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Audit finds loose accounting by sheriffTue, 10/03/2006 - 4:03pm
By: John Thompson
The long-awaited release of the forensic audit of the Sheriff’s Department use of federal drug funds provides a glimpse into a program that has been shrouded from public view for several years. Click here to download a copy of the full accounting report. The Fayette County Commission voted Thursday night after executive session to release the results of the audit provided by The Investigative Accounting Group. In her 16-page assessment CPA Laurie Dyke said that there were “no direct instances of misappropriation; however, we were unable to establish that all transactions were properly approved and recorded or that all assets acquired with Federal Seizure Funds are being used for valid purposes, based on documents provided.” Contacted Monday, Sheriff Randall Johnson said he didn’t have a chance to examine the whole document and a statement would be released at a later date by Johnson, or his attorney Rick Lindsey. “I know there are some things that need to be tightened up,” he said. On Tuesday, County Commission Chairman Greg Dunn explained why it took so long for the $16,000 audit to be released. “We were going through legal channels and this was part of our discovery during one of the cases against the sheriff,” he explained. The audit has been completed since last November, but Dunn said the county was trying to “solve the problem without imploding the county.” The audit seems to vindicate county officials who claimed there were no financial controls on the Sheriff’s Department. “I just can’t believe that nobody questioned him for years. The information has been there,” Dunn added. The commission chairman said the audit shows the arrogance of the department in not documenting travel expenses and leaving large gratuities. “They were leaving $10 tips on a $20 bill with taxpayers’ money,” he said. Travel costs The audit covered 2001, 2002, 2003 and 2004. As part of the audit, investigators also examined trips totaling more than $70,000 taken by the department in fiscal years 2004 and 2005. In the audit several deviations were observed from the county’s written travel policy, including: • No documentation of the necessity, approximate cost or advance approval of trips by the department. “Implicit approval is generally documented through Captain (Michele) Walker’s authorization to issue per diem payments to travelers,” the audit stated. • A flagrant disregard for the county’s travel policy that limits attendance at events that are more than 300 miles away to one employee. “We noted numerous trips to locations more than 300 miles from the county, including Boston, Houston and Las Vegas with multiple attendees and no written justification,” the report stated. • Exceeding the county’s 20 percent maximum gratuity policy. “We noted a few where the gratuity amount appears unreasonable and certainly above the 20 percent limit, including one where the meal receipt was $22 and a $10 tip was included,” the audit said. While most of the travel expenses appear in line, the auditors had a problem with the lack of documentation surrounding the travel. Another problem was advancing money from the drug buy fund account, instead of federal seizure funds. During a visit to the department in Aug. 2005, the auditors questioned Walker about expense advance and reimbursement forms without check numbers. Walker told the investigators that she “sometimes pays travel expenses and occasional other small items from a cash fund that she keeps in her safe.” The investigators said the cash in the safe comes from funds budgeted for drug buys. “Each year for at least several years, the Sheriff has requested and the county has budgeted a line item for drug buys. No documentation of the actual use of these funds is received by the county finance department. We understand that the amount is approximately $28,000 per year.” “We also discovered that some of the cash is maintained in the safe, but some of it is kept in a bank account maintained by the Sheriff’s Department that was not provided to us,” the investigators indicated. Some of the trips made by Sheriff’s Department employees include: • A two-day trip to Pensacola, Fla., in July 2003 for four employees, including then-Lt. Col. Bruce Jordan. The trip was paid for with drug funds. • A three-day trip to Boston for three employees, including Jordan in August 2003. • A two-day trip to South Carolina in August 2003 for three employees for repairing the helicopter. The trip was paid for with drug funds. • A trip to Washington, D.C., in September 2003 for four employees to attend a firearms instruction class. • An eight-day trip to Florida in October 2003 for Jordan and three employees for “unknown training.” • A five-day trip to South Carolina for five employees to attend bloodhound training. • A two-day trip to Las Vegas in February 2004 for Jordan and two employees. The audit says there was no stated purpose for training and no conference registration. • A four-day trip to Ft. Lauderdale in March 2004 for Jordan and two employees. The audit states no purpose was given and no per diem or expenses, except hotel. • A four-day trip to Jacksonville for Jordan and three employees for crisis hostage negotiation. • A trip to Hilton Head in September 2004 for two employees for asset forfeiture training. In the annual certification report signed by Sheriff Randall Johnson, the document lists $96,497 for travel and training in fiscal year 2004. Commission Chairman Greg Dunn refused to sign the document because of lack of documentation. In the most recent certification report submitted in July, $66,996 was spent on travel and training. The auditors listed several problems with the department’s accounting practices involving training and travel. The department was taken to task for no accountability to the county, the undisclosed bank account and the indication that all of the drug fund buy money was not used to purchase drugs and a lack of documentation of funds paid or reimbursed from the drug buy fund. Computers and televisions The audit also discovered that during 2003 and 2004, the department bought more than $190,000 in computers, TVs and electronic equipment. But when the auditors tried to inventory the items, they ran into problems. “Several of the items we attempted to verify were not tagged, improperly identified, not available for inspection because we were told that they were out in the field, or on loan to another agency and not recorded on either of the inventory listings,” the audit reports. In 2004, the department bought more than $21,000 worth of TVs for the watch office. Vehicles During the same time frame, the department spent more than $157,000 on 10 vehicles and two golf carts. All of the vehicles were purchased at Don Jackson Lincoln Mercury through a very informal process. “The Sheriff’s Department does not issue purchase requisitions, purchase orders or competitive bids for large purchases, as specified in Fayette County’s Municipal Code Article 5. Several purchases in excess of $20,000 were made and according to county regulations, these should have been approved by the Board of Commissioners on a competitive sealed bid basis,” the audit states. The audit also said it’s questionable whether one of the vehicles should have been assigned to District Attorney Scott Ballard because the assignment may not be a “valid law enforcement purpose” required by the Equitable Sharing Guidelines. The two golf carts were assigned to school resource officers at Whitewater Middle School and an unnamed school. As of Nov. 2005, the audit determined the department had a ratio of 1.09 vehicles for every non-jail employee in the department. In January, three Fayette County employees were detained by deputies after they drove away from an auto dealership with three vehicles that had been traded in by the sheriff’s department three weeks earlier. Although county officials contended the cars were titled to the county and thus owned by the county, sheriff’s officials say they were bought with federal drug seizure funds which by law means they can only be used for law enforcement purposes. The vehicles had been used as undercover cars, and the department routinely trades undercover vehicles out ... “for obvious reasons,” said then- Lt. Col. Bruce Jordan, director of investigations for the Fayette County Sheriff’s Office. Because the cars were bought with federal drug seizure funds, the county does not have control over them. “The matter has been turned over to the U.S. Attorney’s Office,” Jordan said, noting that no arrests were made nor citations issued in connection with the incident. Jordan said the initial report from the dealership was unclear about who actually took the vehicles, so deputies began looking for them. Ironically, it was Jordan himself who found the vehicles on Ga. Highway 54 near McDonough Road and he followed them into the county’s fleet maintenance area along with an undercover drug agent in an unmarked vehicle and one road deputy. “I said, ‘Get out of our cars,’” Jordan said, adding that County Commission Chairman Greg Dunn had sent a letter to the dealership asserting that the cars were county property. “I told them Greg Dunn has no governing authority over them because they were purchased with federal drug funds,” Jordan said. The three county employees, including Finance Director Mark Pullium, were taken to the sheriff’s department to write statements about “why they did what they did,” Jordan said. Pullium did not comply with that request, although the two other employees did, Jordan added. All three employees were later released after Sheriff Randall Johnson determined not to arrest them. Jordan said the cars were the dealership’s property and thus the dealership could have taken out criminal warrants for the employees’ arrest. Also, one of the cars had an incorrect tag placed on it, and none of them were insured, meaning that the three employees could have at least been cited for driving without insurance, Jordan said. No citations were written, Jordan confirmed. The three cars had a trade-in value of $21,000, Jordan said. Because they had already had their insurance coverage revoked, the cars had to be towed away, he added. Weapons Another big purchase during fiscal year 2005 was weapons. The department spent more than $75,000 on 142 Sig-Sauer pistols. When the auditors visited in Oct. 2005, they received an inventory listing showing all 142 of the new weapons, but only seven were in the armory. One weapon that was supposed to be in the armory was with a uniformed officer, and another that was shown as being assigned was in the armory. The Sig-Sauers replaced Glocks and the auditors were told the Glocks were being used as backup weapons. The auditors received an old inventory listing of the Glocks, but were told it had not been updated in years. “There is no policy to physically inspect weapons assigned to any officers,” the report concluded. Repercussions The audit concludes that certain spending decisions by the Sheriff’s Department may adversely impact the county’s budget. When vehicles are bought with seized funds, they have to be maintained and insured with county funds. The county could end up paying operating costs for the helicopter in several years, the audit says, if it’s determined the helicopter costs are not an approved use of seizure funds. In 2004, the department started with a balance of $167,000 in the seized funds account and received $853,000 in seizure funds and interest income and spent $654,000. But in 2005, the department only received $191,000 and spent $490,000 and was left with a year-ending balance of $47,000. “If the trend continues, it is possible that there will be insufficient Federal Seizure Funds to pay for the significant helicopter expenses and this may create budget and cost issues for the county,” the audit concluded. In 2006, the numbers bounced back. The department received $1.5 million in funds and spent $599,000, leaving a fund balance of $962,000. The audit does indicate that funds are being spent for valid law enforcement purposes and supplementing the Sheriff’s budget, but offers several concerns. • Certain line items, such as uniforms, are budgeted in drug funds and the general county budget. • The use of a vehicle by the District Attorney. • The large amount of money spent on TVs and computers. • The ongoing expenses for the helicopter. In summary, the audit states that seizure funds have not been accurately reported in the county’s annual financial report. While the inaccuracies are not material to the county’s financial statement, they “indicate internal control weaknesses which can and should be corrected.” “The Sheriff’s Department is not complying with established county policies and procedures, especially related to purchasing, competitive bids and documentation of travel expenses,” the audit concludes. The audit also warns the county should be cautious about the Sheriff’s Department reporting before signing the annual Certification Report. In April of this year, County Commission Chairman Greg Dunn insisted that all federally forfeited property be “funneled through the Fayette County Department of Finance,” according to a letter he wrote to Fayette County Sheriff Randall Johnson. Dunn also wrote a letter to the U.S. Department of Justice, which administers the federal drug forfeiture program, saying that all property “requested on behalf of the sheriff’s department” should be submitted to county finance director Mark Pulliam. “This letter is to notify you that, effective immediately, the contact person authorized to receive forfeited property from the Department of Justice has been changed to the Fayette County Director of Finance, Mark Pulliam,” Dunn wrote. Currently the Justice Department works directly with the Fayette County Sheriff’s Department in providing the seized items and funds. The sheriff’s department operates a drug task force that works local cases in addition to regional cases by cooperating with the federal Drug Enforcement Administration. By participating in DEA busts, the sheriff’s department qualifies for the seized money, which must be spent on items such as equipment, supplies and training. The funds cannot be used to pay salaries. Dunn’s letter to the Justice Department also referred to the sheriff’s department entering a “Federal Equitable Sharing Agreement.” Sheriff Randall Johnson said there is no such agreement in place. “No agreement ever happened about that drug money because it’s not his,” Johnson said Dunn has insisted that he doesn’t want to control the forfeited drug funds, but he wants the funds and property purchased with that money to be fully accounted for. The sheriff’s department made its drug seizure fund purchases available for inspection by Pulliam earlier this year who went through stacks of receipts from purchases, officials said. — Staff Writer John Munford contributed to this article. login to post comments
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