The State Auditor’s Office sent a letter to the Prescription Opioid Settlement Distribution Commission (POSDC) saying it intends to audit 11 additional grant recipients following an alleged misuse of funds incident.
The decision comes after State Auditor Lydia York alerted the Department of Justice (DOJ) last month of potential misuse of funds from the Opioid Abatement and Remediation Grant Program given to Kent County nonprofit Code Purple.
The POSDC is in charge of distributing those grants to organizations that are helping abate the opioid crisis in Delaware.
"We were unable to complete an audit — that's always disarming to us, and we stopped there, wrote a report and passed it off to the Department of Justice," York said in reference to Code Purple.
The DOJ's white collar crime unit is now investigating Code Purple and is attempting to claw back $290,000 in grant funding distributed to the nonprofit.
York sent a letter to the commission last week formally requesting a “memorandum of understanding” to audit 11 additional grant recipients.
She says it wouldn’t surprise the auditor’s office if nothing concerning comes back from the audits, but she wants to be sure there is not further waste, fraud or abuse.
“That first one was quite remarkable, but this is also, again, a part of the audit process. When our sample tells us something that doesn't comport with what we're expecting, we tend to expand the sample to figure out if we found the needle in the haystack or if there's just a whole lot more needles in that haystack," she said.
She explains the 11 nonprofits were not targeted due to suspected fund misuse, but rather based on the size of the grant they received, meaning nonprofits who were allocated more funding have a higher risk factor.
York says assuming full cooperation, the office intends to release the first set of reports in the fall.
Additionally, the PODSC held its first full quarterly meeting since the announcement of concerns surrounding Code Purple.
During subcommittee reports, several chairs brought up concerns of not meeting a quorum during their meetings to conduct business, as well as not knowing that each meeting is required to have an in-person anchor location under Delaware law.
"I take responsibility that we allowed this. The idea of the anchor locations for subcommittees committees, as well as support commissions had been approved since May 2023. We will do everything we can to correct that," said Chair of the Governance Committee Dave Humes.
The commission's grant distribution process is also currently under scrutiny. Outside consultant Social Contract is preparing recommendations on any performance improvements that can be made and any guardrails that should be implemented before the commission distributes its next cycle of funds.
The first report is expected in August and the second is expected in September.
The commission's Governance Committee also presented some recommendations to enhance the governance structure of the committee, including developing a procedures manual, which will act as a guide for how the commission should conduct businesses.
The committee also recommended operational oversight enhancements to the POSDC, including having the commission review grantee application forms, reviewing any documents that outline the commission staff's internal processes and that the Executive Director's quarterly updates begin to include the number of grantees in good standing, the number of grantees referred to the State Auditor's Office for review and the number of grantees under review by the Attorney General.
The commission plans to vote on the updated recommendations at their October meeting.
Auditor York says the internal operations of the PODSC have not been referred to the auditor's office for investigation, but they would conduct a report if they were asked to do so.
During public comment, nonprofit atTAcK addiction board member Jill Fredel expressed her disappointment with Attorney General Kathy Jennings, who is also co-chair of the POSDC, promoting distrust in all grant recipients, following a letter from Jennings to the commission from June 28 that reads: “This project is rife with potential for fraud, waste, and abuse — and correspondence with the state auditor has left me gravely concerned that at least one grantee appears to have engaged in wrongdoing with significant state and/or federal funds, including its Commission grant.”
"When there's a process to get money out into the community, out to grassroots organizations like ours, and then I read that the attorney general says this project is ‘rife with potential for fraud, waste and abuse,’ it paints a broad brushstroke for all of the grantees who have gotten that funding. People look at us now at atTAacK addiction with skepticism," Fredel said. "It's hard to sit here and know that the attorney general of our state thinks we're fraudsters and that we're wasting this money. Those are too valuable — all of those lives."
atTAcK addiction has received funding from the commission in the past but is not slated to be audited.
Jennings responded saying there is only one organization under criminal investigation, and says she has been personally affected by the opioid epidemic, prompting her to take the potential fraudulent use of funds very seriously.
"Every dollar is precious, but I will not allow us to spend dollars that are being abused, and that is what happened. This is not negligence, it's not even recklessness — it is abuse. $290,000 is not being used to save lives right now, and if we can do better so that that doesn't happen again, then I'm going to continue to advocate."
