Audit finds fraud with North Miami Beach procurement

(The Center Square) — An audit conducted by the Florida Auditor General uncovered several issues with North Miami Beach's failure to take action to prevent abuse of purchasing cards and failure to report suspected fraud.

According to the report, the city uses purchasing cards to make small purchases, reducing the need for purchase orders and allowing vendors to be paid quickly. In April 2023, the city hired a lawyer to address accusations of improperly using taxpayer dollars through these purchasing cards.

The investigation uncovered questionable use of purchasing cards and purchases of grocery store gift cards. An analysis of over 10,000 transactions, totaling over $2 million, showed that $1.4 million violated purchasing card policies, as well as state law and other applicable local ordinances.

The investigative report identified purchases of $296,211 from online retailers, $185,684 from retail stores, $86,520 from charitable contributions, $70,907 from food purchases, $68,600 from unclassified purchases, $500 from a bicycle purchase and $339 from child support and alimony fees.

According to the report sent to the auditor general, staff stated the expenditures were made because the former administration had a culture of bullying and intimidation to prevent the reporting of improper use of city funds.

City staff also disclosed that the finance and procurement personnel were ordered to follow directions, no questions asked, replaced or circumvented the authority of finance and procurement professionals with lesser qualified employees and continually refused to follow purchasing protocols.

It was also found that the city commission had purchased 1,000 grocery store gift cards, valued at $100 each — totaling $100,000 — to give to North Miami Beach residents who had experienced financial hardship during the COVID-19 pandemic.

The report further indicated that out of the 1,000 grocery store cards purchased, only 785 were accounted for. It was suspected that the remaining gift cards were distributed without any accountability and two arrests had already been made.

The auditor general recommended that the city continue to establish a whistleblower hotline, review any questionable charges in the investigative report, seek reimbursement from former city employees who made purchases contrary to state law and city policies and take disciplinary action against those who improperly used purchase cards — or record why they decided action was not needed.