Broward County, Fla., inspector general John Scott said Monday that top employees in the city of Lauderdale Lakes “have grossly mismanaged public funds entrusted to its care.”

Scott said that his investigation into the city’s finances from 2008 through 2011 found that the former finance director, under the authority of the former city manager, proposed revenue estimates “that ignored the downturn in the economy and multiple financial red flags,” and maintained spending levels at “unsustainable amounts.”

Scott said city officials inflated revenues by more than $18.6 million while revenues actually were declining.

In less than four years, the city went from having more than $6 million in general fund reserves to being unable to satisfy $9 million in public safety costs owed to Broward County, the inspector said. The debt owed to Broward is what prompted the probe.

Scott also substantiated allegations that $2.5 million from the city’s community redevelopment agency was improperly used to pay operating expenses, and that elected officials failed to properly conduct financial reviews and understand the reports of auditors.

Unrated Lauderdale Lakes has hired a new finance director and imposed new financial procedures and safeguards. The inspector recommended that city commissioners receive training to strengthen their understanding of financial management and budgets, and hire an internal auditor.

A criminal investigation reportedly is under consideration.

The fiscal 2010 audit showed that city fund balances totaled $516,316, while long-term liabilities, including bonds, totaled $29.9 million. The city’s bonds were placed with banks except for a small amount sold through a pool-bond conduit.

The audit did not indicate that the city defaulted on any payments, and officials could not be reached for comment. The 2011 audit has not been released.

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