A former Geminus employee misappropriated $636,000 in Emergency Rental Assistance funds destined to help renters hang on to their residences during the pandemic by creating false landlords to fraudulently request money from the program, according to an independent audit by an Indianapolis accounting firm.
Geminus discovered discrepancies in its records which led to finding out about the potential fraud in July 2022, according to Bill Trowbridge, president and CEO of Geminus and its umbrella organization, Regional Care Group.
The nonprofit service agency based in Merrillville immediately contacted the U.S. Department of the Treasury and fired the employee, as well as alerting the accounting firm that does its annual audit.
The audit, released in January 2023, covered fiscal years ending in June 2021 and 2022. The $636,000 figure is what Geminus “had strong suspicions” was fraudulent and reported to the feds and the agency’s auditors, Trowbridge said in an email follow-up to a phone interview. It is up to the Treasury Department, through its investigators, to determine whether actual fraud occurred.
“It sounds like a big number but they found it quickly and the feds are dealing with it appropriately,” Trowbridge said, adding that the former employee was likely part of a larger scheme involving other agencies that also distributed the rental assistance funds.
Geminus received $40 million in federal funding for the Emergency Rental Assistance program as a pass-through agency, distributing the money throughout Lake County during the pandemic. The agency provides an assortment of services in the county, including early education and childcare; assistance for families and children; and substance abuse and suicide prevention.
“In this case, the victim is the federal government and its COVID relief funds — not Geminus,” Trowbridge said in his email. “None of the amounts in question come from our accounts and have no impact on our finances or services. All the ERA funds flowed from the Federal Government.”
He added by phone that the agency’s internal processes worked and if there’s “a silver lining, it didn’t put any of our services in jeopardy because it was pass-through money.”
Additionally, the way the program was administered by the federal government, allowing those seeking assistance to sign a document attesting that they were not committing fraud rather than supplying document verification, to speed up the disbursement process, opened the rental assistance program to fraud, Trowbridge said.
According to the audit for Geminus, “An employee that created fictitious landlords circumvented internal controls to request rental payments from the Emergency Rental Assistance program for tenants that had already paid their rent. While rental payment requests from the Emergency Rental Assistance program were regularly checked, the significant quantity of requests and low response rates from tenants confirming rental assistance payment requests led to certain rental assistance payment requests not being verified.”
As part of the audit process, Judith Sikora, then Geminus’ chief financial officer, provided a corrective action plan, including hiring “additional finance personnel to improve internal controls surrounding the grant expenditure process,” according to the audit.
As far as Trowbridge is concerned, Geminus’ internal controls worked in that the apparent discrepancies came to light and were appropriately handled by his agency.
“We self-identified it,” he said, adding the agency flagged the matter with its accounting firm, “so our internal controls are solid.”
Lake County and Hanover Township officials were dismayed to hear about the allegations and chagrined knowing the funds involved were supposed to help those in need.
Michael Repay, president of the Lake County Board of Commissioners, said he did not know about the financial misappropriation.
“I really don’t know how to really comment except that it is utterly disgusting someone in a position like that would…take advantage of the people that really needed it and the landlords that needed it,” Repay said.
Administering these large allocations of money, especially when it comes to assistance and interfacing so many potential payees, lends itself to a consultant situation, Repay said.
The partnership with Geminus was pitched to him as an opportunity to get the money out the door in a very efficient manner.
He does not remember in detail the specifics that led the county to hire Geminus to administer the funds. The move was recommended by Tim Brown, the county’s director of community economic development. The department handles HUD programs.
Repay said previous to learning of the alleged misappropriated funds, Geminus has been considered nothing but efficient and helpful in administering those types of large grant-funded programs.
“The goal in this was to get the money into the people’s hands who needed it most,” Repay said.
Hanover Township Trustee Kevin Toth said his office, like many others including entities like Catholic Charities, worked for the state during the first round of funding to process applications for rental assistance from renters from around Indiana. During the second round, counties were allowed to opt out of the state program and administer their own portion of the funds.
Toth said when he processed applications for the state, his office verified about 600. Initially, the office continued its work verifying applications – a process that could involve verifying addresses, relationships between renters and landlords, and other information, through Geminus.
He said it did not appear Geminus was prepared to administer the program and was behind by several months. His office had signed on with Geminus to review applications as it had done for the state. He said his office received few applications and often when they were sent, the emails were missing attachments or the attachments would not open. Ultimately, the problems led the office to stop reviewing applications.
The trustee said the situation was working while the state was administering the program and he was frustrated Geminus was allowed to be paid 10% of the assistance funding to administer the program.
“I just thought it was a bad idea from the get-go. Why scrape away $1.3 million off top? Why? To put in another layer of bureaucracy?” he asked.
News of the alleged misappropriation of funds makes it worse, he said.
“This could have helped a lot of people,” he said.