Confidential FEMA accounts sent to former employee; Indiana DHS accused of mismanagment

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INDIANAPOLIS (WTHR) - The responses to Hurricane Irma and Harvey are important reminders of why our Indiana Department of Homeland Security must be prepared for natural and man made disasters.

The training takes money. This year Indiana will get nearly ten-million dollars.

13 Investigates has discovered serious lapses and is asking the DHS director about the agency's handling of FEMA grant money as both State Auditors and a former employee allege financial mismanagement.

For months, 13 Investigates has asked those in charge at DHS to talk about problems at the agency. It wasn't until 13 Investigates sent a two-page letter to the Governor's office, did the Director agree to talk about DHS starting with the money.

TRACKING FEMA GRANT MONEY

First responders jump into action for a simulated disaster at a Wayne Township fire training facility.

Training now can save lives later.

Each year, FEMA provides millions of dollars in grant funding to help state and local agencies pay for both training and technology.

The Department of Homeland Security is supposed to track every penny. "You are responsible for that and you make sure that it's right because you're accountable," said Leeann Walton, the former Chief Financial Officer at DHS.

But 13 Investigates has discovered troubling financial practices at DHS involving federal grant money including:

  • Missing receipts
  • Misspent funds
  • and confidential banking information improperly sent out to those who shouldn't have it.

Walton was the CFO until August 2016 and had intimate knowledge of the problems facing DHS and was working to fix them.

But she was fired according to the State Personnel Department for "poor judgment and lack of candor" under Indiana's nepotism rules for failing to disclose family ties to three women hired on at DHS.

Now Walton is appealing the nepotism charge against her and alleging possible fraud against DHS for what's been happening since she left the agency.

FORMER CFO ALLEGES FRAUD

"They are actually using my log-in information to submit federal financial reports and cash draws for the State of Indiana," Walton revealed after a day long hearing before the State Ethics Board about her termination.

Our cameras zoomed in to look at Walton's cell phone to see what she was talking about. Her inbox showed notice after notice from the federal government reportedly alerting her to millions of dollars in deposits going into DHS accounts. Confidential information and reports Walton should no longer get.

"When you saw that, what did you think?" asked 13 Investigates

"I was shocked," she said.

Walton did not open the reports, but told us what she discovered within them.

"I think the total of the cash draws that they've done in my name that I have via email is approximately $4 and a half million dollars. I'm not even there and haven't been for a year," said Walton with disbelief.

HOMELAND SECURITY DIRECTOR RESPONDS

We wanted to know what the Director at DHS had to say about the breach.

Bryan Langley sat down with 13 Investigates and says he put an end to employees using some else's credentials.

"Dual log-in is not to be accepted," said Langley. "I got rid of that practice. You have to have one password, your password only," he told 13 Investigates. But when pressed about how Walton was still receiving notices on her personal cell phone, Langley admitted he was concerned.

"Very much, so that's why we're going to look into it," he responded. "She never should have access to any of that information. Sharing of information, sensitive information is not to be tolerated," he added.

Walton and her attorney are also both concerned about the possible implications.

"Does that make it appear that you're doing something?" questioned 13 Investigates.

"Yes," said Walton. From the Federal government's side it looks like I'm actually submitting the reports or doing the cash draws," she said explaining why she's so concerned.

STATE AUDIT FINDS DISCREPANCIES

It's not the first time questions have been raised about the handling of federal grant money at DHS.

In December, the State Board of Accounts filed and released an audit showing serious deficiencies.

The Cash Book lacked "identifiable information to trace an Individual receipt from a payer."

"a portion of the agency copies of receipts were torn out of the (receipt) book and missing," and receipts "written out of sequential order."

In addition, auditors discovered the agency's physical inventory failed to match up with the master list.

18 items worth $56,000 total simply disappeared. Either missing or stolen.

This is the second time DHS has been cited for the very same problem.

"That's why I reached out to FEMA and allowed them to come in and to see what we're doing and to help us benchmark and to improve those things," Langley told 13 Investigates.

Walton says the funding problems are systemic.

She says other departments are misspending grant money first responders across the state should be getting to prepare for potential disasters.

Walton and her attorney have reported the improper use of her credentials to FEMA. She says a half million dollar mistake was discovered in FEMA misspending.

DHS staff members promised to get back with us today on that and the total amount of money under scrutiny, but no one did.

Director Langley tells 13 Investigates FEMA has been to Indianapolis to review it's financial management after raising questions about hundred of thousands of dollars in spending.

DHS has promised the State that it would tighten its controls to prevent missing receipts and equipment. For starters, the agency is moving receipt books out of the Fire and Building Safety Division.

13 Investigates will bring you the Director's response on all of our exclusive investigations Wednesday.

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