Alerus Management Company “Fleeces” City of Burnsville

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Written By:
The Whistler

May 5, 2010
7:52am

A friend of the Say Anything Blog let us know about a Blog down in the Minneapolis Area, Lazy Lightening that has been covering the scandals at the Burnsville event center. This event center is also managed by Venuworks. Yes the same Venuworks company that has mismanaged the Alerus Center since it was built and the same Venuworks that has done nothing but insult us and lose ever greater amounts of money. In case anyone remembers, Venuworks used to be known as Compass.

This Blog wrote of an audit done of the operations down in Burnsville. They excerpted some of the more troubling parts of the audit report.

Credit cards:

Each facility is limited to one credit card and that credit card should only be used for travel and emergency use. The Manager had only one credit card but the credit card was being used for non-travel and non-emergency use.

The Executive Director and Business Manager of the BPAC should be the only signers on credit card accounts. The credit card in the name of the BPAC had other individuals as signers.

Credit card statements should be paid monthly to ensure that interest and penalties are not incurred. We noted that two of the three credit card statements selected for testing were not paid on a timely basis.

All credit card statements should be approved by the Executive Director or General Manager of the BPAC. We noted no documentation of approval by the Executive Director of the BPAC on any of the three credit card statements we selected for testing.

Travel and Entertainment:

All three of the expense reports lacked receipts; however, reimbursement was still made.

Petty cash:

Petty cash can be used for any purchase under $25. It was noted that purchases were being reimbursed from petty cash that were over the $25 limit.

Conflict of Interest:

Per inquiry of BPAC staff, they indentified one organization that if the BPAC contracted with a potential conflict of interest could arise. During our reading of the contract entered into with this organization, we noted two facility usage agreements that were signed on behalf of the organization by a councilmember of the City. As part of our procedures for the testing of these contracts, we did not determine of a conflict of interest as defined in the Minnesota Statutes actually exists.

Operating Account:

This expense reimbursement lacked complete, supporting, and appropriate documentation for the $1,431.82 of reimbursement to the employee. The supporting documentation attached to the request for reimbursement totaled only $1,058.92.

Segregation of Duties and Other Controls:

It was noted that the Executive Director approved his own expense reports.

We noted checks written that only had the Executive Director’s signature and were not signed by a second approved signer. These checks included checks written to the Executive Director and signed by the Executive Director totaling $4,499.

So we have employees of he management company turning in all kinds of unverifiable expenses while the city taxpayers get stuck with a bill of $534,000 for operating losses.

Clearly there was a lax attitude by the people working for Venuworks at that facility. I see two sources of the problem. The people hired to work in the Burnsville had no respect for proper procedures. A professional would never sign a check to himself because a professional wouldn’t want to create the appearance of impropriety. That goes for the rest of the incidents that the audit uncovered.

But a larger issue is the lack of oversight and care by Venuworks. They get paid a lot of money in addition to the local salaries. How do they earn that? They sure aren’t guarding the taxpayers money.

In the case of the Alerus Center they aren’t bringing any successful large acts nor are they attracting big conventions from outside of the area. All the Alerus gets is local event and statewide type conventions when it’s our turn like the ND Education Association or ND Political conventions.

So what do we get for our money, except for insults?

Some might say that this is an isolated incident. Sure it happened in Burnsville, but there’s no reason to think that inappropriate financial matters won’t infect us up here in Grand Forks.

They’d be wrong. Guess where the new executive director of the Alerus came from? If you guessed the Burnsville operation you’d be right.

Grand Forks’ Alerus Center is getting a new executive director on Monday, VenuWorks, the company that runs the city-owned events center, announced Wednesday.

Roger Swanson, the marketing director at another VenuWorks facility, the Burnsville (Minn.) Performing Arts Center, is replacing outgoing Executive Director Steve Hyman, who is leaving Friday.

Still, the Burnsville center where Swanson’s coming from has had its share of financial challenges. The St. Paul Pioneer Press reported in March that the 15-month-old building lost $534,000 in its first year of operation though it had been budgeted to lose just $220,000.

It’s scary. The system at least in Grand Forks works about like this: Employees of Venuworks call up the Grand Forks City finance office and say that they need some more money because they’re running short. They finance department is obligated by the bond agreements to transfer them more of our money. On the March financial statement the Alerus operations shows a line item “Due to City” of $1,097,375.

The Alerus Commission that’s charged with oversight instead cuts secret deals with Venuworks to let them out of parts of the written contract that the public is counting on. The Alerus Commission inexplicably gave Venuworks a long-term contract when they’ve been failing to meet their obligations.

So we have a management company that has been whacked with an audit at another facility; that promoted a key management person from that facility to run the Alerus; who’s overseen by a group that has broken the law to benefit Venuworks over the taxpayers.

What’s the worst that could happen?