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MISSISSIPPI STATE AUDITOR UPDATE
Mississippi State Auditor Shad White makes a stop in the Golden Triangle.
White has been in office just a little over 100 days.
He was appointed to finish serving the term of former Mississippi State Auditor Stacey Pickering.
White shared with the Lowndes County Republican Women exactly what his office does.
Basically, it serves as the state’s watch dog when it comes to public money.
“If there are small institutions and by that, I mean institutions that have less than 100 employees. You tend to see, nationwide, you tend to see more fraud in those institutions and when fraud happens, it actually ends up being at a higher price tag, than in bigger institutions. Those are nationwide statistics and we see that pattern playing out in Mississippi, too,” says White.
White says he plans on running for state auditor once this term ends.
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President of Jones County supervisors charged with embezzlement, fraud
The President of the Jones County Board of Supervisors was arrested and charged with embezzlement and fraud on Tuesday.
Special agents from State Auditor Shad White’s office arrested Jerome Wyatt after he was indicted by a grand jury on two counts of embezzlement and two counts of fraud, according to White.
Wyatt, representing Beat 5, is accused of embezzling from a youth mentoring program and the sale of a county vehicle and using the funds for personal use. Wyatt was also charged with fraud for authorizing improper overtime payments to county employees.
A news release from the Office of the State Auditor said Wyatt founded “The Gentlemen’s Club” to mentor young men at Laurel Middle School with the goal of providing programming for young men at risk and to fund field trips, blazers for members and incentives for students to maintain grades. The club used an expense account of public funds at the Laurel School District.
White’s office discovered during a routine financial audit of Jones County that Wyatt received personal reimbursement for certain club expenditures from the school district while also submitting reimbursement requests to the county for the same expenditures, according to the release. One example, Wyatt was allegedly reimbursed by the club’s school district account for the catering costs of an event, though the Jones County Board of Supervisors had already paid for the catering.
According to White, Wyatt was converting public funds for personal use.
Wyatt was also indicted for fraud after approving the improper overtime payments to an off-duty county employee who drove the Gentleman’s Club to Alabama for a field trip. The employee was paid by the school district’s expense fund for his work on the trip, but the employee also requested and received overtime pay from the county for the trip after Wyatt approved it, according to the State Auditor.
Wyatt is also accused of embezzling funds received from the sale of a county vehicle. The Board of Supervisors approved the sale of a 1997 Ford F-350 for scrap in May 2017. Later in the year, Wyatt arranged to have the truck sold and scrapped in Lamar County, but the county never received payment from the sale of the truck and eventually alerted the Office of the State Auditor, who determined an individual acting on Wyatt’s behest had been paid for the vehicle.
The fraudulent payments and embezzling amounted to $2,819.70, according to White. Wyatt is responsible for repaying $6,076.46 to account for interest and investigative costs.
If Wyatt is convicted, Wyatt faces up to 45 years in prison and $25,000 in fines.
“Supervisor Wyatt took money dedicated to a mentorship program for young men for his own personal benefit,” said State Auditor Shad White. “Those young men deserve better. Our schools deserve better. The case as a whole shows Wyatt was willing to take advantage of the taxpayers of Jones County, and now he needs to be held accountable. Public offices are not there to provide special benefits to those who hold them. Public officials should serve the people, not use their positions to enrich themselves.”
This indictment is not Wyatt’s first encounter with the Auditor’s Office, according to White. An audit exception in January 2018 regarding reimbursements for travel not related to official duties as a county supervisors was made. The full amount of the exception was paid by Wyatt.
“I also applaud the hard work of District Attorney Buckley in this case and his willingness to bring the case to the grand jury,” said White. “My office is prepared to work with all the district attorneys around the state to hold anyone who embezzles public money accountable, regardless of who you are or where you’re from. Having partners like District Attorney Buckley is critical for accomplishing that mission.”
Wyatt declined to comment on the charges after being released from jail on a $4,000 bond.
The Laurel School District released the following statement: “We were saddened to hear the news of Mr. Wyatt’s indictment. The mentoring program he established was beneficial to our students through the years.”
Judge Dal Williamson said the trial is set to begin on February 6.
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State auditor investigating over $100K in misspent money at…
Tuesday, State Auditor Shad White announced that civil demands were issued to 12 current and former Canton municipal utilities employees.
The demands total $101,829.76 and include principle, interest, and investigative costs.
The following demands were issued:
Kenneth Wayne Jones – $78,612.81
The late Charles Weems – $4,308.00
Cleotha Williams – $3,722.20
Cleveland Anderson – $3,671.15
LC Slaughter – $3,542.02
Charlie Morgan – $2,370.49
John Noble – $1,937.51
Silbrina Wright – $1,239.50
Robert Chinn – $983.57
Simon Collier – $588.90
Miriam Koury – $458.94
Stacey Spencer – $394.67
Former Canton Municipal Utilities Executive Director Kenneth Wayne Jones was issued a demand for $78,612.81, which includes an illegal severance settlement agreement paid by Canton Municipal Authority to Jones, a Samsung LED television, and an Amazon Fire TV Stick.
Severance pay for public officials is prohibited by Mississippi statutes and has been addressed by the Mississippi Attorney General multiple times. Both electronic items were purchased by Jones using a procurement card belonging to Canton Municipal Utilities during his employment and could not be found during a recent asset inventory.
Each board member was issued a demand related to voting to approve personal purchases made by Canton Municipal Utilities employees with a procurement card.
The purchases were approved from November 2015 until November 2017 and included alcohol and gift cards. One demand letter related to this case has not yet been delivered at this time.
“When this many people violate purchasing laws, you have an organization that needs to entirely rethink its practices. Typically we do not have cause to issue this many demands to a single organization, but that is the case here. Ratepayers and others who put their faith in Canton Municipal Utilities need to be made whole, and the people receiving these demands are personally responsible for paying this money back. I applaud our investigative team for working quickly and carefully to bring these problems to light,” said State Auditor Shad White.
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FORMER OLOH VFD TREASURER ARRESTED FOR EMBEZZLEMENT
A former treasurer for the Oloh Fire Department has been arrested for allegedly embezzling thousands of dollars from the organization, including making payments to her personal credit card using the fire department’s bank account.
State Auditor Shad White announced Thursday that Michelle Barefoot was arrested this week by special agents from the Mississippi Office of the State Auditor. The arrest took place after a grand jury assembled by Hal Kittrell, District Attorney for the 15th District Court of Mississippi, returned an indictment for embezzlement against Barefoot.
“The sad truth is that, when you look at fraud statistics around the country, small organizations have more fraud cases and lose more money per fraud than large organizations,” White said in a statement on his website. “Local government has more fraud than state government, according to the Association of Certified Fraud Examiners.
“This case is a classic example of how people can take advantage of small, local entities like a volunteer fire department. We’re going to remain vigilant in identifying and bringing cases like this one to a conclusion.”
The embezzlement case was discovered in the Audits Exception Report, which White released in August. The report shows that White has issued 43 demands to recover almost $3 million in misappropriated funds from organizations throughout the state, including more than $422,000 from the Hattiesburg Tourism Commission, as well as other funds from the Mississippi Military Department, N.R. Burger Middle School, the Oloh VFD and a former Lamar County Deputy Tax Collector.
The report states that Oloh Fire Department was issued a formal demand in August 2017 in the amount of $40,693.84 for misappropriation of funds on Barefoot’s part. For Fiscal Year 2018, payment of $22,993.89 – the principal amount of the demand – was received from Barefoot’s insurance company, leaving a balance of $17,699.95.
Barefoot was released from her position at the fire department in March 2012, when she failed to provide requested financial records after it was discovered she had used the company’s bank account between November 2010 and February 2012 to pay her credit card.
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Former Coldwater town clerk accused of stealing $116K
A former town clerk in northwest Mississippi has been indicted on charges that he stole $116,000 in town money.
George Nangah was clerk in the 1,700-resident town of Coldwater from 2014 until he was fired in July 2017. Nangah, a 51-year-old resident of Cordova, Tennessee, was indicted in August on 14 counts of wire fraud. That indictment was unsealed Sept. 19, but Nangah wasn’t arrested until Friday in Tunica County.
U.S. Magistrate Judge Roy Percy, in a Tuesday hearing in federal court in Oxford, ordered Nangah jailed pending a Thursday hearing. Assistant Public Defender Greg Park declined to comment on Nangah’s guilt or innocence. He said defense lawyers haven’t seen the evidence in the case yet. Park said Nangah wants to be released on bail.
The indictment alleges Nangah used a debit card connected to the town’s bank account to buy items at Lowe’s and set up a town charge account at Best Buy, using it to buy gift cards and merchandise. Prosecutors said none of the purchases were for the town and state Auditor Shad White said Nangah bought a GoPro camera and gift cards for airline tickets and hotels.
Prosecutors also allege Nangah paid himself directly from town bank accounts and paid an unnamed third party who would then pay kickbacks to Nangah. White said Nangah paid $46,000 to himself and $53,000 to the other person.
If convicted, Nangah faces up to 20 years in federal prison and up to a $250,000 fine.
White said he is also referring Nangah’s case for state prosecution on embezzlement charges.
“We will crack down on any embezzlement at any level of government,” White said in a statement.
In addition to the $116,000 that prosecutors say Nangah stole, White said auditors found that Nangah made $100,000 worth of improper payments that weren’t approved by town aldermen.
White filed a civil demand against Nangah demanding he repay nearly $303,000, including the amount White says he embezzled, the unapproved payments and the cost of the investigation and interest costs.
If Nangah doesn’t pay the money within 30 days, White could sue him in a civil lawsuit. Nangah also had a surety bond, and White is demanding payment from the bonding company.
Coldwater Mayor Jessie Edwards didn’t immediately return a phone call seeking comment on Wednesday.
News
State auditor report slams state Board of Dental Examiners…
A state auditor’s report slams the state board that licenses and regulates dentists for mismanagement and urges more oversight.
The compliance audit of the Mississippi State Board of Dental Examiners details what state Auditor Shad White called alarming management practices including evidence that board staff was allowed to consume alcohol on the job.
“What we found at the Dental Board is an example of particularly bad management,” White said The staff at the board failed to follow proper procedures when making purchases, failed to separate purchasing duties (which can lead to fraud), held cash that should have been deposited for too long, failed to follow proper bookkeeping procedures, and accumulated excessive comp time.”
The report details findings related to the current board members, former executive director and several other employees.
Findings of the report:
The executive director of the agency operates with nearly complete autonomy from effectively no oversight being exercised by the board of directors
Many instances of noncompliance with state law related to travel card purchases and reimbursements for travel were found
Board meeting minutes were not properly approved, signed or posted in several instances
Payments for contracted services and commodities were processed incorrectly.
Cash and check payments received for licenses were not deposited in a timely fashion, which could lead to fraud and abuse. A log of cash receipts was not kept, which allowed cash to remain unattended in the office for three months
Several instances of unauthorized and excessive amounts of compensatory leave were awarded to the former executive director and deputy executive director
Multiple employees received insurance coverage that differed from the coverage plan indicated in Statewide Personnel and Human Resource System filings.
In July, longtime executive director Diane Howell abruptly resigned after a lengthy executive board meeting. She had been there 24 years.
When asked Monday if the board officially fired Howell, Board President Dr. Frank Conaway Jr., a Bay St. Louis dentist, said it was personnel matter and wouldn’t discuss it further.
Conaway said Monday of the audit report: “it says what it says. The report pointed out some things and we corrected them.” He wouldn’t make any other comment.
The board is seeking applicants for the executive director’s position, but questions arose about whether the board was lowering qualifications for the position.
The posted qualifications said a person with a high school diploma or GED and related experience could be considered for the job, which pays a maximum salary of $90,000 a year.
The then-deputy director didn’t have a college degree, which led to speculation that she could move into the executive director’s position. However, the deputy director, who was serving as interim executive director, abruptly resigned last week prior to the release of the auditor’s report. Her resignation is effective September 30.
The dental board had an executive meeting on Friday on the executive director’s position.
Conaway said last month about 20 applicants had applied for the position. He said the minimum qualification language was taken from the old job application for executive director when Howell was hired.
White said the auditor’s office also found evidence that the staff was allowed to consume alcohol during work hours.
“Going forward, the board needs to choose its director carefully and then engage in closer oversight of the staff,” White said. “The taxpayers and licensees funding the board deserve better. I also hope this audit reminds the boards of other small agencies to take a closer look at how those agencies are being run and to engage in closer oversight if necessary.”
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Preventing embezzlement; State Auditor Calls for internal auditors
After nearly $1 million embezzled from Coahoma Community College, Auditor’s report describes how higher education can prevent future fraud.
Today, State Auditor Shad White released a report showing that, while all Mississippi four-year universities have internal auditors, no Mississippi community colleges employ internal auditors. The report recommends changes to state law to address that issue and describes other measures to help prevent fraud in higher education.
The study released today was designed to test how well Mississippi community colleges and universities comply with the Internal Audit Act of 2003. “This report produced by our performance audit division is alarming after our investigation into the embezzlement at Coahoma Community College. Internal auditors at community colleges can help prevent future embezzlements like Coahoma’s, and my goal is to prevent embezzlement from happening in the first place,” said State Auditor White.
The Office of the State Auditor reviewed internal audit procedures for each of the nine universities and the fifteen community colleges mentioned in the Act, which states these institutions “shall, subject to specific appropriation of available funding, employ an agency internal audit director.” Mississippi community colleges have argued that they have never been given “specific appropriation[s]” for internal auditors and therefore do not employ them.
The auditor’s office will propose legislation this coming session that would remove the “subject to specific appropriation” language from the Act, requiring internal auditors at all Mississippi community colleges and universities.
The auditor’s report also mentions ways other states ensure internal audits are conducted. Fifteen other states’ laws were reviewed, and six of those states require various public entities or agencies to hire internal auditors.
While some Mississippi community colleges reported hiring private firms to evaluate internal controls or having internal audit duties performed by staff in addition to normal duties, having a standalone internal auditor is a stronger means of preventing fraud. “Having internal auditors on staff, working with community colleges every day, is an important measure to prevent embezzlement like what we saw in Coahoma County,” said White.
In September 2018, State Auditor White issued a nearly $1 million demand for embezzlement against two former Coahoma Community College employees. These two individuals in the community college’s purchasing office were able to embezzle undetected for four years until a whistleblower reported suspicious activity.
During the study, auditors also discovered that no universities have peer reviews of their audits. Peer reviews involve outside auditors completing a review of the auditing methods of the universities’ audit divisions. These reviews are common practice for the Institute of Internal Auditors, and the State Auditor’s office itself undergoes peer review from out-of-state auditors. After this recommendation from the State Auditor, the Institutions of Higher Learning Internal Audit Department has prioritized establishing a peer review program for universities under its jurisdiction.
“We will continue to maintain a zero tolerance policy toward embezzlement and theft of public money. But we also want to stop theft before it starts. I hope this report will help our public institutions put protections into place to prevent that theft before it happens. Our students and communities cannot afford more million dollar losses to fraud. It isn’t fair to those students and the taxpayers, so we must be vigilant in stopping it,” said White.