PDA defends decision to call off investigation

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Officials with the Fort Worden Public Development Authority said they called off an outside investigation of former executive director Dave Robison because the public corporation was nearly broke and couldn’t pay for the independent probe.

Norm Tonina and Todd Hutton, co-chairs of the Fort Worden PDA Board, said in a statement read at the start of the board’s last meeting that they asked Robison to submit a letter of resignation last August “in lieu of our continuing what could have been a costly and time-consuming investigation for an organization that was already operating with limited staff and almost no cash.”

A storm of controversy has consumed the Fort Worden PDA since October, when officials announced the agency was on the precipice of financial collapse.

Officials have blamed much of the authority’s budgetary meltdown on the shutdown caused by the COVID-19 pandemic and the subsequent loss of $6 million in revenue, though some within the PDA have also acknowledged the agency was actually in the red and operating in a deficit at the start of 2020, before the pandemic. 

A deep dive into the agency’s finances in August, after David Timmons was hired as associate executive director of the PDA, found that millions of dollars earmarked for construction projects had been shifted instead to the costs of daily operations. 

Timmons announced in October that the PDA’s financial foundation was a “house of cards” and that millions of dollars in bank loans and lines of credit that had been secured for construction projects and other improvements of the fort campus — debt of $5.1 million — was coming due. 

Officials had also found “financial irregularities” that put the future of the fort’s public corporation into question, and beyond the diversion of millions of dollars from construction projects to the costs of daily operations, they had discovered that hundreds of thousands of dollars in debt had been racked up on more than a dozen credit cards.

CHAIRS DEFEND BOARD 

In their statement at the start of the last board meeting, co-chairs Tonina and Hutton said the movement of capital funds to operations was “unauthorized.”

They also defended the board’s oversight of the management of the PDA.

“Since the PDA’s inception, the board has taken its fiduciary responsibility seriously,” Tonina said.

“Dating back to early 2019, the board, and especially the treasurer, met regularly with the staff finance team to focus efforts and implement additional reporting aimed at improving the board’s monitoring and financial controls.

“The board’s active involvement only increased during the pandemic and with the discovery of serious financial issues,” Tonina added.

Tonina said state auditors were immediately notified when the financial issues were discovered last summer.

“In August 2020, when staff found certain financial irregularities, the PDA immediately reported them to the State Auditor’s Office,” he said.

The board and Timmons “learned of delays in submittal of required financial documents,” Tonina said, and that the state auditor had opened a separate investigation as a result.

“The PDA continues to work closely with the State Auditor’s Office and is committed to transparency,” he added.

PDA GETS A CLOSE LOOK

According to documents obtained by The Leader through a public records request, board members began talking about an investigation of Robison last August after a whistleblower accused Robison of ordering staff to shred paperwork from the personnel file for Diane Moody, the fort’s chief financial officer.

The claim was made by two PDA employees, who alleged Robison pressured staff to let Moody back into her office to “clean up files” months after she abruptly resigned from her post last June.

The call for an investigation followed the discovery of Moody’s failure to file financial reports that ultimately put vital financing at risk for the PDA’s signature development, the $12.5 million Makers Square.

When confronted by the PDA’s co-chairs in late August about the allegation that Robison had directed the PDA’s human resources manager to shred documents that he removed from Moody’s personnel file, Robison disputed the allegation.

“This is a troubling statement. I do not recall this and seriously doubt that I instructed anyone ever to shred any HR document. I need more information on this in order to respond,” Robison told the board chairs.

Robison also said other staff members had “trust issues” with the PDA’s human resources manager.

Robison, responding to written questions from The Leader, said he didn’t oppose an investigation into the allegations.

“I welcomed a board inquiry into the matter,” Robison wrote in an email to the newspaper.

Robison declined to offer any detail on the shredding allegation.

“You have my statement that I made to the board co-chairs,” Robison wrote.

Moody resigned in early July, and two weeks later, staff had changed the locks on her office door.

In his response to a letter from the board chairs that detailed the allegations made against him, Robison disputed the claim that staff felt pressured by his insistence that Moody be allowed back into her former office to “clean up files” and that he asked for paperwork in her files to be shredded.

Robison wrote the claim that he pressured staff was “overstated and inaccurate.”

In an email to the newspaper, Robison said he asked staff to allow Moody to access her working files.

“I suggested that certain staff meet with her to get access to her working files, specifically, on the August reopening plan and financial reports she was preparing for the time sensitive historic tax credit process,” Robison said.

MUCH-ANTICIPATED AUDIT

PDA officials have offered few details on the “financial irregularities” that were discovered in the agency’s books, and have repeatedly said an accountability audit by the State Auditor’s Office that started earlier this year will provide a detailed account of the problems.

Robison, in his response to questions from The Leader, declined to answer questions about the shifting of capital funding to operations and the appropriateness of diverting the funds. 

He also declined to say whether board members had been notified of the shifting of funds, or whether the agency’s legal counsel had been consulted on the changed use of the funds, or if the lenders who had provided the funding for those construction projects had been notified.

“There are many questions I cannot answer due to the ongoing investigation by the Washington State Auditor’s Office on use of capital funds for operations,” Robison said.

Late last year, PDA board members offered few hints on the scope of the financial irregularities.

In a letter to Port Townsend city officials following public criticism of the PDA after the public announcement of its dire financial situation, board co-chairs Tonina and Hutton said Timmons had found problems after he was hired by the PDA last summer as acting associate executive director.

Timmons, they wrote, “discovered that the Authority has not complied in the past year in the area of Accounts Payable and Procurement of Professional Services.”

Alleged fraud, they added, was discovered in the procurement of professional services.

“Potential malfeasance” and “possible misrepresentation of the PDA’s finances” was being examined by the State Auditor’s Office, they said.

The misrepresentation, according to the co-chairs, centered on financial reports that were made to the board “during the first and second quarters of 2020.”

In an internal email days before the announcement of Robison’s retirement, Hutton wrote  there was an “ongoing criminal investigation” within the PDA that was focused on alleged embezzlement. 

“A more comprehensive internal investigation” was under consideration, Hutton noted.

Robison was not involved, Hutton added, but the board co-chairs announced they were taking steps to reign in Robison’s authority within the PDA.

“Norm Tonina and I have determined that it is prudent for risk management purposes that we temporarily suspend Dave Robison’s signatory authority for all matters, including but not limited to contracts, leases, licenses, operational and constructional expenses, and personnel actions. This is being done strictly for risk management purposes and is not intended to be punitive to Dave Robison nor a reflection on his integrity,” Hutton wrote in an email to staff.

“We have absolutely no reason at this time to believe he is implicated in the alleged embezzlement,” Hutton wrote.

In the statement read at the start of the PDA board’s last meeting, Tonina and Hutton again stressed that the allegations of fraud did not extend to Robison.

The co-chairs asked for Robison’s resignation, Tonina said, “with the knowledge that zero evidence existed that the former [executive director] had knowledge of or participated in the alleged fraud incidents.”

QUICK DECISION

Documents released by the Fort Worden PDA show the decision against seeking an outside investigator came quickly after the board co-chairs presented Robison with an Aug. 26 letter that detailed perceived performance problems.

Eight allegations were raised in the letter to Robison: 

“- Your direction to the PDA’s HR Manager to shred documents that you removed from Diane Moody’s personnel file.

- Your pressuring of staff on several occasions to allow Diane access to her secured office to ‘clean up files,’ when the Acting Associate Executive Director and co-chairs explicitly prohibited Moody from entering the office.

- The lack of adherence to established internal controls designed to ensure the organization remains predictable, stable, and in financial control.

- A working relationship with Diane Moody where she often operated autonomously with very little oversight or review.

- The fact the State Auditor’s Office opened a fraud investigation based on Diane’s failure to submit annual financials in concert with concerns the auditors allegedly observed during the Audit.

- Diane’s behavior at the staff retreat where she was apparently inebriated and was disruptive in her comments and behavior. This aligns to a pattern in Diane’s behavior that, while addressed with her in January, never was driven to completion. 

- The state of Makers Square, which appears to be over budget, and with the LCP grants and important Historic Tax Credits at potential risk due to the PDA’s financial condition (including, the state of the financials, which pre-dates COVID).

- Concern amongst staff and board members about your judgment and decision-making based on the above stated allegations, along with other concerns.”

The board chairs told Robison an investigation was needed to examine the claims, “especially in light of the very serious financial situation that is unfolding.”

Internal emails show that board members exchanged names of lawyers who could conduct the investigation into Robison’s performance, but the idea of launching a probe was dropped within the span of a week after Robison agreed to retire, with an end date of Nov. 15.

LOOKING AHEAD

In their statement at the last meeting, Tonina and Hutton noted the progress the PDA had made in its recovery, but noted that delays could endanger the authority’s survival.

“The PDA continues to work closely with the State Auditor’s Office and is committed to transparency,” Tonina said.

Hutton added the PDA had made “great strides” since October, when the financial crisis was announced, and the authority’s strategy is focussed on an aggressive effort to refinance its debt.

“The PDA is at a critical phase in executing our reorganization and recovery strategy, which is designed to ensure greater resilience, operational efficiency, and access to future recovery resources, all to support our Lifelong Learning mission,” Hutton said.

“The PDA Board deeply appreciates and wants to recognize the efforts of staff and our community stakeholders to help bring Fort Worden back as a vibrant environment for groups and individuals who seek enrichment and discovery through Lifelong Learning,” he added.