Investigation finds possible fraud in accounting practices at veterans home

A state investigation into accounting practices at the Minnesota Veterans Home in Minneapolis has found evidence of possible financial wrongdoing and fraud.

The Minneapolis Veterans Home, which cares for more than 300 residents, has had history of trouble, including reports of neglect and medication errors, and health and safety issues. The Legislative Auditor's office opened its investigation last summer after relatives of two of the home's residents alerted staff to suspicious financial transactions.

Investigators looked at the home's financial activity from January 2010 through June 2011. In a report released Thursday, they found that about $6,800 worth of receipts couldn't be traced back to bank deposits or resident accounting records. They also found delays in the recording of $16,500 in resident receipts. The Legislative Auditor's Director of Investigations Sonya Johnson said this could be an indication of fraud.

"And the problems I found with these, is that I found receipts but I wouldn't see anything that was recorded on their daily cashiers log which would be deposited at the bank, or anything on the resident account statements to say that the money that the receipt was for actually made their statements," Johnson said.

The Minneapolis home is one of five across the state that provides veterans with skilled nursing care.

Staff at the home collect money and record receipts for resident care and trust accounts. During the timeframe the audit examined, the home recorded approximately $10.5 million on behalf of residents.

While the accounting errors found by this investigation are relatively small in comparison, Johnson said the problems are evidence of weak control.

"It's a matter of trust. This is people's money and the home has a fiduciary responsibility to make sure, whether it's $3 or $7,000, that it's accounted for appropriately because you're in a position of trust with those people and they need to know that if they bring money then its accounted for appropriately," Johnson said. The Veterans Home agreed with the investigation's findings.

State Commisioner of Veterans Affairs Larry Shellito said he's changed the homes' financial procedures as a result of the investigation. The home now uses new tamper-evident envelopes and new vault combinations, and has limited access to the cashier's office. The home also has a new computerized ledger system that automatically generates duplicate receipts.

"This is going to sound strange but I was very, very pleased and impressed with the way the leadership and the staff at the home went through the processes and so forth," Shellito said. "They took this extremely serious. They weren't going to hide anything; they were open; they were up front; they immediately took corrective actions and they dealt with it. So from my level, looking at what happened, I'm extremely proud of my staff."

Shellito says he's working hard to change the reputation of the veterans home and rebuild trust. 　

The Minneapolis Veterans Home has had troubles going back to 2005. The problems included reports of unsafe care, patient neglect and medication errors that resulted in the deaths of three residents.

Shellito said it's too early to say whether any staff will be let go as a result of the investigation.