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How the State of West Virginia wasted $1 million of your money

West Virginia state government is an easy target for the criticism of “waste, fraud and abuse.”  Often when individuals—especially politicians—make those claims, they cannot back them up with documented instances of how government is frittering away our money.

However, occasionally we do get examples of just how wasteful our government can be. Consider the report released by State Auditor J.B. McCuskey’s office on the Department of Health and Human Resources lease payments for office space at the Middletown Mall in Fairmont.

The investigation found DHHR paid $30,907.34 a month in rent from June 2015 until March 2018 even though DHHR had moved its offices out of the mall to a new building.  That’s nearly $1 million taxpayer dollars down the drain.

We can mount a modest defense of DHHR and the state Real Estate Division (WVRED) since the Middletown Mall was going through complicated bankruptcy proceedings and ownership changes.  The report shows that the individuals and/or corporations that received the lease checks changed multiple times over the period, so there was a lot of confusion.

However, that hardly mitigates the complete breakdown within DHHR and the Real Estate Division that led to the expensive mistake. The Auditor’s investigation found “multiple failures, both at an individual employee level and at a larger Department oversight level.”

There were too many breakdowns to list, but here are a couple of examples:

–“Employees within the DHHR Finance section were unilaterally generating the invoices on behalf of Pin Oak (the mall’s owner).”  That’s a problem.  State agencies normally require the vendor to generate the invoice asking for payment, not the agency paying the bill.

–“Under the current practices and procedures, a single employee in DHHR has the ability to create an invoice, approve the invoice, and then direct special pick-up of a check for delivery to the same person.”  The Auditor’s investigation did not find any embezzlement, but it’s clear how that practice is ripe for abuse.

–“While the emails reflect DHHR and WVRED diligently tried to make sure termination (of the lease) occurred, it also highlights that DHHR never took steps to stop the payment from occurring or demanding proof of termination.  Instead, the concern appeared to wane.”

Governor Jim Justice says one state worker has been fired and two more suspended over the mess, but can the state get any of the money back?  The Auditor’s office says the improper payments amount to $432,702.76 to BB&T, $247,258.72 to Deitrich Fansler of Pin Oak Properties and $185,444.04 to General Acquisitions (Biafora Inc. and David Biafora).

The Auditor recommends the state “examine legal remedies… for the recovery of the monies paid since termination.” However, there’s a lingering question of whether DHHR officially notified any of the mall owners of the lease cancelation.  The report said, “WVRED is unable to produce a signed, dated copy of the termination letter to Pin Oak Properties.”

Current mall owner David Biafora told our Brad McElhinny that he’s never received a cancelation notice. “Today, we’ve not gotten anything. Maybe they don’t know where to send it,” Biafora said. “In my files I have a lease.  That’s all that was given to me in bankruptcy.”

“What’s kind of odd is why the state kept paying,” Biafora added. Well, it’s more than odd; it’s scandalous that the handling of this lease by DHHR and WVRED was so slipshod that it has cost the state’s taxpayers $1 million.

Now that’s government waste.





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