UPDATE: Auditors Uncover Alleged Financial Improprieties in Sus - WBOC-TV 16, Delmarvas News Leader, FOX 21 -

UPDATE: Auditors Uncover Alleged Financial Improprieties in Sussex Tech Audit

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(Courtesy: Sussex Technical High School) (Courtesy: Sussex Technical High School)

DOVER, Del. (AP, Randall Chase/ WBOC) - A Delaware businessman sold a piece of property to a local school district for almost double what he paid for it two weeks earlier, then received millions of dollars from the district for construction management work that skirted state bidding and purchasing requirements, state auditors said Thursday.
    
The findings were released following an investigation prompted by an anonymous tip regarding Sussex Technical School District's dealings with Laurel businessman Michael Horsey.
    
Auditors found, among other things, that after sitting in on a December 2011 planning meeting between district officials and state transportation officials regarding a new school bus entrance, Horsey -- through one of his businesses -- bought a piece of land needed for the project for $110,000. He sold it to the district two weeks later for $200,000, an 82 percent increase.
    
Sussex Tech then awarded the construction management contract for the bus entrance to Common Sense Solutions, another business owned by Horsey, for almost $206,000.
    
Horsey's company later received additional contracts worth $1.6 million for two unrelated projects that were not subject to competitive bidding because they were "piggybacked" on to the bus entrance project. Auditors said a school attorney signed off on the piggybacking based on language in a document that was not part of the original bus entrance contract.
    
The document in question says that the district reserved the right to retain new construction management services for projects beyond the scope of the bus entrance modification "without explanation or justification."
    
"That language is not in compliance with state law," said state audit manager Laura Horsey, who is not related to Michael Horsey or his family.
    
Auditors found that the district ultimately paid Common Sense Solutions almost $3.9 million from July 2011 to November 2016. Officials said they found an overall lack of support for invoices, several violations of state budget and accounting rules, and conflicts of interest.
    
The problems included manipulating invoices to avoid state approval for purchase orders over $5,000 and $10,000.
    
Officials said Terry Little, the former school facilities director who served on a committee that chose Horsey's company for the bus entrance  project, encouraged the invoice splitting in emails to vendors on which Michael Horsey was copied.
    
Auditors also said payments and invoices appeared to be split to avoid a requirement for three letter bids for projects exceeding $50,000, and competitive bidding for projects exceeding $100,000.
    
Officials also found that the rates and costs Horsey was charging to the district were significantly higher than average compared to other school contracts they examined.
    
Little resigned from the school district in July 2015, then was hired by Horsey's company as project coordinator and liaison for the same projects he managed while working for Sussex Tech.
    
Delaware law prohibits any former state employee from representing or otherwise assisting any private enterprise on any matter involving the state for two years after leaving state employment if the person was responsible for such a matter while a government employee.
    
State auditor Tom Wagner said the activities outlined in the report war in "direct circumvention of state laws, rules, regulations and procedures."
    
Horsey and Little did not immediately respond to a telephone message left with Common Sense Solutions. WBOC's repeated calls on Friday to Common Sense Solutions went unanswered.
    
Sussex Tech superintendent A.J. Lathbury also did not immediately respond to telephone and email messages. When WBOC reached the district, they referred the station to the statement on their website, listed below. 
    

 Sussex Technical School District is currently attempting to improve both process and procedure as it pertains to the appropriate scrutiny of transactions and enforcement of fiscal policies. Decreases in personnel over the years has led to many individuals wearing various hats and/or splitting job duties, this has presented challenges as all were learning and continue to learn their role and responsibilities. Sussex Technical School District will continue to do the best job possible while serving our community. All input will be synthesized and assist with our efforts moving forward. As of June 30, 2017, the contract with CSS will come to an end. There are no further plans to utilize CSS’s CM services beyond that point.


Republican state legislators from Sussex County said the audit raises "troubling questions" about how decisions are being made at the school, how tax dollars are being spent and whether sufficient oversight is being exercised.
    
"We urge the state Attorney General's Office to investigate these findings and aggressively pursue action should any criminal wrongdoing be found," GOP lawmakers said in a prepared statement.

State Senator Brian Pettyjohn, one of the aforementioned lawmakers, says he fully supports the school and its teachers, and this is no reflection on them. If anything, it hurts them, he says.

"Bottom line, it's about the kids," he tells WBOC. "If there were truly misdeeds that occurred there, we need to make sure the people responsible are held accountable."

WBOC spoke with taxpayers who expressed frustration at the audit and the district's apparent lack of oversight.

"Somebody screwed up," says Patsy Cicola of Prime Hook. "Somebody didn't check. But if they had a check and balances to do that, that wouldn't have happened."

"Knowing you're paying the taxes, it's going to help the kids," says Marie Kilpatrick of Georgetown. "Then you find out somebody else is benefiting from it. It's not a really nice job." 

To read the audit click here

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