Germantown Settlement fails to file $3 million in audits

Posted: October 22, 2010

Conventional wisdom has recently demonstrated in Philadelphia that if there's evidence of unaccounted taxpayer money, then the bankrupt nonprofit Germantown Settlement is probably in the mix.

So it was no surprise yesterday when the City Controller's Office released an audit concluding that the moneypit agency still hadn't filed audit reports with the Department of Human Services covering a whopping $3 million in spending for fiscal years 2006-09.

An additional 10 DHS subrecipients also failed to file audit reports, to the tune of $78 million during the same period, Controller Alan Butkovitz said.

Going forward, the Controller's Office will cut off payment to any DHS subrecipient that is late filing reports, which are due no later than 120 days after close of the fiscal year.

"The federal government and the granting agencies are getting stricter as well," Butkovitz said. "We can't have the city at risk for refunding money to the federal or state government because the organization who actually spent the money doesn't take the audit requirements seriously."

DHS officials have, in turn, taken a stronger tact with provider agencies. DHS has "a new and more stringent policy" and is stopping payment and contract processing, and prohibiting subrecipients from being considered for new funding until past-due audits are filed, DHS Commissioner Anne Marie Ambrose wrote in her response to the audit.

Messages left by the Daily News for Emanuel Freeman, CEO of Germantown Settlement, and one of his attorneys were not returned yesterday.

According to an article in this month's Philadelphia magazine, Deputy Mayor Don Schwarz promised about $120,000 for the agency in late 2008, even though one of the agencies he oversees, the Department of Public Health, hadn't received an audit from Germantown Settlement since 2005.

A Daily News call request seeking comment from Schwarz went unanswered.

Except for Germantown Settlement, all of the subrecipients of the federal, state and city money eventually filed their respective audit reports between 13 and 22 months after they were due.

The subrecipients were Best Nest Inc., ChildFirst Services Inc., Community Advocates' Association Children and Youth Inc., the defunct Philadelphia Safe and Sound, Shabriawn Inc., Bethanna, the Center for the Support of Families, Fund for Philadelphia, the School District of Philadelphia and Creative Resources Inc.

Germantown Settlement, a social-service agency that was mismanaged into bankruptcy and has numerous commercial and housing properties, is believed to have received about $100 million in taxpayer money over the past 25 years.

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