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Comptroller Investigation Uncovers Multiple Issues in Greene County Utility Districts

Press release from the Tennessee Office of the Comproller; August 18, 2014:

A special investigation by the Tennessee Comptroller of the Treasury has identified a number of problems with the Chuckey Utility District and the Cross Anchor Utility District in Greene County. Until recently these two districts shared a common staff, including upper management.

Investigators made several findings associated with retired general manager Shirley Collins, and former general manager Kandie Jennings. Collins served as general manager for both districts until 2012, at which time the two districts appointed her daughter, Kandie Jennings, general manager.

Comptroller investigators found that Shirley Collins received $25,056 in bonuses that had not been approved by the boards of commissioners. In December 2012, Kandie Jennings directed performance bonuses and longevity bonuses be paid to her mother. Individual board members told investigators they did not approve and were not aware of the bonuses.

Investigators also discovered that former general manager Kandie Jennings spent $2,064 of district funds to purchase an Apple MacBook Pro and accessories for her personal benefit.

There are additional concerns surrounding a $182,334 consulting contract between the Chuckey Utility District and retired general manager Shirley Collins. Investigators found inconsistencies with the authorization, interpretation, and initiation date of the contract.

Comptroller investigators have included a number of recommendations in their final report. These include establishing policies for district expenses and credit card usage. There should also be more oversight of district fuel cards and utility district vehicles.

“Utility Districts are entrusted with large amounts of money,” Comptroller Justin P. Wilson said. “Ratepayers must have confidence that these funds are not being misspent. We are committed to making all forms of government work better.”

To view the investigation online, go to: http://www.comptroller.tn.gov/ia/.

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Fmr Bedford Co Sex Offender Registry Officer Took $30K in Public Funds for Personal Use

Press release from the Office of the Tennessee Comptroller; December 18, 2013:

A woman formerly charged with making sure sex offenders in Bedford County were properly registered and monitored took more than $31,000 in sex offender registration fees over six years for her own personal use, an investigation by the Comptroller’s office has found.

Under Tennessee law, convicted sex offenders are required to register with the local law enforcement agencies in their home communities and also report any changes of address. The information provided through that process is maintained on a statewide database of sex offenders.

To cover the administrative expenses required to maintain the database, each sex offender is required to pay an annual fee, which is now set at $150. A portion of the collected fees are used by the local law enforcement agencies, while the rest are forwarded to the Tennessee Bureau of Investigation.

The Comptroller’s investigation, which is detailed in a report released today, examined the operations of the Bedford County Sheriff’s Department’s sex offender registry office from 2006 through 2011.

During that time period, investigators determined that at least 158 sex offenders should have paid fees totaling $42,198. However, the former registry officer, Rebecca Hord, only turned over $10,738 to the sheriff’s department – keeping at least $31,460 for herself. (Because of incomplete recordkeeping, investigators say the total number of offenders and the amount of missing fees could actually have been higher.)

The Comptroller’s investigation was conducted in coordination with the Tennessee Bureau of Investigation.

Investigators also concluded that Hord had forged the sheriff’s signature on some documents declaring some sex offenders to be indigent. And investigators said the department didn’t provide adequate oversight over the sex offender registry program because it failed to follow up when offenders weren’t paying fees and didn’t require offenders to report to the department in person.

Hord was indicted by the Bedford County Grand Jury on charges of theft, forgery and official misconduct earlier this week.

“Some people might not be concerned about the loss of these fees paid by convicted sex offenders, but they should be,” Comptroller Justin P. Wilson said. “For public safety, it’s extremely important that we have mechanisms in place to track sex offenders after they are released from prison. The sex offender registration fees are supposed to cover the cost of that monitoring effort. So to the extent those fees aren’t available, money from other sources might need to be used to cover those expenses. I commend the work of our investigators and those from the Tennessee Bureau of Investigation on this case.”

Results of the investigative report can be viewed online at http://www.comptroller.tn.gov/ia/.

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Comptroller: General Services Audit Uncovers Flaws in Contract Procurement Process

Press release from the Office of the Tennessee Comptroller of the Treasury; November 13, 2013:

A report released today by the Comptroller’s office details flaws in the way that the Department of General Services (DGS) handled a contract for facility assessments, master planning and facility management services for the state’s real estate properties.

According to the audit, although DGS did not violate state policy and procedures, department management intentionally procured a contract that was broad in scope so that they could later procure specific services through the contract amendment process. Auditors reported that they could not determine whether some of the amendments were within management’s original contract scope. In addition, auditors reported that in two cases, these amendments created organizational conflicts of interest whereby the contractor could profit from its own recommendations to the state.

Auditors reported in a separate finding that DGS did not adequately document its decision to exclude a vendor when procuring the facilities management services contract.

The audit also highlighted issues with the department’s payment cards and information systems. Auditors found that 20 state agencies representing 78 percent of the state’s cardholders did not submit documentation of their purchases for several months. The entire report can be viewed online at: http://www.comptroller.tn.gov/repository/SA/pa13044.pdf

“The state’s citizens must be able to rely on the Department of General Services’ officials to properly administer the state’s contract procurement process, including those contracts involving the state’s real estate properties,” Comptroller Justin P. Wilson said. “The new commissioner of the department should ensure full transparency and accountability in all procurement activities and should take steps, including disclosure, to mitigate against the risks of any potential conflicts of interest, if those conflicts cannot be avoided in the first place.”

A joint subcommittee of the General Assembly’s Government Operations Committees will hold sunset hearings on the Procurement Commission, the Advisory Council on State Procurement, and the State Protest Committee, which are administratively attached to the department’s Central Procurement Office, on November 13 at 9 a.m. in Room 30 in Legislative Plaza.

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Former East TN Water Division Employee Indicted on Charges of Theft, Fraud

Press release from the Office of the Tennessee Comptroller of the Treasury Justin Wilson; May 23, 2013:

Following a review by the Comptroller’s Division of Investigations, the former clerk of the Watauga River Regional Water Authority/North Elizabethton Water Division surrendered to the Carter County Sheriff’s Office this month after being indicted on charges of theft, forgery, official misconduct and credit card fraud.

The Comptroller’s review found the former clerk, Lori Beth Feaster, had stolen cash utility collections, made personal purchases with district credit cards and took unauthorized check payments that amounted to tens of thousands of dollars.

Feaster used some of the agency’s funds to cover personal expenses such as a battery and windshield wipers for her car and an energy efficient front-loading clothes washer.

In a report released today, the Comptroller’s investigators detailed how, in just two years, Feaster stole approximately $44,174 of ratepayer funds while handling and accounting for utility collections at the agency.

Investigators noted that it was Feaster’s ability to collect money, prepare bank deposits and sign checks on behalf of the agency without sufficient oversight which presented her with the opportunity to steal public funds. She capitalized on that situation by issuing more than $23,000 in checks to herself, taking more than $15,000 in cash utility collections and making more than $4,000 in fraudulent credit card purchases – all the while falsifying agency records to cover her tracks.

Feaster concealed $23,743 in checks made out in her name by fraudulently recording the payments in the agency’s accounting records as payments to a backhoe vendor. She also shorted cash utility deposits by at least $15,506. In one instance, Feaster changed a $6,974.34 bank deposit slip prepared by another employee to $5,974.35 and kept $1,000 for her personal use.

“Theft or misuse of public funds is unacceptable, whether those funds come from tax dollars, utility bills or any other sources,” Comptroller Justin P. Wilson said. “These types of crimes need to be taken as seriously as any other type of theft.”

“The failure to adequately separate financial duties, as was the case here, is the most common weakness in accountability that allows for thefts of public funds to occur,” says L. Rene Brison, Assistant Director of the Comptroller’s Division of Investigations. “It is imperative that all public officials and employees put adequate safeguards in place to prevent any single employee from having sole responsibility for each step in the collections and disbursements process.”

To view the report online, go to: http://www.comptroller.tn.gov/ia/

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Comptroller Audit Uncovers Theft of Morristown Animal Shelter Funds by Employee

Press release from the Office of the Tennessee Comptroller of the Treasury Justin Wilson; May 22, 2013:

An employee of the Morristown-Hamblen Humane Society altered receipts to conceal the theft of $51,130 from the organization’s adoption fees and other funds, an audit by the Comptroller’s Division of Investigation has revealed.

Receipts in the humane society’s computer system were backdated – up to 11 years before the installation of the computer system – so they would not be included in daily collection reports. That meant money from adoption fees and other sources didn’t appear in the organization’s records. Investigators concluded that money was stolen by the employee, who was later fired.

Investigative auditors reviewed records from July 1, 2009 through October 31, 2011 after Hamblen County officials discovered the altered receipts from collections were not deposited into the humane society’s bank accounts. The stolen funds should have been used to operate the animal shelter, enforce animal control ordinances and conduct animal cruelty investigations.

The employee involved had been responsible for gathering collections, matching collections with receipts and delivering those collections to the bookkeeper for deposit. During questioning by investigators, the employee admitted to backdating one receipt to “borrow” $120. The employee refused to speak with investigators after being fired.

Investigators also found weaknesses in the humane society’s accounting and record-keeping procedures, which made the theft easier to conceal.

“It is very important that there is an appropriate amount of oversight when public funds are being accepted, recorded and spent or deposited,” Comptroller Justin P. Wilson said. “Putting too many responsibilities in the hands of one individual without that kind of oversight can create situations that are ripe for fraud or abuse. It is very unfortunate in this case that money that could have been used to help stray and abused animals in Hamblen County isn’t available for that purpose because of this.”

The Comptroller’s Division of Investigation has forwarded copies of its report and supporting information to the Office of the District Attorney, Third Judicial District.

To view the report online, go to: http://www.comptroller.tn.gov/ia/

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Comptroller Audit Uncovers Stolen Funds, Altered Records in Chester Co

Press release from the Office of Tennessee Comptroller of the Treasury Justin Wilson; April 16, 2013:

Public money that should have been used to improve water quality and prevent soil erosion in Chester County instead went into the pockets of one of the local conservation district’s employees, an audit by the Comptroller’s Division of Investigations shows.

Stacey Clark, who formerly worked as secretary for the Chester County Soil Conservation District, issued at least 100 district checks to herself or to “cash” over a four-and-a-half year period. Those checks totaled $47,460.

As the only administrative employee at the district, Clark had complete control over the finances and was responsible for collecting money, writing receipts, making bank deposits, preparing and signing checks, receiving bank statements and preparing accounting records. With this unrestricted access to money and records, Clark was able to alter the district’s bank statements to conceal her actions for years.

Clark used a computer to create at least 28 bank statements, on which she omitted and/or altered fraudulent checks, in order to hide what she was doing. Clark also forged a district supervisor’s name on two check stubs as well as the memo line of one check to falsely indicate his authorization of those expenditures. The supervisor later confirmed that his signature was forged and that he had not authorized the checks in question.

Auditors believe the thefts would have been detected sooner if the Chester County Board of Supervisors had provided more oversight of Clark’s actions.

Clark was indicted by the Chester County Grand Jury earlier this year.

“This is yet another example of a publicly-funded agency failing to have adequate safeguards in place to detect fraud,” Comptroller Justin P. Wilson said. “Allowing one employee to handle all aspects of financial transactions creates the potential for mischief. Having appropriate segregation of duties makes it more difficult for one rogue individual to commit fraud.”

To view the audit, which was released today, go to: http://www.comptroller.tn.gov/ia/