February 10, 2020 be Umpnyees Iran Alicea, President And Executive Board Members Hillsborough School Employees Federation, AFT Local #4154 5126 N. Florida Ave, Tampa, Florida 33603 Dear President and Board Members: Thave reviewed the accompanying statement of financial position arising from |." cash transactions of Hillsborough School Employees Federation (HSEF or the Local), AFT Local #4154, for the years ending in June 30, 2019 and 2018, and" the related statements of changes in net assets over the same time period, aioe These financial statements are the responsibility of the organization’s management. In addition to this review, at the request of HSEF, I conducted an investigation of the Local's financial transactions and Internal practices related to credit card charges from July 1, 2018 to December 6, 2019. The Investigation was under the authority of the American Federation of Teachers’ (AFT) Constitution and Bylaws, Article VI, Sectlon 14(a) and (b). During this investigation, I noted certain matters involving the interna! control process that are considered reportable conditions, Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation of the internal control process that, in our judgment, could adversely affect the organization’s ability to record, process, summarize, and report financial data, These matters are addressed after the findings of this investigation, Based on my review of the documents provided, there Is sufficient evidence to conclude that the former Vice President, Stephanie MacNeel spent approximately $19,948.41 of Local funds for personal purposes. This includes charges that Ms. MacNeel either made personally or were made by a related person when the Local’s credit card was in her possession. Stephanie MacNee! was the Vice President from July 2013 to November 1, 2019. Most of the transactions in question involve online credit card payments made using the Local's credit card,Page 2 As Vice President, Ms, MacNeel, was an elected officer and handled a portion of the financial matters of the Local and occupied a position of trust in the organization. Ms. MacNee! had direct access to the Locals credit cards. In assessing the amount of funds the following payments were not properly documented and thus may have been used for personal purposes: Payments made to Verizon and Sprint Wireless HSEF's ATT telephone was given to a family member Payments made for utilities to Brighthouse Network, TECO/Peoples’ Gas, City of Tampa water Payments for auto loan and Geico car insurance Snap Financing (consumer lease to finance purchases) Progressive Leasing (loan to purchase and repay later) Doordash (food delivery service) Shipt (grocery delivery service) And other purchases made in person for Items that appear to be Personal expenses While It is possible that some of these transactions may have been for proper union purposes, there Is no evidence to support a legitimate business purpose, and thus the presumption Is that the majority of the transactions reviewed and Included in this list during this period were for personal use. Thave included with this letter a listing of all questionable transactions. Demand for Repayment In general, AFT recommends that the Local send Ms. MacNee! a demand letter for repayment of the undocumented and potentially disallowed credit card charges. The letter should Include as an attachment the attached spreadsheet with the Identification of the charges that appesr to be for personal and not union business, The Local should give ten (10) business days from the date of your demand for Ms. MacNee! to elther repay the Local or present sufficient evidence regarding each Identified charge that It was made for a proper union approved purpose. If Ms. MacNee! fails to respond, and/or does not provide sufficient documentation of union purpose the Local should file a bond claim to recover the funds. Please be aware that if a bond claim Is filed, the bonding company may require the Local to file a police report. The AFT can assist with this process as well.Page 3 ‘The Local should demand $19,948.41 for personal charges made with the Local's credit card purchases. Credit Card Charges The use of credit cards at HSEF is a recent occurrence. The Local previously used debit cards for union business. When the Local determined the need to have credit cards, the Treasurer obtained six credit cards on behalf of the Local using his own personal credit. These included a MasterCard and ‘American Express cards with subaccounts for President Iran Alicea, Vice President Stephanle MacNeel and for himself, Treasurer Tony Diaz. After discovering the Inappropriate credit card charges, Treasurer Tony Diaz immediately retrieved all the credit cards and canceled them as the cards were in his name. As of December 2019, HSEF does not have any credit cards. I strongly recommend that in the future, HSEF does not obtain credit cards and adopt clear policies In writing that establish guidelines and procedures over reimbursed expenses and other purchases. Secretary Jackle McCollster, along with her officer duties also acts as the accountant for HSEF (the accountant). Prior to March 2019, she was able to download the American Express statements online to enter, match receipts, and reconcile on a monthly basis the credit cards with the Local's general ledger. However, around March of 2019, she was unable to download the statements. Credit card entries after February of 2019 were made several ‘months after the charges were incurred. The accountant requested several times to Ms. MacNeel to regain online access to the American Express account So she could download the statements. Ms. MacNeel claimed that she was also unable to get the statements but was able to get the statement’s balance and the accountant should pay the balance while Ms. MacNee! worked on regaining online access, The accountant continued to pay the balances given while she waited for the statements. During the time Secretary McColister was unable to download the American Express statements HSEF was paying for car payments, Insurance, utilities, other loans and charges for Ms. MacNeel’s son Patrick MacNeel. These charges started consistently on February 4, 2019 and continued until the end of October of 2019, The credit card statements, and my investigation provide enough evidence to show that it is very likely Ms. MacNeel was using her union credit card to pay Patrick MacNeel's auto loan.Page 4 Most of the other transactions during this time period were online transactions ‘or payments that were made by giving the credit card information. However, there were several charges made In stores that would require a person to have the actual credit card to make these charges. Some of the charges were: Olive Garden, SeaWorld Busch Garden merchandise purchase, Orange Lake Country Club lodging, Wal-Mart (Brandon, FL), Love Lush Lashes (which does not have a website and the business location listed is a mobile home address), and others, A traffic violation for Ms. MacNeel’s rental car was charged to the HSEF credit card. IRS Publication 463 states that fines or other traffic violations are not deductible expenses, therefore the Local should not be responsible for an employee's or officer's traffic violations. recommend that these expenses be reimbursed to the Local and no one should use the HSEF's credit card to pay for their own traffic violation even if the person recelved the violation during work hours. This traffic violation Is included In the above calculations, Telephone Charges HSEF uses AT8iT as its carrier for the cell phone that the Local provides for ‘some of the released officers and chlef stewards so they can be available for the members all times. These phones were obtained by the Treasurer using his own personal credit. The Treasurer was the owner of the cell phone account, According to the AT&T phone bill, the Local carried six lines assigned as follows: 813-508-2056, Stephanie MacNeel, Former VP 813-753-1520, Susan Steinhausen, Membership Organizing 813-753-1721, Jackle McColister, Secretary 813-753-2145, Victor Moreno, VP of Custodial 813-895-7583, Stephanie Gutierrez, Administrative Assistant 813-753-1807, Cynthia Gibson, former/deceased Chief Steward It was confirmed by the Treasurer that the phone 813-753-1807 that HSEF claims belongs to the former/deceased Chief Steward Cynthia Gibson, was in the possession of Tyreshia Rhodes. It appears that Ms. Rhodes had a direct relationship with Patrick MacNeel. This line was established on July 30, 2018, Since the account belonged to the Treasurer, he would have to establish new lines, however, the Treasurer was not aware of this line.Pages No Local should provide a telephone line to a family member or anyone not carrying out the business of the Local. The amount HSEF paid for this additional line since inception was $1,506.28 and I recommend that this be returned to the HSEF as there is no evidence the phone line was ever used for union business, Also, it Is unclear to determine the reason why HSEF’s Administrative Assistant/Receptionist would need a cell phone. The President indicated that essential people who needs to be available after hours to help members were the ones that had the cell phones. The Local should maintain a list of cell phones paid by the Local along with Who has those phones to ensure that no unauthorized person Is getting a free pald phone by HSEF. Since Ms. MacNeel Is no longer the VP, I recommend that her phone Is returned to the office If she stil Is in possession of HSEF’s phone. Uniforms HSEF purchased five to ten pairs of women’s jeans for each female staff for the office with choice of style and black jeans for the men. The price for these Pants ranged from $15 to $60 each for a total of approximately $1,100. These were categorized under uniforms for the office. There was no budget approval or board approval for these items. There is no evidence HSEF mandates employees wear uniforms at the office, and the purchases do not meet the definition of uniforms as the term Is commonly understood. T recommend that HSEF stop providing ordinary clothing as uniforms for the employees. Travel Expenses The Local does not have a policy for Travel Expenses. The Local should create 2 policy on how much each person can spend per day for meals. For example, the federal per diem for meals per day for Orlando is $66.00. Some of the expensed meals I reviewed were above this per diem rate. Most of the filghts for the officers were first class with a justification that first class eliminated a baggage fee or allowed the officer to avoid buying two ‘seats due to size requirements or health reasons, Some of the ticket prices were extremely higher than average,Page 6 Upgrades were often requested by officers for hotel rooms. The total cost for conferences and conventions increase from $38,647 to $72,952 compared to the previous year. This was an Increase of $34,304 or almost 90 percent from June 30, 2018 to June 30, 2019. I recommend that a Policy on travel expenses be developed, voted by the board and implemented so there Is clarity on what is allowed end not allowed. This policy should Include wording on family member's reimbursements, should the person who is travelling on behalf of the Local brings their family. The Local should not be responsible for family member's expenses, Rental Car On December 26, 2018, HSEF rented a car on behalf of President Allcea for three weeks. The cost was $1,214.77. The car was rented because the President's car was in the shop being repaired. The same incident occurred In October of 2019. The President rented a car on two occasions to be able to have transportation. Cost was $321.14. Per the AMEX credit card statement, the first charge shows under Ms. MacNeel’s union credit card. Rental cars used to commute from home to work and other locations are not reimbursable expenses. There was also no board resolution or action approving President Alicea to rent a car during the three weeks to commute and to conduct business as needed. I recommend that policies be created for renting cars, purposes of renting cars, when a person can rent a car, etc, And the President reimburse the Local $1,535.88, Tampa Club Membership HSEF joined the Tampa Club during 2019. The membership had as initial fee of $500 plus $140 per month ($1,680 per year). I was not able to see approval in the minutes. When I inquired about the purpose of the expense, President Alicea explained to me that the Local joined the Club to be able to solve the privatization of custodians’ issue and this came with a positive outcome. He also indicated that the membership will not be renewed after it expires, HSEF’s Constitution Article VI, Section 5 says: *...the Executive Board shall approve all contracts, approve all purchases In excess of three hundred ($300.00) dollars...” I recommend that before large amounts are disbursed for clubs such as this, the membership be approved by the board andPage 7 recorded in the minutes. None of the HSEF board members were aware of this. membership. If this membership continues and it Is renewed, this should be paid by the President. 1099's A 1099 Form is a federal Income tax form required to be filed with the Internal Revenue Service to report certain types of payments such as Payments to independent contractors. HSEF pald an Independent contractor for cleaning services during the year reviewed. T recommend that HSEF obtain an IRS Form W-9 before contracting with independent contractors. I recommend HSEF send 1099's before the due date of January 31 each year for person or persons that perform services, are not incorporated and received more than $600 from HSEF in a calendar year. Executive Board Meetings and Minutes During each Executive Board meeting, only bank reconelliations for the general checking and money market accounts were provided to the Executive Board. The entire balance sheet should be disclosed to the board along with the Income statement with actual results compared to the budget. Also, the minutes were taken without much detail or information, T recommend that a complete financial statement with actual amounts Compared to the budget to date be provided to the Executive Board. Due to the confidentially of the Information, these could be collected at the end of each executive meeting or shown In a projector to disallow these financials to be posted or distributed to unauthorized people. I recommend that Board Minutes be taken in greater detail. When approving travel for conferences, conventions and training, the dates of the event should be listed, and the board should vote on who will be attending, the dates that they will be relmbursed, whether attendees will fly coach or first class , and the maximum amount allowed to be expensed to the Local for this particular event. If the person(s) decides to stay longer, they should pay for lodging and ‘meals for the extra days stayed. The Local should not pay for these expenses, Minutes serve as a record of events of the board meetings and should document all important topics discussed and decisions reached. Board ‘minutes can be a crucial document In the event of future legal matters and in documenting compliance with IRS regulations and other regulatory issues.Page 8 CONCLUSION In order to avoid these problems in the future, AFT recommends that the Local adopt a system of internal controls that includes policies and procedures for financial transactions, AFT can assist HSEF by providing model policies for the Local to be able to customize. The continued lack of these safeguards could potentially provide the opportunity to use Union funds for unauthorized personal use, as well as allowing this use to go undetected by persons with fiduciary responsibilities for the Local's assets. This report Is intended for information and use of the officers of the Organization, the members of its audit review committee and Its governing committee, and the officers and their designees of AFT and FEA. This report is not Intended to be and should not be used by anyone other than the specified parties, Tam not independent of the Hillsborough School Employees Federation, AFT Local #4154, Koay Neiper. Kay Nelpert, CPA, CFE, CICA Associate Director AFT Financial Services Stacey Johnson, Chief Financial Officer, AFT Office of the Secretary-Treasurer Tish Olshefskl, Sr. Assistant to the Secretary-Treasurer, AFT Office of the Secretary-Treasurer David Strom, General Counsel, AFT Legal Tanya Cornell, Regional Director, AFT Southern Regional Office Michael Piccinelll, Assistant Director, AFT Legal Martin Powell, Chief of Staff/General Counsel, Florida Education AssociationHSEF Credit Card Credit Card Charges Acorusl Basis All Transactions ate Name Momo ‘Amount Ontinsry Incomerexpense Expense Operations Cable TV 22OWT9—Brighthouse Network e819 2219 Verzon Wireless Receiver 60000 32279 Verizon Wreless ree 50865 woo Verizon Wieless Serves s3ag2 05'07/'9 _Brghthouoe Network sro78 O71 Verizon Wielest —Senion 538.98 ua Verizon Wireless Seno 50582 aria Spectrum 21875 10919 Verizon Wireless Service 3467 ‘oval Cate TV 3821 Cer insurance ogee “Geico Auto 2079 owas —— Gales Auto 43243 09/18 Galea Auto 46795 nea Galea Auto 487.85 7118 Geico Ato 48785 B89 Geico Auto 46785 BD Geico Alo as757 fowts Galen Auto aas.o2 ‘otal Car insurance 327651 car Loan C2118 Autotoan Acceptance 250.00 Oarie/t8 —_AutoLoan Acoeptanes 356.43 95/5/19 AutoLaan Aeceptance 4024 Osir3/19 ——AuloLoan Asseptance 48024 OTi08/19 ——_—AutoLoan Acceptance 48024 Oras ——_AifoLean Acceptance zane oavia/'8 —AuteLoan Aceptence 24202 o2ra3/'8 ——AutoLosn Acceptance 2ae2 ‘nm AutoLean Acceptance. 40024 Totsi Car Loan 925525 Gasoline oxo Wawa Fuel Conveniance 43.00 005/18 Shell OF 43.00 oozes exon Mobi Fuel ane Total Gasotine 117.18 Loan caste Snap Finance s73.98 0220/19 Progressive Lessing Apply for credit and buy 200.00 Garena Progressive Leasing Peyea! 445628 8268 Progressive Leasing PayPal ‘sane “otal Loan 197sa Purchasos oyeaig Hertz Rent Csr Parking Tale Violation by SM for HSEF Leadership 187.00 cats = Shpt Refunces 3719 oasis Shipt Refondes 7180 esozns——Stipt Relunded 500 osoans ——Shipt Rofunees 500 o02!18 © Shipt Rotunded e521 ouo2ne ——Shipt Rotundes 1176 4/0419 Docrdash MacDonaiss 233 o4os's §——Doordash MacDonas 290 Oaioar'a Hungry Howes 2a oworits Ova Garden ors: Owe Shipt Refunded 4969 owiene ——Shpt 3485 PagetHSEF Credit Card Credit Card Charges ‘Accrual Basle All Transactions Dato ‘Momo ‘Amount owtens 3.00 outons 7093 owz0ne ea? owas sist owe Shipt Balance 1170 sae Te 200 508/10 313 osr2i19 Restaurant waa osa7a Pian Cy, FL 8125 osaario 5828 oser9 MacDonaés 2228 osz7ii9 ‘MacDonalds iar os8/59 ‘MacDonalds 2536 osaorie MacDonalds ze 0531/19 MacDonalds 2610 osnig Retina “423 orice Chresy Hare Paypal 30818 ans Broadway Usod Tres 1085 oi Ove Garden, 9880 eID6!59 Orange Lake Count... Artal @16-0/11/19 47 BB! Seaworld Busch Gar. Theme Park 656 8/08/19 Seaworld Busch Gar.” Merchandles Puchase 3185 0808/1 ——-Ssawerld Busch Gar. Pam 13698 o8i08/19—Seawerld Busch Gar. Theme Park 17040 93)0@/19 ———Soawerld Busch Gar.” Food Service 4098 8088 Seaword Busch Gar... Merchandise 11780 OBI ——Ovange Lake Countr.” Aral !5=811/19 Lodging 50528 op1/19 1-800 Flowers 325.49 (0008/19 Seaworld Busch Gar... Ent Season Theme Par 5157 catia Doerdssh MacDonaids 282 0e22/19 ——Warldat SuperCenter ras Cat, Brandon FL 103.23 082519 Doordash, Macbonaiés 2852 0928/19 Warart Supercenter Ian's Garg, Brandon FL 4803 92819 Warlart SuperCenter Brandon, Fi. oor 10018 Sap 503 107089 _“Seeworid Busch Gar... Ent Season Theme Pack Si57 faDor9 Kone dapanese Sto. sana sone Shist 3739 ‘01719 Shipt 700 i178 Shipk “00 siz Shipt 65.21 san7ng Shp Balance 178 101779 Shipt ‘5.00, 1179 ——Shipt 4989 Total Purchases. 441.58 ont 0824/18" Ticon Amerlean Ho.. 205.00 825/19 Trion American He... Refund per spreement, holding foe creed ater moved in 250.00 e619 © Trcon American Ho, Refund 250.00 2679 Treen American Ho 236.00 “Total Rent 0.00 ‘olophones c2e419 Sprint Wireless Q9'04"19 Verizon Wireless ——_—Equpmert,veed Tonys account ert0r19 Verizon Wireless Usod Tony account to gt phone sito Verizon Wireless ——_—BiPay Used Tony's acount o pay the bil ‘2i08/' Verizon Wisloss———Tyroshia Rhodes Telephone “otal Telephones. 324178 Transportation osu Uber 1276 0325718 © Uber 1175 oss = Uber 738 oats Uber 1 Page?HSEF Credit Card Credit Card Charges ‘Accrual Basis All Transactions: Dato Name Memo Amount osisa19 Uber 100 ‘o7ai0 Uber 1288 Bosna = Uber 1594 Total Transportation 5045 tes [20719 TeooiPeople's Gas 303.66 02079 ‘TecolPecple’s Gas Foe 275 oui chy of Tampa Water 8it 9280, 03059 —_‘Teco/People's Gas 29801 a3osiis ——_‘Teco/People's Gas 275 0503/19 —_‘Teco/Peopl's Gas 17888 0503/19 _‘Teco'Peopl's Gi 215 0507/19 ——_TecolPeopk's Gi 27% O87 ——_Teen/Paopie's Gas sn57 Total Utes 99082 Total Operations 19.04841 President Exponses ental Car $2gi8 Hertz Rent ACar Soaks due tocar beg tthe shop for repairs 1277 soos Entorpeo “Transportllon for PRE to provide representation 230188 1onaio Enterprise ‘Transportatlon for PRE to provide representation 8125 “otal Rental Cor 1.538.88 ola Presicent Expensos 1.538.88 Total Expense 2148820 Net Ordinary Income 21,484.28 Not income, 2140420