Auditor General Addresses ICA's 'Bad Recordkeeping' And Forensic Audit

Apr 19, 2016

The Pittsburgh Intergovernmental Cooperation Authority was created by the state legislature back in 2004 to shepherd the city through a period of financial hardship as Pittsburgh teetered on the brink of bankruptcy.

Since then, the ICA has provided Pittsburgh with financial oversight, including approval of annual city budgets and control of gaming revenue generated by the Rivers Casino on the city’s North Shore. 

But now the agency is sitting at the center of controversy after a special report released by the Pennsylvania Auditor General last November found that the ICA’s sole employee, Executive Director Henry Sciortino, couldn’t produce more than 90 percent of records of the authority’s contracts and expenses.

A Pittsburgh Tribune-Review investigative report earlier this month has since revealed the agency failed to maintain many of those records at all, and last week the five-member ICA board announced it will not renew Sciortino’s contract when it expires May 31.

Multiple agencies including the Allegheny County district attorney, the U.S Attorney for the Western District of Pennsylvania and the FBI are each conducting inquiries, along with Pennsylvania Auditor General Eugene DePasquale. 

90.5 WESA’s Josh Raulerson spoke with DePasquale this week.

RAULERSON: So, we just learned that Henry Sciortino has been dismissed, or his contract is not being renewed with the ICA. How does that development affect the forensic audit that you've begun?

DEPASQUALE: It really won’t affect the audit itself. Obviously, that's a decision that the board made with discussion with other leaders, I assume. That's not something we played a part in, but what we're going to be really getting into is what exactly happened with the money, the contracts, and some of these missing checks that is concerning at a minimum. 

"We did know that their recordkeeping was very bad, and a forensic audit is much more expensive, so we didn't dig deeper into the checks and the contracts, et cetera, to try to find out what happened in the missing documents. Clearly we're going to be doing that now with these other revelations."

RAULERSON: So, if you could take us back to the audit that you conducted last November, quickly summarize what was in the report, what you found and what the recommendations were at that time. 

DEPASQUALE: Yeah, we came in at that time with the idea of trying to help foster a better relationship with the city and the Intergovernmental Cooperation Authority, trying to find a way to have the ICA release the gaming money. And we worked with both entities, and we did have concerns with the record keeping of the ICA, and we marked that in our report, but that was not the goal of it.

What we really came up with was for the ICA and the city to develop a better relationship. It was important that the city commit that the gaming money would go toward their pensions. Then, we also believed that the city had had three straight balanced budgets, and then the ICA could then go away. We also recognized that the city was on better financial footing than when the ICA was first put into place. 

So, our recommendation came to the conclusion that it was time for the ICA to go away, but the city should also commit to legislators in Harrisburg, the governor and also the ICA board before that happened, that the additional gaming money would go to help shore up their pension fund.

RAULERSON: And in that November audit, I believe you noted that some records were missing and that the recordkeeping was not ideal. Mr. Sciortino has since admitted that he destroyed or maybe lost some of those documents, and we've had some other revelations about his personal life, his finances … that have raised questions. 

When you did your investigation last year, did you have any suspicion that maybe this went beyond sloppy recordkeeping--that there was maybe more going on there?

DEPASQUALE: One of the concerns we did say is that it wasn't clear in the statute that was created in 2004 (whether or not) the ICA fell under the state's "Right to Know" law. And we had asked for the legislature to correct that.

We did know that their recordkeeping was very bad, and a forensic audit is much more expensive, so we didn't dig deeper into the checks and the contracts, et cetera, to try to find out what happened in the missing documents. Clearly we're going to be doing that now with these other revelations. 

But some of the things that had come out about Mr. Sciortino and some of the others, we knew there was bad recordkeeping, but the extent of which we were unaware. 

RAULERSON: So, as you look forward to this forensic audit now, how does that complicate the job that's in front of you? How do you do an audit when you just don't have the records you need?

DEPASQUALE: Well, we don't have the records at the ICA, but we can work through the banks and some of the other financial institutions to recreate that. 

RAULERSON: And a forensic audit often precedes legal action; is that what's coming next here? What are you looking to find, and how do you expect it to play out?

DEPASQUALE: Yeah, we are working in coordination with other law enforcement agencies, and anything that we find will be given to the appropriate authorities, and they'll have to make a determination that we know this is also separate investigations that have been talked about both publicly in the newspaper but by other law enforcement entities.

We know that they're beginning their own investigation, and—anything and everything that we find—we will work in coordination with them so that they have what we have. 

RAULERSON: And regardless of whether or not ICA or Mr. Sciortino personally turns out to have committed wrongdoing—criminally actionable wrongdoing, I guess—putting that all aside, has the agency in your view become tainted in a way that compromises its effectiveness going forward?

DEPASQUALE: To me there's no question right now that any effectiveness of the ICA is tainted, and these items all have to be cleared up whether it was illegal activity or just incompetence. You know, incompetence isn't a crime, but, you know, you're looking at one of the two or somewhere in between. 

But it's, you know, to me there's no question that the ICA, for them to move forward effectively if they're going to continue moving forward effectively, these items are going to have to be cleaned up. 

RAULERSON: State Auditor General Eugene DePasquale, thanks for your time today. 

DEPASQUALE: Thanks for having me, and take care.