Missing PDA documents prompted legal threat

Auditor’s office review expanded to include look at official’s paid time off

Posted 5/14/21

Officials with the Fort Worden Public Development Authority warned their former chief financial officer that she could face felony charges if she didn’t return “boxes of FWPDA files and …

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Missing PDA documents prompted legal threat

Auditor’s office review expanded to include look at official’s paid time off

Posted

Officials with the Fort Worden Public Development Authority warned their former chief financial officer that she could face felony charges if she didn’t return “boxes of FWPDA files and documents” in the months following her ouster from the agency, according to public records released by the authority.

Diane Moody announced her retirement from the Fort Worden PDA last June; a move that members of its board of directors later said came in response to “financial irregularities” within the PDA that were first announced publicly in October.

But while PDA officials have been tight-lipped with any details on the alleged fraud within the development authority, records made public through a recent request by The Leader show, in part, that concerns about employees being overpaid — as well as a questions about nearly $1 million that was spent on the fort’s Makers Square project — were shared with state auditors in the weeks before PDA officials announced the agency was in a financial crisis.

The Washington State Auditor’s Office is still at work examining accusations of financial improprieties within the PDA. The release of the state’s accountability audit was originally expected to be made public in April but has since been pushed back.

The Fort Worden PDA has been front-and-center of public scrutiny since officials announced late last year it was in a financial freefall and may not survive the COVID-19 pandemic. While a dramatic drop-off in revenues was rightly recognized as caused by fewer visitors to the fort during the global pandemic, documents released by the PDA show the agency had a budget deficit in 2019.

PDA officials have said “serious financial irregularities” within the public corporation were found last year after David Timmons was hired to help the organization navigate the impacts of the COVID-19 pandemic.

Timmons announced last October that the PDA’s financial foundation was a “house of cards” and that millions of dollars in bank loans and lines of credit that had been secured for construction projects and other improvements of the fort campus — debt of $5.1 million — was coming due. 

Officials had also found millions of dollars from construction projects had been diverted to the costs of daily operations, which PDA Board Co-Chairs Norm Tonina and Todd Hutton have since said was “unauthorized.”

Tonina and Hutton earlier said the PDA’s financial problems were caused in part by former executive director Dave Robison’s “apparent lack of oversight of key staff.”

Robison was relieved of personnel and financial management responsibilities after the potential malfeasance was discovered, and Robison retired from the PDA in November. 

Financial misdeeds within the PDA extended beyond the shifting of capital dollars to daily expenses.

AUDITOR ALERTED

Documents released to The Leader in response to public records requests show that Moody, the PDA’s chief financial officer, was under scrutiny for being paid for time she wasn’t at work but on vacation.

In an email to The Leader, Tonina said the vacation allegation “was brought to our attention AFTER the investigation that Todd and I led was completed and Robison submitted his letter of retirement.”

The issue of Moody’s vacation pay was added to the investigation underway at the State Auditor’s Office, Tonina added.

“If the SAO investigation finds fraud, or recommends further investigation, then the PDA will take appropriate follow-up steps,” Tonina noted.

Recently released records show the PDA’s investigation included internal and external investigators, and the agency sought assistance from the Port Townsend Police Department and the Washington State Patrol, as well as the Washington State Attorney’s Office.

PDA officials have offered few public details on the quest to resolve the authority’s “financial irregularities” that were discovered before  the agency announced it was millions in debt and living a month-to-month existence.

Subsequent work to refinance the PDA’s substantial debt is ongoing as the authority’s board of directors is preparing to vacate their posts en-masse in the coming month.

PDA officials have long said they contacted the Washington State Auditor’s Office to “self-report” the suspected fraud within the agency last year.

Records released to The Leader show the internal investigation by the board into financial questions dogging the agency happened months before officials publicly announced the PDA was facing an impending financial collapse.

MISSING RECORDS

Officials were also trying to get back records that Moody had taken with her after her June departure from the organization.

In an email to Moody, PDA attorney John Watts wrote on Sept. 1: “…You have backed out of a number of recent promises to return several boxes of FWPDA files and documents that you’ve said you have.

“I am asked to notify you that unless arrangements — no later than close of business Wednesday,
September 2nd — with me or [the PDA’s human resources manager] for their return … FWPDA will have to pursue other options to obtain their return.

“For your information, wrongfully exerting control over government records is theft in the second degree, a Class C felony,” Watts added.

“I only refer to criminal statues to get your attention, and of course we do not want to involve the police or prosecutor’s office in this matter,” Watts wrote. “What we seek is your cooperation.”

Moody responded via email four hours later, and said the “back outs” were because her car brakes were getting worked on, and after that, she was helping a neighbor and didn’t see the email request until the evening.

A medical procedure soon followed, Moody added, and that led to a hospital stay.

“I have been on bed rest from my hospital visit until Thursday this week,” she wrote.

“Curious what this is about?” Moody added in the email. “Seems there is another layer at play.”

Moody then offered to deliver the records in six days.

Her email prompted a response from the PDA’s lawyer the next morning: “This is about overdue return of PDA records. To avoid further delay, we would like to have the docs returned by tomorrow, or arrange to pick them up from your house tomorrow.”

Employees suspected someone was stealing from the PDA by August 2020, at least, according to records released to the Leader by the development authority.

PDA staff were warned Aug. 21 to keep quiet about the probe, and Chief Criminal Deputy Prosecutor Chris Ashcraft was emailed a week later about the accusations, according to records released by the PDA.

Port Townsend police were also notified. 

Within the PDA, officials continued to look for financial misdeeds.

An extensive review was conducted of PDA credit card accounts that were in the names of Moody and Robison.

An audit was also conducted of Moody’s and Robison’s paid time off.

“Diane is a chronic offender,” the PDA’s human resources manager said in a September email to Timmons, who had since become interim executive director of the PDA. “We have record in TSheets of time she put in for time off, only to go back in and cancel those days off in order to credit her PTO [paid time off] ledger. I do have coordinating email confirmations for most if not all.”

Timmons, in an email forwarding the time-off audit to an audit manager in the State Auditor’s Office, added: “As I suspected here is another way they were converting leave time that is now being cashed out.”

Watts, the attorney for the PDA, notified Moody in a Dec. 16 letter that the agency was withholding any final payment to her.

“The State Auditor’s Office, in reviewing the FWPDA’s books, has called out some areas where there may be inappropriate activity, including reporting of paid leave,” Watts said in the letter to Moody.

“Until that review is completed (which may take several more months), the FWPDA will be withholding your final payment for leave payout,” Watts added.

In a response to PDA officials, Moody said she did not believe her paid leave balances were incorrect.

“The Quickbooks system calculated it and the finance team adjusted due to PTO hours calculated by QB,” she wrote. “I was capped out a long time ago because I didn’t take vacation as I should have.”

LACK OF TRANSPARENCY

In an email to The Leader, Robison said he could not answer questions about the use of capital funds on daily expenses “due to the ongoing investigation by the Washington State Auditor’s Office.”

Robison said Moody “initially worked well with board members and the general manager in preparing the annual operating budget as well as being the lead staff for ongoing board review of the monthly financial reports. Beginning in spring of 2019, board concerns were raised about accurate and timely financial reporting. In January 2020, the board and I found out that the year ended in a deficit, which was not forecasted in earlier financial reports,” Robison wrote.

He said his opinion of Moody had since changed.

“I was devastated that she was not transparent with me and the board finance team,” Robison told The Leader.

Robison also said he accepted responsibility for the PDA’s problems over the past year.

“As executive director, I was responsible for the overall organization. I trusted my senior staff, perhaps too much, to manage their staff and carry out their department responsibilities,” he said in his email to The Leader.

SUSPICIOUS STOCK SALE

Another email forwarded to the state auditor was an email of a stock sale that Moody had been involved with that had raised questions at the Fort Worden Foundation.

The foundation’s chief advancement officer noted he had found a stock holding  “that Diane [Moody] never disclosed or put on the balance sheet. It was held at our brokerage account and not subject to oversight.”

“Normal practice is to always sell such a position immediately at market,” the foundation officer added. “It was disclosed at the end of 2019 and sold at that time. However, I don’t see where those funds went ... I’m concerned.”

In a following email, the officer added that the foundation had paid $66,749 for “contract services,” but it was unclear how that money was spent.

The email also noted that there were no details in financial information provided to the foundation by Moody that would show how $903,000 was spent on the Makers Square project, “but no detail as to how or where, and a balance of $96,159.78 unaccounted for.”

Those emails were also sent to the State Auditor’s Office.

Timmons noted to the audit manager he had advised the foundation, “FYI I suggested they investigate ASAP.”

In response to a public records request from The Leader for documents raising issues of fraud that were presented to state audit officials last year — a disclosure mandated by Washington state law — the Fort Worden PDA released a handful of emails to the newspaper as well as a log of documents that would be kept secret.

Most of the new details on the alleged theft within the agency, however, come from a six-page document prepared by the PDA that lists records that were withheld from public view.

Nearly all of the records kept secret, according to the PDA, were due to “legal research, opinions, or mental impressions related to investigation and anticipated legal proceedings regarding suspected fraud by a former FWPDA employee.”

Watts, the PDA’s attorney, cited that reason 21 times in the development authority’s rationale for withholding  information on fraud-related records shared with the State Auditor’s Office.

Even so, descriptions of the documents give a limited insight into the timeline of the PDA’s investigation into internal claims of fraud and when the agency alerted other officials about potential financial misdeeds within the publicly chartered corporation.

An engagement letter with a forensic investigator was prepared by Sept. 1, and the next day, the PDA’s attorney asked the county prosecutor’s office for help in the investigation.

LOOKING FOR HELP

As PDA officials set out the scope of the investigation, they also reached out to employees to ask for their assistance in the probe but to maintain confidentiality.

By Sept. 4, according to PDA records, the agency’s attorney had picked out people within the development authority who could help out in the investigation.

Timmons, the PDA’s interim director, contacted the Washington State Auditor’s Office about hiring an investigator on Sept. 15 — two weeks after the investigator was hired.

The next day, the forensic accountant handed over her report — an 11-page report with nine pages of attachments.

In the days that followed, according to records released by the PDA, the agency’s board chairs traded notes on next steps with the investigation with the PDA’s attorney while he reminded staff to keep quiet about the review.

Records indicate the forensic accountant’s investigation report was sent to the State Auditor’s Office
Sept. 24, roughly a week after it landed in the hands of the PDA’s attorney.

Watts, the attorney for the Fort Worden PDA, contacted Port Townsend police the next day about an investigation.

Records show that four days later, Timmons notified the State Auditor’s Office of Watts’ outreach effort to local police.

Documents released by the PDA also show that the Washington State Attorney General’s Office was in contact with the authority in October.

Topics included getting the State Patrol’s help in the investigation, and a possible criminal referral to the Attorney General’s Office.

Comments

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Reality Check

Remember that Timmons was City Manager as problems with audits arose long before Covid. Nothing was done. Appointed Mayor Sandoval did nothing. Faber second in rank on Council and an attorney did noting. As well as the rest of the rest of the Council who are infamous for falling in line following senior Council members. The new City Manager is a fake and proven to be so. To put Timmons who is part of the overall problem at the helm rather than someone to finally represent the interests of all of the people of the State who own Fort Worden is in itself nearly criminal. Timmons has been working to further cement the FWPDA and City interests to Fort Worden. When does it end? Timmons record as City manager is dismal, City finances are in ruin.

It is time for the State to take control. It is time for the State to own up to its own failures. "Partners" = special interests. The motivations of those writing letters to the editor talking of a vibrant and wonderful FWPDA are simply spin and propaganda to keep social position in this sad group. That smarmy reality has been the heart of the FWPDA from Day One. The past ownership of the Leader was part of it. Brian Kelly is showing himself and the current ownership of the Leader as being leaders. Award winning stuff.

This sad little bunch of self congratulating locals blew it. It is no surprise to those who knew the players from the start, and the methods used to take the people's property for largely private use.

It needs to end now. Timmons needs to exit with the board. State Parks needs to resume responsibility. If indeed $32 million of taxpayer money may be on the way, Timmons is not the person to administrate the use of those funds. So many inept egos are connected in plain sight and not in plain sight.

Let us begin to respect what Fort Worden represents. The "City of Port Townsend" is nothing more than a social club. It seems that will go on forever. Let this poison not taint Fort Worden another day. To reward this travesty leaving any shred of "the city" in control is criminal. For god's sake end it now. The State is far from perfect. It is just more flawed folk with titles trying to keep jobs and positions. Lets at least have the best of that pool of potential stewards have a chance. With true openness.

I have gone by the handle Collateral Damage for years. You all are to this social club. Incompetence and arrogance are a toxic combination. Look at it, assign responsibility to each and every player. Demand that it ends here.

I am, and you are, Collateral Damage

Saturday, May 15
More detail please

"Subsequent work to refinance the PDA’s substantial debt is ongoing as the authority’s board of directors is preparing to vacate their posts en-masse in the coming month."

To be replaced by who? Is this the full board as it should be?

Saturday, May 15
Tom Thiersch

The article does not state if the records were *ever* obtained from Moody. PT Leader, please finish that part of the saga.

Saturday, May 15
Robert Gray

I hear often that this community is unique because of all of the talented people who live here. Then why do we see the same people showing up in all of these different positions?

Sunday, May 16
HarveyW

Lets all discuss this. Please correct me if I am mistaken. I welcome it. Lets start here........

What is "The City"? The FWPDA is chartered by "The City". Is that 20 year Council Member and 3 time appointed Mayor Sandoval of Windermere Real Estate on the edge of the Historic District? Is it the City Attorney? Is it the City Manager? I thought, and think, it is the laws and codes all public servants are supposed to be contained within. To avoid corruption.

Timmons was City Manager for 20 years, working along side Sandoval. Now Mauro who was vetted by Sandoval is City Manager. That process was detailed in the Leader at the same time the Leader was highlighting that Timmons and Sandoval were engaged in the still practiced parking tolerance policy that benefits the real estate industry. Right now parking spots at both ends of Adams are being removed and converted. Slowly. That line of parking stories was stopped as Mauro stepped in.

Parking chaos harms my business and all business. It harms basic fairness and discriminates against those visitors and locals that don't know of the tolerance policy. It breaks Municipal Codes.

THIS IS NOT ONLY ABOUT PARKING. IT IS ABOUT "THE CITY" BEING HIJACKED BY A FEW SPECIAL INTERESTS. Excuse the caps. It is an ignored fact by the City Council that Mauro was not qualified as advertised. That reflects on Sandoval and the entire Council. Mauro continues the tolerance policy. He just helped put a new Police Chief into power that is expected to ignore municipal codes.

Fort Worden is just a shadow of "The City", made with recycled parts over and over to construct revolving doors where responsibility cant ever find a place to rest.

At the time the FWPDA was formed "The City" was Appointed Mayor Sandoval and Timmons, and whatever City Attorney, and puppet Council. I believe Sandoval signed the FWPDA into existence. Timmons assisted.

"Partners" at Fort Worden, one being the Chair of the FWPDA, were out of compliance with the MOU Centrum had with the State to rent to inclusive businesses that was supposed to facilitate a public experience and participation. Centrum rented the entire campus and sub let for a profit. The State representative at the time did nothing to get things in line. "The City" took over and formed the FWPDA. Who or what was the hand behind that? Who or what is the hand now? "Partners" Special interests. With smiley faces. :)

Who chose Timmons to step in now? What did the State do to be sure there was no funny business by "The City" as Timmons took over what is and was a crime scene? Long time associate Robeson, who was fired by the City years ago for ethics violations was recycled from the Maritime Center, where honest and non owned Council person Alan Frank had serious issues with conduct there, to be Executive Director of the FWPDA. I could go on, but know "too many words" are frowned on by some. That really is the root cause of everything. Limited reading comprehension and attention spans. By voters.

What is actually special about Port Townsend is that "the public" can't pay attention. That bled into Fort Worden. Owned by all of the people of the State of Washington. And used like a whore by a few locals.

It is called corruption. It is in plain sight. That, David Gray is what is unique about Port Townsend and why I am on track to exit. The State of Washington is and was complicit in the formation and approval of the FWPDA, and in allowing Timmons to steer it now. There is much better and honest talent out there locally and State Wide.

Correct me. Go ahead. Come on all you FWPDA cheerleaders out there. The State needs to clean up its mess. Honor the history of this place. Use what is there for veterans and first responders with PTSD.

Or, is the State just as bad as "The City"?

Sunday, May 16
Mark J Blatter

This focus on potential wrong-doing by former PDA staff is a distraction from the more important issue - the PDA "reorganization" and transfer of all hospitality operations and income to a new private nonprofit corporation with self-selected board members. More coverage and analysis of the real story, please.

Tuesday, May 18
HarveyW

"transfer of all hospitality operations and income to a new private nonprofit corporation with self-selected board members"

Under the guidance of Timmons? Sir? Self selected/? Fort Worden i s still the property of all of the people of the State.

And if the box of missing docs is returned who oversees that it is not tampered with? Timmons?

And what of special interests "partners" paying fair rent?

And on and on and on. Timmons? Really?

This is smelling like the first go round. Is it glamping season yet?

Tuesday, May 18
HarveyW

I googled Mark J Blatter.

You should too. Who is advising to hurry up and sell off part of State Parks under the proven train wreck of the FWPDA? Seems to be a Seattle "suit guy".

Hurry up hurry up hurry up is always the voice of special interests. This move needs lots and lots and lots of public scrutiny. As everything FWPDA does. Fool us once..... or, are we indeed as a group "fools" deserving what we ask or don't ask for?

Wednesday, May 19
HarveyW

Mark J Blatter just stopped into my business. I mis read his comment, and apparently got a google of a different person. Mark is a local, opposed to "transfer of all hospitality operations and income to a new private nonprofit corporation with self-selected board members"

Its a beautiful thing to admit mistakes. Sadly missing in the FWPDA. Thanks for stopping in Mark. And setting me straight. Lesson learned. Lifelong learning applies to every day.

If the Leader is up for it I give my permission to delete my original comment and this correction. Thanks again Mark for speaking up, even if I did misunderstand. All cleared up now.

Sunday, May 23