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Denton parks department investigation: Is it criminal or just bad accounting?

New details came to light Friday in the city auditor's investigation into city government's relationship with the Denton Parks Foundation, but it's still unclear whether money has been stolen or if it's just about bad accounting.

The review focuses on the informality in the parks department’s operations and its relationship to the foundation, according to City Manager Todd Hileman. The need for the foundation's cooperation during the review was not intended to cast a shadow on the group.

“Words matter,” Hileman said.  

At the city’s request, foundation officials agreed Oct. 4 to suspend fundraising until the city auditor’s work was finished. However, what remains unclear is whether the city auditor is looking into reports of poor accounting practices or missing money.

Foundation officials have said they do not know what, or who, has been the target in the investigation, but they have pledged their continuing cooperation.

The Denton Parks Foundation is a nonprofit formed in 1987 to support parks programs and small community groups that need a nonprofit umbrella. The foundation hired its first professional staff four years ago with an agreement from the city for salary subsidies. The city paid $77,000 for foundation salary subsidies this year.

According to a city press release, the city auditor’s office received confidential tips over the past several months regarding both the parks department and its relationship to the foundation. A committee consisting of City Auditor Craig Hametner, an assistant city attorney and a representative from the city’s Human Resources office conducted preliminary interviews with both employees and members of the public about those confidential tips.

Following the preliminary review, Hametner briefed the city manager’s office of the need for further investigation. The city manager’s office, in turn, asked the foundation to stop fundraising on behalf of the city “to protect the integrity of the review,” Hileman said. He also placed city of Denton Parks and Recreation Director Emerson Vorel on administrative leave. Vorel is expected to be back in the office Monday, Hileman said.  

Vorel could not be reached for comment as of late Friday afternoon.

As of this week, the city's waste, fraud and abuse committee has interviewed nine individuals and continues to audit contracts and other documents related to the confidential tips. The committee told the city manager’s office it needs another few weeks to complete their review, Hileman said.   

The foundation is continuing to cooperate with the investigation, which means fundraising activities remain suspended, according Denton businessman Tim Crouch, the foundation's immediate  past president.

Crouch said the suspension did not affect the foundation's recent participation in North Texas Giving Day or any other proposals. But he acknowledged that the parks foundation withdrew an application for funding to the Denton Benefit League, which raises money to help nonprofits buy needed equipment. 

A review of city financial records showed that the parks foundation sends only a small portion of the money it raises directly to the city. From 2015 to 2017, the foundation wrote checks totaling just under $70,000 to the city parks department. Most of the checks underwrote scholarships for children to participate in various recreation programs, such as swimming lessons and summer camps.  

None of the $500,000 the foundation raised to rebuild the Eureka Park 2 playground came in the form of a check to the city. Nor did any of the money raised to build cabanas at Water Works Park.

The foundation’s most recent annual tax form showed the group raised $590,405 and spent $524,439 in 2015, nearly two-and-a-half times what it raised and spent in 2014.

The Denton Record-Chronicle requested the foundation’s three most recent annual budgets from the foundation board on Oct. 5, the day after the investigation came to light. Board officials agreed to provide the documents, but had not done so by late Friday afternoon.

The Denton City Council discussed the status of the investigation behind closed doors Tuesday. Mayor Chris Watts declined to give specifics on the two-hour briefing from the city auditor and the city's fraud, waste and abuse committee. However, he said he believes the final report from the city auditor — who answers to the city council and not the city manager — will show the need for more stringent accounting practices between the parks department and the foundation.

“I think we will come out of this wiser and more learned,” Watts said.  

Foundation officials also look forward to the final report, Crouch said.

“We are looking forward to the opportunity to implement best practices in working with our partner at the city of Denton,” Crouch said.

PEGGY HEINKEL-WOLFE can be reached at 940-566-6881.

FEATURED PHOTO: Residents enjoy the 2017 Cinco de Mayo celebration in Quakertown Park. The Denton Parks Foundation sponsors the annual festival.
DRC file photo