Council Initiated Investigation
CDM Contract Compliance Report
Felton Financial Forensics, LLC
5200 Tifton Drive, Minneapolis, MN 55439 Phone: 612.490.1940
www.feltonforensics.com
Council Initiated Investigation – CDM Contract Compliance Report
August 5, 2014
Table of Contents
I. Executive Summary ............................................................................................................................... 1
II. Background ........................................................................................................................................... 2
III. CDM Noncompliant Contract Findings ............................................................................................. 3
A. Non-Allowable Expenses ................................................................................................................... 3
IV. Conclusion ....................................................................................................................................... 12
Council Initiated Investigation – CDM Contract Compliance Report
August 5, 2014
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I. Executive Summary
The Honorable Jannquell Peters, Mayor
The Honorable Sharon Shropshire, Council Member, Ward A – At Large
The Honorable Alexander Gothard, Council Member, Ward A
The Honorable Karen René, Council Member, Ward B – At Large
The Honorable Lance Rhodes, Council Member, Ward B
The Honorable Nanette Saucier, Council Member, Ward C – At Large
The Honorable Myron B. Cook, Council Member, Ward C
The Honorable Deana Holiday-Ingraham, Council Member, Ward D – At Large
The Honorable LaTonya Martin, Council Member, Ward D
Dear Honorable Mayor and Council Members:
The City Council retained me to prepare a report on the results of the following Council Initiated
Investigation – Phase II Tasks:
1. Test CDM Smith’s Capital Project Program Billings Compliance with Contract Terms.
2. Test the 59 Missing Boxes Containing Paid Vendor Invoices for Compliance with the City’s
Procurement Code and Policies.
Detailed findings are in the report body. I prepared a separate report for the missing boxes, due to
the length of the report. This report dated May 12, 2014 and titled Council Initiated Investigation
– Missing Boxes Report was previously submitted.
I would like to thank the current mayor and council members, as well as the former mayor
Earnestine D. Pittman, and former council members Sharonda D. Hubbard, Pat Langford, Marcel
L. Reed, and Jackie Slaughter-Gibbons, for this opportunity to serve them and the East Point
residents.
I would also like to thank senior management, the City Attorney’s Office, the Procurement
Office, the East Point staff, and the City’s outside legal counsel, Randy Turner, for their help and
support during Phases I and II of the Council Initiated Investigation.
Respectfully,
Mark A. Felton, CPA, CFE, MAFF, CVA, MBA
Felton Financial Forensics and Valuations, LLC
cc: Ellis Mitchell, Interim City Manager
Brad Bowman, Acting City Attorney
Randy Turner, Esq., Turner & Ross, LLC.
Council Initiated Investigation – CDM Contract Compliance Report
August 5, 2014
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II. Background
In late summer 2012, a City of East Point employee contacted the new city attorney, Corliss
Lawson, and alleged certain improprieties in the City of East Point’s bidding and procurement
process. Based upon this initial allegation an investigation was conducted, which included
reviews of relevant records and interviews of appropriate personnel.
In a report dated June 3, 2013, I provided my results to the Mayor, City Council and City
Attorney. I also presented the results at the July 1, 2013 City Council Meeting. Based on these
report results, the Council in its July 1, 2013 Executive Session authorized Phase II of the Council
Initiated Investigation, and directed the City Attorney to negotiate the scope and agreement terms
with my firm, Felton Financial Forensics.
Former City Attorney Corliss Lawson and I agreed my firm would perform the following:
1. Examine and validate the accuracy of all Camp, Dresser & McKee, Inc. (herein referred
to as CDM Smith) billings related to the Capital Improvement Program.
2. Examine and report on the contents of 59 missing boxes paid vendor invoices located
July 9, 2013 by city staff.
My CDM Smith billings finding summary is:
Based on my reading of the contract between the City of East Point and CDM dated
September 6, 2006, non-allowable contract expenses appeared on CDM Smith billing
invoices to the City of East Point. In the almost seven-year contract period, these non-
allowable expenses totaled $5,390.88.
My findings of the 59 missing boxes of paid vendor invoices contents are: (Note: See my
separate confidential report on the missing boxes dated May 12, 2014.)
1. Prohibited Capital Expenditures.
2. Travel and Other Expenditures without Proper Documented Justification.
3. City’s Credit Card Used for Personal Purchases.
4. Miscellaneous Purchase with Incomplete or No Documented Business Purpose.
My detailed findings are presented in the body of this report.
Council Initiated Investigation – CDM Contract Compliance Report
August 5, 2014
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III. CDM Noncompliant Contract Findings
A. Non-Allowable Expenses
Per Page 14 of the contract between the City of East Point and CDM dated September 6, 2006, CDM
Smith represented it had secured or would secure, at its own expense, all equipment necessary to
complete the contract. In addition, the contract explicitly stated computer hardware and software
expenses, and continuing education conferences and seminar expenses, unless requested by the
Department of Public Works and approved in writing, are not allowed.
Table 1 details non-allowable contract expenses, which appeared on CDM Smith billing invoices to the
City of East Point. In the almost seven-year contract period, these non-allowable expenses totaled
$5,390.88.
CDM Smith’s response to Finding 1: Written approval for these purchases are contained within files
turned over to the City of East Point.
Non-Allowable Expenses
Expense Description Cost Invoice
Number
Invoice
Date
Firm
Name
Supporting
Document
Computer 1 $1,947.08 10 06-26-07 CDM Page 4
Computer 2 $2,636.25 11 07-24-07 CDM Page 5
Field Equipment $177.25 14 10-30-07 CDM Page 6
Traffic Safety Cones $32.36 20 05-21-08 BenchMark Page 7
DLODE Gen3 Surface Mount
Lights $59.95 21 07-02-08 BenchMark Page 8
Hawk Dash Light-48 LEDS $52.99 21 07-02-08 BenchMark Page 8
Certification Training Class $250.00 22 07-28-08 BenchMark Page 9
Field Equipment 2 $66.00 24 09-25-08 CDM Page 10
Computer 3 $169.00 44 05-13-10 CDM Page 11
Total Non-Allowable
Expenses $5,390.88
Table 1 - Non-Allowable Expenses per Contract
Council Initiated Investigation – CDM Contract Compliance Report
August 5, 2014
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Document 7
Council Initiated Investigation – CDM Contract Compliance Report
August 5, 2014
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Document 8
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IV. Conclusion
I have concluded my work on Phases I and II of the Council Initiated Investigation.
Summary findings for both phases are listed below.
Phase I Summary Findings of the Council Initiated Investigation:
1. Invoices were paid without properly approved requisitions and purchase orders.
2. Artificial division of invoices was used to circumvent procurement purchasing
threshold requirements.
3. “Field” purchase orders were improperly used.
4. Vendor payments were under reported.
5. Some invoices were paid twice.
Phase II Summary Findings of the Council Initiated Investigation:
1. Non-allowable expenses, as defined by the contract dated September 6, 2006
between the City of East Point and CDM Smith, appeared on CDM Smith invoice
billings to the City of East Point.
I thank the management and City Staff for their assistance and courtesies extended throughout
this Council Initiated Investigation.