Tom Corbett: Lost Money and Missing Memory, Part 1

Posted by By at 18 September, at 12 : 55 PM Print

The Attorney General of Pennsylvania (“AGO”) is the chief law enforcement officer for the Commonwealth. Few Pennsylvanians would conjure up an image of an office run by a political machine doling out de facto tax breaks, favors, no bid contracts,[1] and even destroying documents.[2] Nor would Pennsylvanians imagine that former Attorney General Leroy Zimmerman still peddled influence in the office, and that AGO employees practiced preferential treatment for collection agencies.[3]

The Office of Attorney General has a below-the-radar function in its civil division that handles the collection of delinquent payments owed to the state. The office, called the Financial Enforcement Section, was established in 1981 and handles delinquencies owed to some 200 agencies and state universities.  At any given time, it handles about 40,000 cases with receivables ranging from $300 million to $500 million. It collects nearly $70 million a year in back taxes.

Yet, the same Tom Corbett who strode atop his anti-corruption platform and marched into the Governor’s Mansion was the guy who presided over a rancid department in Strawberry Square known as the Financial Enforcement Section (“FES”). The FES *was wracked with “sheer and utter incompetence”,[4], gross mismanagement[5] and was lost hundreds of thousands of public dollars on a monthly basis.[6]

Thomas D. Kimmett, former supervisor of the Administrative Collections Unit of the Financial Enforcement Section, filed a lawsuit in U.S. Middle District Court in August, 2008 against the Attorney General’s Office claiming violation of his constitutional rights.

A review of court documents, legal filings, Right to Know Requests filed by Rock the Capital, as well as self-admissions from depositions and a stinging indictment by a high-level whistleblower,[7] show a mismanaged, inefficient, and wasteful department within the Office of Attorney General under Mr. Corbett’s stewardship.

Kimmett had spent the previous ten years working at the Pennsylvania Department of Revenue Department as an assistant counsel in the Chief Counsel’s office. Before that, he worked in New Jersey as a deputy attorney general.

Tom Kimmett is an attorney and accountant. A life-long Republican and Reagan devotee, he stepped on very sensitive political feet in his own party during his tenure in the Pennsylvania Attorney General’s Office.

Kimmett thought he was brought in to clean up a mess, but found himself marooned in a political swamp. He soon discovered that the FES was grossly mismanaged, to the point of fraudulent activities involving settlements of delinquent accounts and the payment of fees to collection agencies.

Shortly after starting at FES, Kimmett met with each of his employees in order to learn more about the Collections Unit and its operations.[8] In the course of those meetings, Kimmett was shocked to learn that FES employees had destroyed his predecessor’s documents on the eve of a Comptroller’s audit.[9]

Mr. Kimmett filed his initial lawsuit as a whistle blower in August 2008 – before he was fired – as a preemptive strike. He identified and reported the following problems at the Financial Enforcement Section:

  • Cases were assigned to private collection agencies immediately before money was to be collected, but after the FES had resolved the problem. This practice allowed the collection agencies – which had not done the legwork – to receive unearned commissions.
  • Collection agencies received fees for cases where the Financial Enforcement Section performed all the collection work.
  • Employees of the FES demonstrated clear-cut favoritism in the referral process to collection agencies.
  • Cases were compromised at FES for extremely low amounts.
  • There was a lack of documentation and an absence of bonding in certain cases for payments to collection agencies.

Kimmett contended there were a number of issues he questioned, but received little support or backing from his supervisors. Kimmett kept running into bureaucratic walls while attempting to notify then Attorney General Tom Corbett of the problems.

Sherry Bellaman, a current FES employee and a former administrative assistant to Thomas Kimmett, is also a plaintiff in Kimmett suit.[10]

Beginning in 2006, Ms. Bellaman, Kimmett’s co-plaintiff, witnessed Jill Keiser and Mark Santana destroy documents in the office of Keyoung Gil (Kimmett’s predecessor), including recent Pennsylvania Department of Transportation documents.[11]

Jill Keiser was an FES employee since the inception of the Department in 1981. She was the Supervisor of the Administrative Collections unit of FES from the mid-1990s and held that position when Kimmett was hired.

Kimmett, hired in late 2006, dutifully followed the chain of command as soon as he learned of wrongdoing in the Financial Enforcement Section. This step marked the beginning of the end of Kimmett’s career in Tom Corbett’s Office of Attorney General.

Kimmett informed Steve Brandwene, Chief of the FES from 1985 through March 2007, that he wanted to meet with Douglas Ottenberg, Assistant Comptroller of the OAG regarding the document destruction. Brandwene told Kimmett that was unnecessary and that “it’s all straightened out.”[12]

Kimmett engaged Douglas Ottenberg and Comptroller of the Attorney General’s Office, Ed Bianco. “We have concerns too…. Doug said we went in and he said ‘I put a Band-Aid on the Lee Gill situation…. We wanted to expand and look at more stuff and we weren’t allowed to…. [I]t concerns us that we weren’t allowed to do those things because we feel they needed to be done.’”[13]

Ottenberg testified, “[W]e all were concerned about fraud, and we all continued to express concerns about the entire FES operation.”[14] In an unprecedented move, the OAG sent Ottenberg to investigate FES “fund flow” problems.  Ottenberg stated that FES employee Jill Keiser was uncooperative during his audit and that Brandwene and Louis Rovelli, Civil Law division Director, did not want the audit to continue.[15]

By May 29, 2007, Ottenberg would confirm to Bianco that Kimmett and he “found gross mismanagement” at FES and that “the mismanagement of dockets is grossly obvious.”

Bellaman also testified that in 2008, due to the destruction of documents, missing software,[16] poor record keeping, and negligence, Kimmett had to reconstruct billing histories and organized a “compromise team” for workouts.[17]

The Collections unit is responsible for processing compromises with debtors who owe money to a state agency.[18]

In some instances, to the dismay of FES employees, comprises were worked out with taxpayers who never requested a compromise. Bellaman said,  “I don’t understand how we would have a compromise if the taxpayer never requested one. That’s — and there was no letter, there was nothing there. It was just a name…There was a follow up…but the debtors never paid it.”[19]

Many compromises of Department of Revenue debts that were being submitted by private collection agencies did not contain basic supporting documentation or information justifying the compromises. Kimmett informed the private collection agencies of the documentation that they were required to compile for the approval of a compromise.[20]

The compromises generated a lot of questions from Kimmett’s superiors who overruled many of Kimmett’s denials.[21] In other words, Kimmett supervisors wanted him to cut a better deal for collection agencies and deadbeat tax payers. Complicating matters, according to Bellaman, was that “there were procedures for the collectors, but no procedures for the collection agencies.”[22]

Kimmett began implementing a more aggressive oversight protocol for collection agencies.[23] Some of the collection agencies began to comply with procedures while others resisted. As Bellaman observed, one agency in particular was unhappy.

One PCA, Linebarger, Goggan, Blair & Sampson (LGB&S) didn’t like it, stating that it would cause more work, that it would cause more negligence on the taxpayer because they wouldn’t be willing to provide information to the collection agency. “… And Tom basically said, you know, this was the procedures that’s in place to help all the collection agencies along with other collection agencies not having a problem with this, you are…”. [24]

In an email to James Furlong, an employee of the Department of Revenue’s Compliance Division, Linebarger objected to Kimmett’s review and his team’s denial of the compromises.[25] Furlong sent the memo to Michael Roman, Deputy Attorney General, who reported to Corbett.[26] Roman then demanded that Kimmett’s team perform a detailed review of every compromise whose denial Linebarger objected.

LGB&S had a secret weapon. They were connected to and protected by Leroy Zimmerman: Republican power broker and Pennsylvania’s first elected Attorney General, under whom the FES was created.

Footnotes    (↵ returns to text)
  1. In an email thread shared “confidentially” with Kimmett; Furlong expressed DOR’s concerns that PCAs had grown too comfortable with their no-bid contracts. Ex. 43 (Furlong Deposition, Exhibit 12). [A]agencies feel ‘safe’ with their no-bid contracts and too ‘comfortable’ in collecting what they can with minimal timeframes and effort.” Kimmett determined that the PCAs were violating their no-bid contracts with OAG and, in two significant respects; this was costing the Commonwealth millions of dollars.
  2. Kimmett learned from a number of his employees that Keiser and Santana had destroyed Gill’s documents on the eve of the Comptroller’s audit. (Exhibit 1, Kimmett Deposition at 215:17-216:14 & Exhibit 18, Bellaman Deposition at 216:12-21.)
  3. Ottenberg wrote to Bianco that Keiser’s “close personal relationship with senior managers of the private collection agencies is inappropriate and the mismanagement of dockets is grossly obvious … .” (Exhibit 27, Corbett Deposition. Ex. 5).
  4. On January 14, 2007, Ottenberg had concluded that both Keiser and Brandwene had exhibited sheer and utter incompetence in their prior management of FES. Ex. 33 (Ottenberg Dep. Ex. 14); Ex. 14 (Ottenberg Deposition at 331:18-334:4.) Ottenberg testified, “So yes, I would say that it’s safe to say that my thinking at that time was that both Jill and Steve apparently had sheer and utter incompetence.” (Ex. 14, Ottenberg Deposition at 333:16-19.)
  5. By May 29, 2007, Ottenberg would confirm to Bianco that Kimmett and he “found gross mismanagement” at FES and that “the mismanagement of dockets is grossly obvious.” (Exhibit 27, Corbett Deposition, Ex. 5)
  6. Susan Cruz from Revenue discussed with Kimmett the fact that the Commonwealth was losing money because DOR was waiving the Act 40 fee. (Exhibit 50, Cruz Deposition at 66:9- 67:1. When DOR waived the Act 40 fee, the PCAs would still withhold their commission from the amount collected from the debtor. Ex. 50 (Cruz Dep.) 42:22- 44:6, 98:3-99:5. DOR’s failure to collect Act 40 fees was a problem. (Exhibit 50, Cruz Deposition at 80:1-13.)
  7. Please note that the operations of   FES are described herein as they existed when the Collections unit was part of FES (as it was during Kimmett’s employment).
  8. Kimmett Deposition, Exhibit 1 at 214:17-215:16.
  9. Kimmett Deposition, Exhibit 1 at 215:17-216:14 & Bellaman   Deposition, Exhibit 18 at 5 216:12-21 and  p. 65,  p. 214, p. 423 & p. 472.
  10. Sherry E. Bellaman vs. Tom Corbett, Mike Roman, Bruce Sarteschi and Jill Keiser was filed in the United States District Court for the Middle District of Pennsylvania, Civil Action No. 1:09-cv-0470.
  11. Kimmett Deposition, Exhibit 1 at 215:17-216:14 & Bellaman   Deposition, Exhibit 18 at 5 216:12-21 and  p. 65,  p. 214, p. 423 & p. 472.
  12. When Kimmett then informed Brandwene that he wanted to meet with Ottenberg, Brandwene told Kimmett that was unnecessary and that “it’s all straightened out.” Ex. 1 (Kimmett Dep.) 216:15-217:1.
  13. Kimmett Deposition, Exhibit 1 at 218:2-13.
  14. Ottenberg Deposition, Exhibit 15 at 217:13-19.
  15. Kimmett Deposition, Exhibit 1, at 218:17-219:5.
  16. Bellaman Deposition. p. 217.
  17. Bellaman Deposition, p. 320, p. 472 & p. 502.
  18. Rovelli Deposition, Exhibit 7, at 50:22-51:11.
  19. Bellaman Deposition, p. 217.
  20. Bellaman Deposition, Exhibit 18 at 471:25-473:11.
  21. Bellaman Deposition, p. 320, p. 472 & p. 502.
  22. Bellaman Deposition, pp. 502-503.
  23. Kimmett discovered approximately 250 compromises in Keiser’s office – some of which dated back to the 1990s – had never been sent to the referring agencies. Ex. 1 (Kimmett Dep.) 335:20-336:18.
  24. Bellaman Deposition,  p. 457.
  25. Exhibit 55, Furlong Deposition at  Ex. 16.
  26. Exhibit 55, Furlong Deposition at  Ex. 16.

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