Wilmington Treasurer files counterclaims in lawsuit with City over authority
The Wilmington City Treasurer is making counter-claims in a lawsuit filed against her last year by the City and its mayor, Mike Purzycki.
Purzycki and the City sued independently elected City Treasurer Velda Jones-Potter in August for withholding and attempting to make certain payments related to the financially troubled Wilmington Housing Partnership, now controlled by the City.
The lawsuit filed in Chancery Court claimed Jones-Potter scheduled an unauthorized payment out of City reserves on a $3.4 million loan borrowed by the City on the Partnership’s behalf, and made several unauthorized interest payments on the loan— while withholding other payments related to the Partnership, including to its contractors.
Wilmington Treasurer Velda Jones-Potter initially asked for the suit to be dismissed, but is changing course over what she says are new developments. She wants a judge to weigh in on two points.
“That the Mayor’s powers are not without limit,” she said. “That he does not direct the Treasurer; it is an independently elected office accountable to the public. And he cannot force access to the City’s bank accounts. The Treasurer was elected as the custodian of City funds.”
In the counterclaim dated Jan. 17, Jones-Potter argues the Administration is challenging her ability to act as a “check” on the Mayor’s handling of City money.
She says she released a more than $42,000 grant payment to the partnership in December at the request of City officials. She takes issue with this request, as it is justified by a repayment agreement between the City and the Wilmington Housing Partnership that Purzycki has called “a formality.”
“Therefore it calls to question the legitimacy of any subsequent payments to that entity,” said Jones-Potter.
The Treasurer also claims that City Finance Director Brett Taylor tried to circumvent her office and wire money from a City bank account directly.
According to a City official, the lawsuit has cost taxpayers $148,000 in legal fees for both parties since it was filed in August.
Jones-Potter maintains this cost to taxpayers is not her fault.
“I proposed that the lawsuit be dismissed,” she said. “It was baseless and unnecessary and wasteful. The Mayor chose not to agree with dismissing it, and so here we are. I believe it is my duty to protect the integrity of this office, the independence of this office and the ability to act in a way that is in the interest of this office.”
Deputy Chief of Staff for Policy and Communications John Rago said in a statement that the Administration will respond to Jones-Potter’s counterclaim “shortly,” and does “not expect the Treasurer’s latest legal move to delay us getting to some resolution of this matter.”
He notes the $3.4 million JPMorgan Chase loan for the Wilmington Housing Partnership preceded Purzycki's administration, and was structured by the previous administration as a unsecured loan.
"There was never a guarantee that the City would be repaid, and it’s absurd for the Treasurer to continue to put forth a false notion to the public," said Rago. "The $3.4 million was not misspent by the WHP, as she continues to claim, but was spent for affordable housing projects, as she well knows. Previous audits have confirmed that point and we expect future audits to verify this also. The Treasurer should stop confusing the public and operate within the facts.”
City Council members have repetedly questioned how the Partnership spent the unpaid $3.4 million loan and requested a forensic audit into the organization’s transactions.
City Auditor Terence Williams has said a forensic audit is currently not an appropriate step to take, citing the potential cost to taxpayers.