Kathryn Boyd-Batstone / Rivard Report
Pat DiGiovanni, president and chief executive officer of Centro San Antonio, resigned Tuesday after it was disclosed that a staffer allegedly embezzled $175,000 over a two-year period from the nonprofit's accounts without being detected by management.
The embezzlement included an elaborate, fake audit to cover up the scheme including fabricated emails and websites, and at least one other person who impersonated an auditor, Trish DeBerry, Centro board member and public relations specialist, told the Rivard Report.
A source close to the situation told the Rivard Report that the Centro board of directors concluded that a "clean sweep" would be necessary to re-establish public trust in the nonprofit, even though DiGiovanni, who has led Centro since 2012, was not associated with the apparent embezzlement. Others at Centro had more direct oversight of the finances, the source said, and additional staff resignations are expected.
"I care about this organization, I care about the community, I care about the relationship between Centro and the City and our partners," DiGiovanni told the Rivard Report Tuesday. "Obviously something like this shakes people's confidence. ... While I had nothing to do with this matter, I need to take personal responsibility as CEO. I don't want to be a distraction."
An interim CEO has not been named, but Darryl Byrd, former SA2020 chief executive officer who now works as an urban planning consultant with Centro, "has been asked to intensify his working relationship with the organization and the board until a new CEO can be identified," according to the press release.
Centro officials declined to name the now former employee accused of the embezzlement, but identified her as a female accountant. She was supervised by one person, DiGiovanni said: Tony Piazzi, Centro's chief operating and financial officer.
Piazzi did not respond to a request for comment.
The employee allegedly “admitted to faking the audits and was terminated immediately,” according to a press release.
Law enforcement was notified, and Centro is working with the San Antonio Police Department on the investigation, said Michael Bernard, Centro's attorney. "There's no evidence that anyone else [from Centro] was involved."
But there are at least two people involved, Bernard said. "We know of two."
Someone was hired or convinced to come to the Centro executive committee and Public Improvement District meetings to pose as an auditor, DeBerry said – part of the "extreme" efforts to cover up the crime.
"We had an impostor come in and pose as a senior audit manager," she said.
"We are going to find out who they are," added Bernard, who previously served as city attorney from 2005-13.
The $175,000 that was allegedly stolen, Bernard said, appears to be only from the Centro San Antonio organization, and not the Public Improvement District. But officials won't know for sure until the investigation is complete.
Centro operates with an annual budget of about $2 million per year, DiGiovanni said, and the improvement district has $5.4 million.
The nonprofit will seek recompense, Bernard said, "from any source available." This could involve a number of different avenues, he said. "I hope it results in restitution."
Darryl Byrd will step in to fulfill some of the CEO's roles, DeBerry said, and the search for a replacement will start in the near future.
"At this point we're focused on the finances of the organization – restoring stability and credibility to Centro San Antonio," she said. "We have very passionate board members that believe in the critical mission of Centro. That is not just advocating, but providing real thought leadership behind redevelopment of the urban core."
Centro, a nonprofit formed in 2010, has essentially two functions: the improvement district arm provides cleaning and "beautification" services and the advocacy arm helps organize events, obtain various recognitions, and study economic and cultural impacts in and around downtown. Now that the accountant is gone and DiGiovanni stepped down, Centro has 13 full-time employees.
DeBerry praised DiGiovanni for taking Centro to the next level.
"When you look at full funding of the downtown projects associated with the last bond, downtown got more money than it has ever gotten through a San Antonio bond program," she said. "And that was because of coordinated efforts led by Pat."
DiGiovanni led Centro to form stakeholder groups to rally behind key projects such as Broadway Cultural Corridor, Hemisfair, and Zona Cultural.
"From a legacy standpoint, I think that's Pat's," DeBerry said.
"It's a team effort," DiGiovanni said. "That's the more immediate accomplishments. ... I feel particularly badly about the staff we've just recruited. They're young, they're passionate, they're energetic and they're now having to deal with this. So we want to make sure we encourage them to continue on because the work that they're doing is important and it's making an impact. And I told them that today."
DiGiovanni hopes the momentum from the bond and other downtown projects continues. He and DeBerry said Centro doesn't plan to change or cancel any events or initiatives.
“While this is an extremely difficult decision for Pat, the Centro San Antonio Board feels very strongly that it is the right one," Don Frost, Centro board chairman, stated in the release. "I want to stress that Pat had absolutely nothing to do with the financial indiscretions, and we appreciate his solid contributions to the organization over the past five years. However, the board and he both felt his resignation was in the best interest of Centro San Antonio."
Centro deploys more than 90 "Centro Ambassadors" who have duties ranging from trash-collection to helping visitors and locals find destinations, according to its website. It also boasts more than 600 members.
"The resignation of Centro’s President and CEO was an appropriate step toward ensuring accountability despite that fact that he is not implicated in any alleged fraudulent activity," Mayor Ron Nirenberg said in a statement. “We will await the results of the investigation, understanding that every organization doing business in our city, especially those that receive benefits as non-profit entities, owes San Antonians their very best efforts to ensure that they are living up to the highest standards of integrity."
"We'll get past this," DiGiovanni said, adding that he hasn't thought about what his personal next steps are. "I need to be in this moment and absorb and embrace it."
He hopes to stay in San Antonio, he said. "I don't intend to sit at home."
Councilman Roberto Treviño (D1), whose district includes downtown, is hopeful for the future of the organization and its mission, but called for a full investigation into the incident.
"Financial Malfeasance is something we cannot and will not tolerate," he said in a statement. "I have full faith that a robust investigation will shed more light on this impropriety. Learning more about preventative measures will only help to ensure the highest fidelity in all of our partnerships."
Before taking the helm of Centro, DiGiovanni served as deputy city manager under City Manager Sheryl Sculley from 2006-2012, where he oversaw downtown development and management issues during the terms of then-Mayor Julián Castro. DiGiovanni came to San Antonio after serving as city manager in Kalamazoo, Michigan, a position once held by Sculley, too, although the two did not work there at the same time.
Prior to DiGiovanni leaving the City, the Ethics Review Board identified a conflict of interest when he sat on a committee that awarded Hunt-Zachry the $325 million Convention Center expansion contract. David Zachry, CEO of half of the Hunt-Zachry partnership, was a member of Centro’s four-person team that selected DiGiovanni as its CEO about one month before the committee concluded its work on the expansion contract. But the board did not find any evidence of quid pro quo or intent to trade favors.
This story was originally published on Nov. 28, 2017.