Audit report shows wasted funds in Nebraska town | NSP investigating

Published: Nov. 8, 2019 at 4:16 PM CST
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An audit of a Nebraska town has revealed wasted funds and suspicious expenditures, leading to an investigation by the Nebraska State Patrol.

The audit of the city of Friend began on August 5 when an attorney representing the city contacted the Auditor of Public Accounts (APA) over concerns about “frequent, high-dollar municipal purchases from two chemical distributors,” according to the audit report.

The purchases were made from Central States Lab and Metro Chemical in Iowa and were approved by Patrick Gates, the city utility superintendent, and Debbie Gilmer, the city clerk.

City board members realized costs of certain products were “significantly inflated,” and brought it to the attention of the APA and the Nebraska Auditor of Public Accounts.

According to the audit report, Gates and Gilmer were suspended indefinitely, and an investigation was launched.

It was then discovered the two distributors were operated by the same individual in Iowa. When asked to provide a catalog of items sold to the city of Friend, the owner of the distribution companies said there were no such records, according to the report.

APA staff then found that similar items that were sold to the city of Friend were also sold to other similar-sized cities in Nebraska at a much lower rate.

According to the report, it is unclear if “the City was simply duped into paying these astronomical prices or if any City staff were receiving kickbacks from the vendors.”

“While comparing the prices available from other vendors for the same items purchased by Mr. Gates, the APA told one distributor how much the City had been paying for a particular product. His stunned reaction captures perfectly the sentiment sure to be had by most readers of the information provided below, “Oh, my God, who would be dumb enough to buy it?” the report states.

Listed as an example in the report, the city of Friend purchased one pallet of sewer lift station degreaser for $5,572.32 from Central States Lab. However, Central States Lab sold the exact same item to the city of Madison, Nebraska for $2,939.76.

In another example, the city of Friend purchased 10 cases of paper towels from Metro Chemical and 10 cases from Central States Lab for a total of $4,589.

According to the report, the APA researched online and found the city could have saved $3,358.20 by buying from an office supply company.

Multiple other examples are also listed in the report.

Also mentioned in the findings by the APA is whether the issues rise to the level of official misconduct.

The Nebraska State Patrol, who was sent the audit, released the following statement:

“We have received the audit and we are actively investigating.”

10/11 NOW reached out to the city for comment, and was referred to the statement released in the budget report, which read:

“The City Council for the City of Friend (“City”) placed tremendous trust in its employees to act in an ethical and fiscally conservative manner. Unfortunately, the APA identified a number of deficiencies in the City’s internal controls, oversight, and claims approval processes. The City has implemented the APA’s recommended protective measures to ensure sufficient accountability and review processes are in place going forward.”