D.C.’s elected officials doled out tens of millions of public dollars in earmarks to groups that owed back taxes or weren’t registered to do business in the District, that spent their money solely on salaries or on questionable “fiscal agents” and often co-mingled public funds, a damning new audit has found.
The city council handed out 154 earmarks worth nearly $48 million in fiscal 2009, but in a new report, Auditor Deborah Nichols concludes that the money went out with “no credible review process.” It exposed taxpayer funds to groups that weren’t registered to do business in the District, owed the public back taxes or spent the money on salaries, “administrative costs” or fringe benefits.
Nichols’ investigation was prompted by revelations that Councilman Marion Barry, D-Ward 8, was steering money to women with whom he was romantically involved. But her 21-page audit casts a wider net and raises questions about the entire earmarking program.
Among her findings:
>> Nearly one-third of the earmark recipients weren’t licensed to do business in the District.
>> At least three earmark recipients, the National Conservancy of Dramatic Arts, Positive Choices and the National Association of Former Foster Care Children of America Inc., made “false representations” on their forms and were given money despite owing back taxes to the District. The Foster Care association, in fact, went bankrupt in 2008, owes the United States and the District about $226,000 in back taxes, and had not filed a tax return since 2007.
>> Groups like Ward 8 Clean and Sober Inc. and Ward 8 Clean and Green — run by Barry’s friends — ducked business licensing laws by designating third-party “fiscal agents.”
>> There were no guidelines for such fiscal agents, and some agents double-dipped into more than one earmark. At least one fiscal agent, GALA Hispanic Theatre, helped itself to a nearly 5 percent fee of a $332,000 earmark “without providing any financial management and oversight services.”
>> Bureaucrats under Chief Financial Office Natwar Gandhi rubber-stamped applications for groups despite not having records that they were obeying tax laws.
>> Seven earmark recipients spent more than $11 million on themselves, “instead of using the funds to support actual delivery of programs or services.”
Efforts to reach the groups mentioned in this story were unsuccessful. Gandhi’s spokesman, David Umansky, couldn’t be reached for comment.
Stung by the Barry scandal, the council voted to suspend earmarks earlier this year. But the city has spent almost $146 million on earmarks since fiscal 2005, records show.
Federal officials are probing Barry’s earmarks, as is Washington superlawyer Bob Bennett. Bennett’s report is expected early next year.
Barry has denied any wrongdoing.
