Auditors: Entitlement, intimidation characterized top Troy city management

By: Terry Oparka | Troy Times | Published July 23, 2019

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TROY — A forensic audit of the financial workings of the city under former City Manager Brian Kischnick did not uncover major fraud. 

However, it did reveal an altered memo from Kischnick to the Troy City Council regarding the purchase of a Jeep Grand Cherokee for his personal use, extravagant tips on numerous food purchases Kischnick made at upscale restaurants, and a management culture that fostered a sense of entitlement and discouraged city employees from reporting potential violations. 

According to the report, in January 2016, the Troy Purchasing Department was contacted by the city’s motor pool superintendent about purchasing a Jeep Grand Cherokee for Kischnick. It had not been included in the city budget and was done per Kischnick’s request. The purchase was on top of the $425 monthly auto stipend that Kischnick already received. 

Purchasing Department staff drafted a memorandum for the council’s approval that described the vehicle, its cost and its use by Kischnick, and they provided a copy to Kischnick to review, with other employees copied. 

The report states that Kischnick subsequently altered the memo to include three additional vehicles, which also were not budgeted, and to remove all references to his use of a new vehicle. 

At a special meeting called July 17, Michele McHale and Eric Conforti, of Plante Moran, presented the findings of the forensic audit that the City Council had requested in December, for a charge of $68,000, in a 6-0 vote. Mayor Dane Slater was absent. 

As part of the forensic audit, Plante Moran staff interviewed 16 city employees, mostly department  heads. They looked into petty cash transactions, disbursements and credit cards Kischnick used. 

Kischnick was sentenced to serve 30 months in prison and two years probation after he pleaded guilty to bribery in August 2018.

A Jan. 18 sentencing memorandum by Assistant U.S. Attorney Dawn Ison states that Kischnick used his city office to solicit bribes and other things of value. This included demanding bribes from DiLisio Contracting. Kischnick was ordered to pay $4,500 in restitution. 

The Troy City Council terminated Kischnick’s employment March 11, 2018, following a March 9 domestic assault charge in Clawson, to which he pleaded no contest. 

Conforti said that Plante Moran found no evidence of fraud transactions with regard to DiLisio. 

The council voted 6-0 to approve a one-year, $2.4 million contract for concrete slab replacement at a June 3 meeting after postponing the matter April 22. 

City Councilman Ed Pennington was absent. 

The audit revealed that Kischnick: 

• Left tips over 25% on food purchases.

• Reported $28,937 on meal purchases in 2015, for a total of $75,350 in meals from 2012 to 2018 — in excess of what is stipulated in city guidelines.

• Expensed meal purchases on weekends. 

• Turned in altered and nonitemized receipts.

• Failed to turn in a number of receipts.

• Purchased personal items, such as phone accessories. 

Tone at the top

Conforti told the council there were problems with 42% of petty cash transactions, disbursements and credit card purchases with city funds over the course of Kischnick’s employment with the city. The interviews revealed Kischnick’s aggressive behavior toward city employees — yelling could be heard through a wall, he said.

“Anyone who speaks up in this environment — that was impressive,” Conforti said. “There were known violations of policy. ... And there weren’t consequences. The former city manager abused power.” 

Conforti said the belief among the city employees was that if they reported Kischnick’s wrongdoing, “He can get away with whatever he wants. … I’m just going to get in trouble.” 

“What we need to do is have a policy that’s consistently applied,” said Troy City Attorney Lori Grigg Bluhm. 

Addressing the length of time it took them to complete the audit, McHale compared their work to a “triage team. We spent double the time anticipated, and we had to attend to other clients who weren’t bleeding.” 

“We had two to four people on-site (in City Hall) to make sure you weren’t bleeding,” Conforti added. 

McHale said they recommend that the city hire an outside firm to do random and periodic checks of the city’s financials. 

“To say this is a troubling summary is an understatement,” said Councilwoman Edna Abrahim. “Council oversight did not function. We’ve got to move forward in a productive way. This isn’t just about Brian (Kischnick). This is about us.” 

“It doesn’t help us to continue to dive into Brian Kischnick,” said Councilman Dave Henderson. 

Three residents spoke during public comment, including Aaron Green. 

On July 18, Green told C & G Newspapers that he agrees with Abrahim’s statement that the report is troubling. He said there are opportunities for a lot of improvement and growth. 

“I have confidence in most of City Council, the city manager and city attorney to make and keep Troy the excellent city that it is.” 

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