Velken Never Had A Written Contract

Easy to miss in the talk about the Village taxpayers getting a bill from the Florida Retirement System for $472,546 to settle pension claims against Lewis Velken is that Velken was not an employee of North Bay Village and Velken never had a written contract with the Village.  

In 2018, Velken was approving  $70,357 invoices by himself and for himself while Mayor Connie Leon Kreps was signing the checks over a 5 month period in 2018.  More checks were issued in January 2019.  

None of the compliance systems that are supposed to protect against fraud stopped this or even alerted the Village.  

Nobody ever publicly asked why the police chief who became the Village manager was not an employee, or why there was no written contract.  Not the people who processed the invoices, certainly not the Village manager himself as he already knew, nor Mayor Kreps as she signed the checks.  

Even stranger is that Lewis Velken reported on a 1099 that he received $48,570 with the rest apparently held back by his billing agent, a cool $21,787 (31%) presumably for "admin costs" but it does bring up the question of where did that money go?

2018 Was A Crazy Year

An estimate of the costs of 2018 that were laid out to settle ill advised legal maneuvers, severance payments for long term employees, "agreements not to sue" by contractors, and other settlements, are somewhere around $1.2 million taxpayer dollars and now the Village is on the hook for an additional $472,546 in fines to the Florida Retirement System for allowing this fraud to happen.  

It Could Happen Again

There are surely criminal investigations going on as to how an individual could use a third party to avoid pension obligations.  I am assuming that it will include those who facilitated the payments and it remains to be seen if anyone will be held accountable.  

Right now, the Village government is focused on containing the scandal by refusing to talk about it publicly and being annoyed at the FRS for holding the Village responsible.  

The Commission who will ultimately decide the strategy in how the Village pays this has not called for a special meeting to discuss the issue nor private shade session to discuss legal strategy.  

The Village Manager, citing "legal concerns", has refused to answer questions about if the policies and procedures have been updated to prevent this kind of fraud in the future.  

Maybe everyone is just hoping that it will go away if they don't say anything.  That strategy clearly failed in February 2019 when it was the official stance of the newly elected commission.  

Just as concerning is that the well paid auditors never flagged the systems failures that led to an individual not employed by the Village or even contracted to submit, approve and have disbursed tens of thousands of dollars.

Focus On The Here And Now

The taxpayers and residents of North Bay Village need reasons to trust their government before they allow a half a million dollars to slip away.  

The five commissioners who represent the taxpayers have an obligation to explain what they know and what they don't know.  The commissioners and the public need to be absolutely certain that this cannot happen again.  

The commission should insist, in public, that every existing contract and retainer be reviewed for potential abuse.  The commission should also make sure that any agreements exceeding the Charter limit of $10,000 to $15,000 per year have their explicit approval by majority vote.  

The commission should review, in public, the HR and Accounting procedures that have been put in place to flag potential fraud, protect employees who flag these issues, and residents who expose the same.  

The commission should by resolution ask state and federal authorities, including the FRS, to assist the North Bay Village police investigation into the fraud.  

The Village Manager should be prepared with an assessment of what has changed since 2018, steps that are being taken to recover the money fraudulently disbursed,  and what steps are being taken with the auditors to strengthen the defenses against fraud.  

There need to be criminal investigations into the fraud.  North Bay Village police can't do it alone.  They will need state and federal help and the commission should request that on behalf of the Village.  

Is Anyone But The Mayor Stepping Up?

Nope.  

Well, the Mayor is.  It's been over a week since Mayor Brent Latham broke the news about the FRS bill, which you can read here at the Mayor's Blog on the Village website.  

Latham has been absolutely laser focused on the critical aspect of this fraud, demanding that the Village have in place the accounting compliance and the HR policies needed to prevent this from happening again, now or in the future.  He's been pretty consistent on this since 2019 when he first came into office.  

The 4 Other Commissioners And The Village Manager

The mayor can't do this alone.  Under our system of government in North Bay Village, the mayor is one voice among five, holding equal power as the other four members.  

We know where the mayor stands.  The silence from the other commissioners is deafening.  At least two commission members must request the type of special public meeting required to review these issues.  

None have done so.  

The commission has not scheduled a special meeting to discuss the issue and instead has suggested that it might be one item among many at the yet to be publicly scheduled February meeting.  

The Village manager has not made any statements about how they intend to address the issue internally or externally.  

According to sources, the Village is planning to negotiate with the FRS to bring the amount owed under $250,000 so it will be covered by the Village's tax payer funded insurance and maybe they won't have to think about it again.  

If the residents say nothing, North Bay Village can continue to be ripe for the picking by anyone with the nerve and desire.  

Kevin Vericker

January 31, 2022