Delaware County never had a fraud hotline. Its new controller changed that

Delaware County's fiscal watchdog has sharpened its teeth with a new fraud-detection tool, one that puts the county on par with its peers in the region.

Controller Joanne Phillips, a Democrat who took office after last November's historic election in the GOP-dominated county, officially launched an anonymous hotline last week for both employees and residents to submit tips about misuse of county resources.  It's something the real-estate lawyer has been adamant about during her short tenure, and it served as an integral part of her speeches on the campaign trail.

"I think that there's a definite move toward transparency and bringing a new eye to county government," Phillips said, referring to Councilmen Brian Zidek and Kevin Madden, the first Democrats to win a countywide election. "I think that's a good thing, and I think people are on board."

But why did it take Delaware County so long to launch a tool that most of the state's larger counties, including Bucks, Montgomery, Chester, and Philadelphia, have used for years?

Phillips was quick to point out that none of her new colleagues were against the idea. They were "cooperative and helpful," she said, in working the last few months on the logistics of setting up the phone line and notifying all county offices about the new protocol.

"This was that type of thing where people heard about it, everyone recognized it was something that she wanted to do, and no one would dispute the value of this initiative," said Marianne Grace, the county's executive director. "I told her our departments would do anything they could do to help develop this and get it off the ground."

Edward O'Lone, Phillips' predecessor and now the finance director in Marple Township, said this week that he had discussed the concept of a hotline with his colleagues, and that it "never came to fruition."

John McBlain, chair of the County Council, called Phillips' hotline – which didn't require council approval – a "fine idea," one that he hopes can guard against waste and root out corruption.

When asked about the absence of such a hotline in years past, McBlain said that when previous instances of fraud were detected, the District Attorney's Office and other "checks and balances" were able to handle them quickly and competently.

"The fact that we didn't have a hotline before doesn't mean the government operated any worse," McBlain said. "I can point to the city of Philadelphia losing $30 million, and they have a fraud hotline." He was referring to the city's announcement that it had hired an accounting firm to try to reconcile a $33.3 million discrepancy in its bank records.

Industry experts say tips, anonymous or otherwise, are overwhelmingly effective in detecting and combating fraud, much more so than internal audits. And tips are enhanced by the presence of hotlines.

The Association of Certified Fraud Examiners found that fraud losses were 50 percent smaller at organizations with hotlines, and that organizations without hotlines were twice as likely to discover instances of fraud by accident, according to its 2018 Report to the Nations, a global study on occupational fraud.

And some of Delaware County's recent high-profile fraud investigations were discovered exactly that way: accidentally, or years later through internal audits. Jessica Smith McCusker, an Upper Darby tax office worker, last month admitted to stealing $215,000 over six years from her employer. A supervisor quite literally stumbled upon the fraud while looking for office forms inside McCusker's desk drawer, investigators said.

In 2012, Christine Trout was fired from her position as the county's register of wills after an internal audit discovered she'd stolen more than $160,000 over five years. Three years later, the District Attorney's Office found that one of its employees, Mary Elizabeth Lynch, had diverted more than $50,000 in cash seized from criminals to buy concert tickets and open up a debit card. Lynch's crimes were found during an audit of assets stored in the office's evidence room.

Christy Joy, the controller for Schuylkill County and president of the Pennsylvania State Association of County Controllers, is an ardent proponent of fraud hotlines. They're not "silver bullets" to preventing fraud, he said, but they provide an outlet to reluctant would-be whistle-blowers.

"It's effective because in the trenches, the people who are likely to see this fraud immediately are often overwhelmed or uncertain," Joy said. "Sometimes it could be their boss or their coworker, and that level of anonymity gives them the freedom and the courage to do what's right."

In Lehigh County, Controller Glenn Eckhart said his office's fraud hotline has uncovered everything from scams targeting senior citizens to a vendor who had overcharged the county.

Phillips said Delaware County's new hotline had received a handful of calls since her announcement of its debut last week. She declined to go into specifics, but said her office is looking into the information they provided.

"Our office represents the taxpayers. It represents their tax dollars," she said. "I wanted to let people know that I'm here."