We completed a review of Deutsche Bank’s Job Creation and Retention Program (JCRP) grant. We selected this auditee based on a hotline complaint, case number HL-2012-0199, that was referred from the United States Government Accountability, FraudNet control number 58392, received on November 23, 2011. The complaint alleged that Deutsche Bank officials fraudulently received a $34.5 million JCRP grant under the guise that they would maintain 5,500 jobs in Lower Manhattan over a 10-year commitment period and that during this period, Deutsche Bank officials did not maintain the employment goals. In addition, the complainant alleged that Deutsche Bank officials could not have maintained the required minimum employment number of 5,500 at 60 Wall Street since the building has a maximum office occupancy capacity of approximately 3,400. The objectives of the review were to determine whether the complaint alleging that Deutsche Bank officials fraudulently received $34.5 million in Federal funding under the terms of the grant disbursement agreement had merit and whether there were indications that Deutsche Bank officials did not maintain the required minimum employment number during the commitment period.
Our review determined that ESD officials did not maintain adequate documentation to substantiate the merits of the complaint. While ESD officials complied with established procedures for monitoring the JCRP grant and there was no indication that Deutsche Bank officials did not maintain the required minimum employment number during the commitment period, the monitoring procedures need to be strengthened to ensure that ESD officials obtain and maintain sufficient documentation supporting the accuracy of the self-certified employment reports. The allegation that Deutsche Bank officials could not have maintained the required minimum employment number at 60 Wall Street has no merit. A certificate of occupancy, dated December 2003, revealed that the building had a maximum office occupancy of at least 11,850 persons.
We recommend that HUD’s Deputy Assistant Secretary for Grant Programs instruct ESD officials to (1) develop additional procedures to ensure that documentation fully supporting the accuracy of the JCRP grant recipients’ self-certified employment reports is obtained and maintained in the program files, (2) strengthen monitoring procedures to reasonably ensure the accuracy of annual employment reports submitted by JCRP grant recipients by requiring them to also submit documentation demonstrating that the reported employment numbers are based on the grant agreement’s definition of full-time permanent employees and the formula for determining the number of such employees, (3) require JCRP grant recipients to provide documentation, such as payroll records, in support of written explanations regarding material differences between the employment numbers reported to ESD officials and those reported on the NYS-45, and (4) modify the current employment verification procedures to ensure that JCRP grant recipients are monitored more frequently during their commitment period.