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Dewey report: No controls on some police, lifeguard revenue

Town settles Hanewinckel lawsuit for $122,000
April 2, 2018

Story Location:
Dagsworthy Ave.
Dewey Beach  Delaware  19971
United States

An investigative report released March 28 by Dewey Town Council confirms what was already known – there was little to no oversight by the town of revenue from donations or its participation in a federal military surplus program.

“The town has no documented internal control, policies and procedures with regard to the [Law Enforcement Support Office] program and/or the handling of lifeguard donations,” the 7-page report said.

In December, Dewey commissioners voted unanimously to hire Salisbury-based TGM Group to look back five years at each town department’s procurement procedures and any other revenue-generating activity not under the finance department’s control. The certified public accounting firm has been conducting the town’s end-of-fiscal-year audits for the past five years.

The report gives no dollar amounts, but it says some money received by the police department was deposited into one of four accounts managed by the town’s finance department or placed in a safe in the police department. The report said the money in the safe was recently given to the finance department too.

The report also says the beach patrol deposited money obtained by lifeguards into three accounts – two that were recorded by the town’s finance department, and a separate competition team account that was not recorded.

Dewey Mayor TJ Redefer said it’s embarrassing for the town to not have had these procedures in place, but he said it all looks rather minor.

“People have something to look at now,” he said. “Maybe this will help settle some of the tension in town.”

The town has already taken action on TGM’s first recommendation – to hire an in-house financial manager or a third-party contractor. During a special meeting Feb. 23, council voted unanimously to hire Milford-based Luff & Associates to perform the duties of the vacant financial director through the end of this fiscal year, March 31. The certified public accounting firm is already doing payroll for the town.

The second recommendation is to develop a formal accounting policy and procedures handbook.

Town Manager Scott Koenig said, March 29, this process will begin almost immediately. He said there will be a discussion between Luff & Associates, TGM Group and town commissioners to see if the town wants to continue to use the military surplus program, and if so, creating procedures that easily document everything.

Koenig, whose first day on the job in Dewey was March 12, said he wasn’t surprised to learn that not everything was in place. Dewey is still a small town, and as programs like this become more widely used, he said, there are going to be things not thought about.

“Moving forward, I think everything will be in place,” he said.

During a special meeting March 26, town council voted in favor of TGM conducting an investigation into the specific financial amounts associated with the previously unsupervised accounts.

Redefer said this second phase is not a forensic audit. He said he looks forward to seeing if any money from the sale of the military surplus goods didn’t make it back to the police department safe.

This could all have been started back in 2016 when the first big check from the sale of equipment came in, he said.

Hanewinckel lawsuit settled

In addition to releasing the procurement procedures report, Dewey commissioners also agreed to pay $122,000 to settle a lawsuit filed by former Commissioner Rich Hanewinckel.

In September 2015, Hanewinckel filed a lawsuit in the U. S. District Court of Delaware against former Town Manager Marc Appelbaum, former Mayor Diane Hanson and the town.

The suit, filed by Hanewinckel’s Georgetown-based attorney Jane Patchell, argued Appelbaum used the authority of his office to disrupt Hanewinckel’s rental business and that Appelbaum arbitrarily enforced town zoning laws against Hanewinckel. She also accuses Hanson of conspiring with Appelbaum to obstruct Hanewinckel’s businesses.

Redefer said the settlement is on top of the $100,000 deductible the town had to pay before before the town’s insurance carrier began paying for legal fees.

At this point, Koenig said he is not aware of the final amount of legal fees because not all the paperwork has been handed in.