The unimaginable happened in former President Ronald Reagan’s hometown.
The city comptroller in Dixon, Ill., stole more than $50 million in public money over two decades, crippling the city’s budget, in part to build a championship-winning horse-breeding business. A 2017 documentary about the theft is now on Netflix.
A case like that shows why local officials need to be proactive and never think their town is immune from fraud and abuse, government groups say.
Officials in Trappe Borough, Montgomery County, didn’t want to wait until something happened to act. Last year, they started using a third-party hotline that employees and residents can contact with tips about fraud, waste, and abuse in borough government, said Phil Ronca, Borough Council president.
“The goal was to ensure we had a means of hearing something we needed to hear about that people felt reluctant to report and wanted to report anonymously” using a “safe outlet,” he said.
The borough of 3,600 people is part of a small but growing group nationwide: the one in 10 local governments that the International City/County Management Association estimates offers employees and residents an external hotline for reporting wrongdoing.
They’re more common in private business, but the association “strongly recommends” all local governments use them as one way to strengthen the “ethical climate" and deter bad behavior, said Martha Perego, the group’s director of member services and ethics. She said a company unaffiliated with government is a “safe way" to point out potential wrongdoing for people who aren’t comfortable interacting with the entity drawing their complaint.
“This is just one more preemptive step local governments can take to make sure if there’s something inappropriate going on, they hear about it and have time to investigate, review, and take proactive action if they have to,” Perego said.
Costs for these hotlines range from less than $1,000 per year — Trappe pays $650 — to six figures. The hotlines receive tips by phone call, text, email, mail, fax, or online form, and send them to several people within the government. Tipsters can send documents and communicate with governments through third-party websites while staying anonymous.
Philadelphia doesn’t have an external hotline, but the city’s Office of the Inspector General says it aims to fulfill that role.
"We’re not a third-party group, but we are an independent office within the city,” said Inspector General Amy Kurland, a former federal prosecutor who expanded the office’s investigative duties when she took over in 2008.
The office fields concerns about wrongdoing, such as city employees clocking in but not working, and companies telling the city they use minority- and female-owned subcontractors when they don’t. Kurland said one of the office’s highest priorities is to keep tips confidential.
But tipsters may not feel comfortable dealing directly with any city entity. And the office, although it’s been around for 40 years, is not permanent. A mayor could decide to close it; City Council would need to pass a bill to make it permanent and has shown no signs that it will.
Philadelphia’s Office of the City Controller, a permanent office, operates a hotline and online form for city employees and the public to report fraud, waste, and abuse. The office investigates the tips.
Many states also have hotlines for reporting wrongdoing, but they often don’t have the resources to look into complaints about local governments in a timely or thorough way, Perego said. Depending on the nature of the allegations, the state or law enforcement may eventually get involved.
Kentucky uses a third-party hotline and has fielded calls from employees and residents about workers doing personal business during work hours, misusing state money or equipment, and speeding in state vehicles.
The City of Nashville has received tips about bosses mistreating employees, people not showing up to work, and employees buying things with public money that they shouldn’t be buying.
The expanding market of third-party hotlines includes Lighthouse Services in Blue Bell, which York County uses, and Ohio-based Red Flag Reporting, which Trappe uses.
Ray Dunkle, a certified fraud examiner, founded Red Flag Reporting 3½ years ago and said he has seen a “growing understanding and appreciation of this service.”
Horror stories such as the one in Illinois help.
Tips allow governments to fix problems before situations escalate, Dunkle said. If something does happen, they can point to the hotlines as evidence of their commitment to doing things right.
“If we’re all honest, at one time we’ve flicked that little angel right off our shoulder,” Dunkle said. “We’re all human; we’re all capable of making mistakes.”
Kentucky has fielded about 500 tips in the year and a half since it started using Red Flag Reporting, said Gerald Hoppmann, executive director of Kentucky’s Office of Policy and Audit.
Many times, people don’t know whom to call to report potential wrongdoing, so the state wanted one streamlined reporting system, he said. Most tips lead to some sort of action, such as the disciplining of an employee or a change in policy, he said.
Just telling people the state has a third-party hotline that takes anonymous tips is a deterrent, he said, "like a police car sitting on the corner.”
The state considers the drop in tips about employee behavior, especially inappropriate use of state resources, to be a sign of progress.
“Lots of tips came in initially," Hoppmann said, “because people were getting away with things.”
In Trappe, borough officials haven’t seen a flood of calls since they started using the hotline a year ago.
In that time, the borough has gotten one “tip”: Send someone to get rid of a wasp nest.
“Just because we’re not hearing anything doesn’t necessarily mean everything is fine,” Ronca said. "We know we can sleep better knowing we have this mechanism in place for people to report things.”
This story has been updated to include the hotline Philadelphia’s Office of the City Controller operates.