Houston Library foundation cut checks to vendors, city employees that couldn’t be cashed

The Houston Public Library Foundation issued at least a dozen checks that city employees and vendors were unable to cash in 2023 — a problem that left people scrambling for answers as the foundation and the city’s beleaguered public library system point fingers at each other.

The returned checks include at least nine reimbursement payments to Houston Public Library employees who had pre-paid for event costs and travel funded by the foundation, a nonprofit organization that funds library programming and events, according to records obtained by the Houston Landing via public records requests.

One employee, Crystal Swimmer, was issued two checks that would not clear over the course of the year: A January reimbursement of $387.66, and a November payment of $157.23.

In total, the returned checks accounted for thousands of dollars due to employees and vendors, including a travel reimbursement to one employee for nearly $900.

“That’s a lot of money to somebody. That’s a significant amount of money,” said Houston Public Library’s interim executive director, Cynthia Wilson .

“It’s not anything we would ever want people to think — you know, my gosh, writing bad checks to employees and staff. It’s not good,” she continued. “I would just be devastated if that happened to me or to someone I knew.”

The foundation is a nonprofit organization that supports the city’s library programs and services.

Originally established in 1977 as the Houston Library Board, its mission is to solicit funds and gifts for library acquisitions and improvements. In its current incarnation, there are no staff members; instead, the foundation is governed by a mayoral-appointed board of more than a dozen members.

Officials say the faulty checks didn’t “bounce” — a term for when a check is returned due to insufficient funds. According to Licia Green-Ellis, the foundation’s longtime board chair until last month when Mayor John Whitmire elected not to extend her expiring term, the checks were returned due to clerical issues stemming from the city library’s finance team.

Whenever the foundation issues a check, the library’s finance team is supposed to enter the check’s details into an online system with Cadence Bank — a safety feature put in place early last year after the foundation was alerted to fraudulent activity.

The check fraud case is now the focus of a criminal investigation by the Houston Police Department.

A fraud alert at the Houston library foundation

Late in 2022, the foundation was alerted to fraudulent checks resulting in thousands of dollars in stolen funds.

“Someone stole a check that was written out to a vendor,” Green-Ellis said. “They stole that check, and then changed the amount and ultimately cashed it.”

The stolen check was a $297.50 payment issued to Liberty Screening Services on Nov. 10, 2022, to pay for 35 background screenings conducted that October. That check was signed by two people, as is required on checks issued by the foundation. Then, those signatures appear to have been copied onto two brand-new checks — each for $3,000. They were deposited in early December 2023.

“Clearly that was a red flag” when that amount of money was taken from the foundation’s bank account, said Green-Ellis.

library interim executive director Cynthia Wilson

“I would just be devastated if that happened to me or to someone I knew.”

On Jan. 18, 2023, Houston Police Department records show, a library employee walked into the downtown police station and filed a report, stating that a “suspect forged and cashed company checks without their consent.”

According to a letter the city penned to the Texas attorney general’s office in an effort to block release of emails concerning the bad checks issued to employees, the criminal investigation is ongoing, and an arrest warrant has been issued.

The city contends it cannot release certain pieces of correspondence about the returned checks because of the pending criminal case. The Landing has appealed the city’s effort to keep the documents private.

While the foundation was able to recoup the money stolen, according to Green-Ellis, the theft appears to have left a lasting impact on the nonprofit’s ability to pay for its services.

More than ‘an isolated incident’

In a statement, Mayor John Whitmire’s spokeswoman Mary Benton described the errors as “an isolated incident.” But records obtained by the Landing show that city employees and vendors have been unable to cash checks all throughout 2023.

In November, Mary Gilmore, the owner of the small Houston business Amazing Awards, was unable to cash a check for a little more than $1,000.

“It’s a lot of money,” said Gilmore, who has supplied awards for city programs since 2014. “Especially if you’re doing business with the city. You’re competitive, so being competitive, that thousand dollars definitely means a lot.”

According to the invoices Amazing Awards submitted to the city in November, Gilmore sells products to the city for between 66.7 percent and 75 percent of her retail rates — meaning she’s making huge reductions to remain competitive and win the bid for the work.

“This is the first time I’ve had issues with payment,” Gilmore said. And the city fixed it pretty quickly, she added. Minimal harm done.

That minimal harm is key, says Benton, who noted that “the mayor was unaware of the (check) issue because the staff resolved the problems without significantly impacting the operation.”

But that hasn’t always been the case.

In May 2023, Houston Library employee Patrick Atkins wrote the finance department about issues with a reimbursement check.

“I tried to deposit my checks by mobile deposit and they took the money back,” Atkins wrote in a May 17 email, obtained via a public records request. “I then went in person and deposited them, then a few days later they took the money back again.”

He wasn’t alone.

A couple of weeks later, another employee, Rachel Stout, was unable to cash a foundation check for $888.

Stout’s boss, Mercedes Clark, emailed Dimitri Revada, a member of the library’s financial services department, on June 6.

“Rachel’s travel reimbursement check from the city bounced and she tells me this has not been resolved yet. She also has not gotten any response since,” Clark wrote in an email, obtained via public records request. “She used her personal credit card for her travel and I see she is getting a little nervous about having the funds to pay.”

Revada responded: “We will reimburse Rachel for the travel on (sic) this week. She should receive a check no later than this Friday.”

But Friday came and went. No check.

The following Monday, Stout followed up with another email to the finance department: “Hi Dimitri,” she wrote. “Hope you’re having a great day. I hadn’t heard anything from you on Friday, so I wanted to check in and find out when I can pick up my check.”

The check finally arrived on June 13. But that wasn’t the end of the issue for Stout, who was charged a “$7.00 bounced check fee” by her bank, according to her follow-up emails. She continued to check in with the finance department about the final $7 she was owed for weeks.

Library leader blames ‘lack of leadership’ at foundation

When asked what could account for this kind of accounting, the library’s interim director Wilson pointed to a lack of oversight at the foundation.

“It’s not the city, I can guarantee you that,” Wilson said earlier this month during a sit-down interview with the Landing . “Now I will say the foundation has had some challenges, because there has not been an executive director in the role for several years.”

She continued: “It’s not that they don’t have the money. They have the money. It’s just when you don’t have anyone in an oversight position, things like that will happen.”

According to its most recent tax filings, the foundation holds $19.6 million worth of assets, and had roughly $1 million in cash on hand in January 2023.

The foundation has not had a single full-time staff member for the past several years, after the most recent executive director was let go during the pandemic. Wilson noted that the mayor is working to shuffle the board, thanking those with expiring terms like Green-Ellis for their service, and making plans for new appointees. Wilson has hired a consultant to help find a permanent executive director to join the staff.

“It’s a symptom of a lack of leadership. That is a big problem, but we’re solving it,” Wilson said on Wednesday, April 17. “I’m giving it two weeks, but it’s going to be solved quickly.”

Foundation leader says library’s finance team holds key

In the months after the check fraud, Green-Ellis said, the foundation worked with the library and Cadence Bank to institute what’s known as “positive pay” — a system used by banks to deter check fraud.

Under the system, whenever the foundation writes a check, it informs the library’s financial team of the details — including check number, payee and the amount. The finance department, Green-Ellis said, is then required to submit all that information into a portal on Cadence Bank’s website, then issue the check.

“What that does is when the individual who the check is made out to goes to present that check, it will line up with what’s in the system,” Green-Ellis explained. “If it does not line up with what is in the system, the check will not be cashed. It will be returned. So if you received a check and the finance department had not put all that information into the system, the bank is not going to honor that check.”

That’s the likely cause for at least four checks that library employees were unable to cash on the week of Christmas. On Dec. 26, library employee Israel Favela sent an email to higher-ups, detailing four employees whose reimbursement checks did not clear; another employee had not yet tried to deposit her check, according to the email, obtained by the Landing.

Benton, from the mayor’s office, explained to the Landing that the city was closed for holiday break from Dec. 22 through Dec. 25 “and the deadline to approve the Positive Pay was Dec. 22. As a result, the Houston Public Library Foundation checks were not processed because of a positive pay error.”

Employees who had their checks returned during the busiest shopping week of the year had to wait until after the New Year to receive their reimbursements. According to Benton, that particular instance was resolved in early 2024.

More fixes are coming, according to Wilson. The mayor elected not to extend the expiring terms of eight members, including Green-Ellis, vice-chair Zarine Boyce and treasurer Neil Thomas.

“Those individuals were thanked for their leadership,” Wilson said, adding that the former members raised a lot of money and put on a lot of programs.”

Whitmire is in the process of nominating and appointing new members to the board.

That, combined with the plans to hire a full-time executive director, should create a mix of skill sets that will “make sure things like this don’t happen,” Wilson said.