund is a nonprofit that manages $7 million to $10 million annually for various city programs that promote tourism, business and economic development, education, culture, and job growth. Much of its revenue comes from the annual Philadelphia Marathon.

In 2014, $500,000 was set aside for grants, $200,000 of which was placed in the newly created Marathon Reserves account. In 2015, the fund spent nearly double what had been allocated for the Marathon Reserves account.

The controller's review was made at the request of Del Bianco, who was appointed by Nutter in 2015.

"The executive director had concerns that some of the Marathon Reserves funds may not have been spent appropriately," the controller's report said.

Lauren Hitt, spokeswoman for Mayor Kenney, said Del Bianco was not available Tuesday for questions. According to Hitt, Del Bianco previously raised questions about the spending.

"Ashley raised her concerns with [Peterkin Bell] and then directly to Mayor Nutter in the fall of last year," Hitt said. "Her concerns were overruled by both."

Nutter said Del Bianco never came to him with her concerns.

Some of the expenditures made by Peterkin Bell without board approval, according to the report, included:

$51,295 for airfare to Rome and lodging there at a five-star hotel for the mayor and five executive staff to arrange Pope Francis' visit in September.

$52,000 for accommodations at Philadelphia Marriott Courtyard from Sept. 15 to Oct. 3, 2015. Hitt said that the accommodations were for city staff, including emergency personnel, who stayed in Center City for the pope's visit. The pope visited Philadelphia following the World Meeting of Families, which ran from Sept. 22 to 27.

Nearly $11,000 for a three-hour open wine and beer event for the NAACP Mayor's Reception at the African American Museum in Philadelphia.

More than $100,000 was spent with credit cards linked to the fund's account, including one in Peterkin Bell's name, Butkovitz said. There were charges for $700 worth of Uber rides, a $766 flight to San Francisco, and $80 for a pair of shoes at Macy's.

"While the purchase of shoes was less than most charges, I find it absolutely intolerable the former chairperson used the reserves account to make such a purchase," Butkovitz said. He added that there could be a reasonable explanation for the shoes but said there were no invoices or memos explaining the purchase.

During Tuesday's news conference, Butkovitz said that while there was no evidence of criminal wrongdoing, his office would continue investigating the matter.

Butkovitz recommended that the board of directors take a "more active oversight role" in the use of Marathon Reserves funds. He vowed to conduct a more in-depth investigation of the entire fund dating back to 2008.

"We thank the controller for his recommendations, which we fully support," Hitt said in an e-mailed statement. "While their adoption must be voted on by the board, we are optimistic that this report will lead to a more transparent and effective fund."

cvargas@phillynews.com

215-854-5520@InqCVargas