CPB IG recommends recouping $1.1M from WLRN for misreporting income, plus penalties

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WLRN in Miami received $1.1 million more than it should have in television Community Service Grants over an eight-year period, according to an evaluation of the station’s financial reports by the CPB Inspector General.

WLRN overstated TV underwriting revenues by nearly $9.5 million between July 2007 and June 2015 and understated radio underwriting income by the same amount, the report found. The misstatement of revenues led to the incorrect CSG amounts, which are set based on a station’s annual nonfederal financial support.

WLRN’s underwriting work and accounting is handled by Friends of WLRN, a Florida nonprofit that also oversees the station’s fundraising, membership activities and major-gift donations.

Dwight Hill, chair of the board of Friends of WLRN, told Current in March that former Friends of WLRN CFO Jorge Perez-Alvarez deliberately misreported the station’s underwriting income to CPB.

After the misreporting was discovered, CPB asked the IG to review WLRN’s underwriting income. The IG determined that WLRN did not notice the mistakes when preparing its TV and radio annual financial reports “due to a lack of adequate internal controls.” The station failed to reconcile its financial reports to the Friends’ general ledger, the IG report said.

The IG recommended to CPB management that it recover $1.1 million in excess TV CSG payments to WLRN and “assess appropriate penalties” for noncompliance.

In WLRN’s response, GM John LaBonia agreed to corrective actions to prevent future accounting mistakes. “While there is no excuse for the misallocation,” he said, “WLRN detected the reporting mistakes and voluntarily corrected the errant underwriting revenue allocation.”

He also said that repaying more than $1 million “would be catastrophic” to the station and “would likely result in significant cutbacks.”

LaBonia suggested that WLRN pay CPB $544,700, the difference between the TV CSG overpayments and the radio CSG the station would have received if underwriting had been properly reported. While repaying that amount “will certainly not be easy for WLRN,” he said, “vital services would not be affected to the same extent.”

The IG disagreed. “CPB should assess appropriate penalties given the egregious nature of the misreporting over multiple years,” the report said.

CPB management has 90 days to respond to the evaluation.

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