Missing Ottawa Street BIA money was withdrawn using a little-known debit card, new chair says

The former chair of the Ottawa Street Business Improvement Area (BIA) withdrew money for his personal use from the non-profit organization’s account using a debit card, the group’s new chair told a packed meeting last week, as many members expressed surprise that such a card existed.

“We had a debit card for any cash purposes, which is very rarely used,” Thomas Lute, joining the meeting remotely, said to the engaged crowd. “Everything else is done by cheque with two signatures.”

Lute was responding to questions about missing money that led to the replacement of former chair Michael Carruth on March 22. Carruth was removed from his role “due to the misuse of BIA funds,” which led to Hamilton police and the city’s auditor general opening an investigation, as CBC Hamilton previously reported.

Lute said at the meeting on April 21, the board is now tightening oversight of its bank account: “As of now, there is no card,” he said.

Carruth told CBC Hamilton earlier this month that he used about $16,000 of the BIA’s money out of personal desperation and said he plans to pay it back. He did not respond to follow-up questions about the debit card following the latest BIA meeting.

Lute told about 20 people packed into the board’s cozy office, and another five or so who joined the meeting online, that Carruth says he is trying to secure a loan to pay back the money but nothing has come through yet.

BIAs are designated areas within which all commercial and industrial properties pay a levy collected through their City of Hamilton property taxes. The Ottawa Street BIA runs along Ottawa Street North between Main and Barton streets, and largely uses its funds for street beautification and hosting events.

As for the police investigation, BIA executive director Stephanie Weiler said last week the case had not yet been assigned to an officer, as far as she was aware.

Lute said Carruth had given a statement to the auditor general and got the impression during that interview that the police’s fraud department could take a while to get to the BIA investigation.

“It seemed like the amount that we’re looking at here was a smaller case in terms of what kind of fraud investigations they deal with,” Lute said.

CBC contacted the Hamilton police on April 23 to ask for updates on the investigation but did not hear back.

Carruth stayed on BIA board after closing his business

The BIA informed its members of financial irregularities at an emergency meeting on March 22, according to minutes posted publicly last week. Carruth was removed from his role and Lute, the BIA’s former vice-chair, was chosen as the new chair that day.

The minutes from that meeting, made public after they were approved April 21, show the BIA’s accountant had discussed issues with the bank account with Carruth when he was board chair, and that Carruth informed the board on March 20 at 11:14 a.m. Lute previously told CBC Hamilton the board’s accountant alerted him of the discrepancies and he went to the board. 

CBC asked Lute for a clarification of the timeline and did not get a response.

The minutes also note the auditor general planned to speak with Weiler, as well as the BIA’s bookkeeper and treasurer.

Carruth had been BIA chair for several years, and served as its treasurer before that. He was the owner of Down the Street Food Co., which closed in November, but continued to serve on the BIA board after that. According to the city’s BIA bylaw, members of a BIA must rent or own a business property in the prescribed area.

Sean Queroub, owner of Nova Sewing within the BIA, says he expressed concerns to the board that its president was no longer an eligible member after Down the Street Food Co. closed, yet Carruth was allowed to remain in his position as president.

Sean Queroub, president of Nova Sewing Centre, is pictured in his store in a CBC file photo. (Sunnie Huang/CBC)

“I was told he maintained an office on the street, which I have found to be non-existent,” Queroub told CBC Hamilton in an email following the April meeting, at which he was an outspoken participant and one of several people urging the board to push police to lay charges, or to sue Carruth in civil court if necessary.

“The board’s failure to follow the bylaws is particularly troubling as it remains unclear when the theft occurred; strictly adhering to governance procedures might have prevented this outcome,” Queroub said.

“As the accountant and treasurer are responsible for balancing bank statements, it is unclear how repeated cash withdrawals were not flagged sooner, especially given the BIA’s fixed expenses.”

Lute said Carruth had asked to remain on the board until the next annual general meeting, and the board voted to allow it after consulting with the city.

“We were told that it was fine if he wanted to finish out his tenure,” Lute said. “Hindsight is 2020.”

Treasurer surprised to learn of debit card

BIA treasurer Eva Grad, who owns the Revolving Closet consignment store on Ottawa Street North, told CBC Hamilton she was “shocked” when Queroub said during the recent meeting that she should have noticed the transitions sooner.

“All I do is sign the cheques,” she said in a phone interview from her store on April 23. “I don’t get involved [with the bank account], never did. I never thought twice [because] we had a bookkeeper.”

Grad said news that money had been taken was alarming, as she trusted her fellow BIA members and believed they all had the organization’s best interests in mind. She said the unauthorized withdrawals began in December, and were listed on a bank statement that came in late January. She said the accountant was aware by February.

Grad also said she was previously unaware of the BIA debit card.

“In the past we could never have one,” Grad said. “People used to have to pay out of their pocket and get reimbursed… We were all surprised about this debit card.”