Special Report - Arkansas Times€¦ · provided by elected Prosecuting Attorneys of the State’s twenty-eight judicial ... federal and state circuit court orders, and audit

ARKANSAS DIVISION OF LEGISLATIVE AUDIT 172 State Capitol, Little Rock, AR 72201 Phone: 501-683-8600 Fax: 501-683-8605 www.arklegaudit.gov

Report ID: IRPA02811 Report Date: June 30, 2011

INTRODUCTION This report is issued to provide Legislative Joint Auditing Committee (LJAC) a summary of disposition reports provided by elected Prosecuting Attorneys of the State’s twenty-eight judicial districts. A map of judicial districts is provided on page 3. BACKGROUND Arkansas Code Annotated (Code) § 10-4-419, provided in Appendix A, requires the Legislative Auditor to notify applicable prosecuting attorneys of audit reports reflecting apparent unauthorized disbursements or unaccounted for funds or property by a public official or employee. The Legislative Auditor also refers apparent conflicts with various state ethics laws to the appropriate prosecuting attorney. Ark. Code Ann. § 10-4-419 stipulates prosecuting attorneys shall report to LJAC, by June 30 of each year, the status or disposition of any matter referred to them by the Legislative Auditor on behalf of LJAC. Further, Ark. Code Ann. § 21-2-708 directs LJAC to notify the Arkansas Governmental Bonding Board (Board) of audit reports reflecting apparent improper transactions for which a public official, officer, or employee may be liable. After a prosecutor has disposed of a matter referred by LJAC, the Board determines whether a loss is covered by Arkansas Self-Insured Fidelity Bond Program. In response to LJAC’s request to formalize interaction, relating to “white collar crime,” among Legislative Audit, Arkansas State Police, and Prosecuting Attorneys, the parties agreed to a Memorandum of Understanding, approved by LJAC on July 14, 2006, presented in Appendix B. OBJECTIVES Objectives in preparing this special report were to:

Compile responses from each Prosecuting Attorney concerning all matters referred them by the Legislative Auditor on behalf of LJAC;

Provide information of special interest to LJAC; and

Present disposition reports in a concise manner for LJAC.

Prosecuting Attorneys

Disposition of Matters Referred by Legislative Joint Auditing Committee January 1, 2010 through December 31, 2010

Special Report Legislative Joint Auditing Committee

October 14, 2011

2

SCOPE AND METHODOLOGY Disposition information submitted by Prosecuting Attorneys was compiled for the period January 1, 2010 through December 31, 2010. Matters referred to prosecuting attorneys prior to January 1, 2010, but unresolved as of the previous special report date of June 30, 2010 are also included in the report. To facilitate the reporting process, information related to referred matters was provided each Prosecutor. Relevant Code, federal and state circuit court orders, and audit related files were reviewed. In addition, Board approved bond payments from Arkansas Fidelity Bond Trust Fund are disclosed in this report. The methodology used in conducting this review was developed uniquely to address the stated objectives; therefore, this review was more limited in scope than an audit or attestation engagement performed in accordance with Government Auditing Standards issued by the Comptroller General of the United States. MATTERS REFERRED TO PROSECUTING ATTORNEYS Each audit report referred to the applicable Prosecutor is listed by judicial district on pages 8 through 68. Individual matters are briefly summarized with Bond Trust Fund payments included, if applicable, followed by the status or disposition provided by the appropriate Prosecuting Attorney. A summary of disposition of matters referred to Prosecuting Attorneys is presented in Exhibit I on pages 4 and 5. Also provided in Exhibit I are the dollar amounts, if applicable, disclosed in audit findings of matters referred. Of the 223 matters in which disposition reports were requested, the LJAC referred 153 matters to the State’s Prosecuting Attorneys during the period January 1, 2010 through December 31, 2010. The remaining 70 matters were referred, but not resolved, prior to 2010.

ITEMS OF SPECIAL INTEREST TO LJAC Prosecution Declined Of special interest to LJAC are instances in which the individual responsible for the improper transaction(s) reimbursed the public entity, but no charges were filed. The Second Judicial District Prosecuting Attorney did not pursue criminal charges in one matter for which repayment of $4,902 was made, by City of Keiser Recorder/Treasurer, for unauthorized compensation. Court-Ordered Sentences Imposed Court-ordered sentences imposed for cases in which a conviction was obtained is also of particular interest to LJAC. Criminal charges were filed in 40 of 223 matters referred to a Prosecutor. Five cases are pending in court, two cases were dismissed, and the remaining 33 cases, in which a conviction was obtained and sentence imposed, are listed, by judicial district, in Exhibit II on page 6. Information provided includes: Entity audited.

Type of matter referred.

Amount of improper transaction(s).

Position of employee or elected official against whom charges were filed.

Plea of defendant.

Court-ordered sentence. The terms of a defendant’s court-ordered sentence, also presented in Exhibit II on page 6, include: Time, in months, of incarceration, probation,

and suspended imposition of a sentence.

Hours of community service.

Fines, court costs, restitution, and audit costs. Defendants entered pleas of no contest or guilty in all but 4 of the 33 cases in which a conviction was obtained.

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Source: Arkansas Judicial Directory

Arkansas Judicial Districts Counties Comprising Each District

Of the 33 cases in which a conviction was obtained, 27 were disposed of in state circuit courts and 6 were resolved in federal court.

Information relating to the matters referred to, and disposition of those matters by, the State’s

Prosecuting Attorneys are referenced below by judicial districts and the starting page numbers.

A map of counties comprising each judicial district is also presented.

Judicial District Page Judicial District Page

First 8 Twelfth 42Second 13 Thirteenth 43Third 20 Fourteenth 46Fourth 22 Fifteenth 50Fifth 23 Sixteenth 52Sixth 24 Seventeenth 53Seventh 31 Eighteenth East 55Eighth North 32 Eighteenth West 56Eighth South 34 Nineteenth East 57Ninth East 36 Nineteenth West 58Ninth West 37 Twentieth 59Tenth 38 Twenty-first 65Eleventh East 39 Twenty-second 66Eleventh West 40 Twenty-third 67

4

Number ofMatters Charges Acquitted/ Insufficient Under

Judicial Referred Filed Conviction Pending Dismissed Prosecution Evidence Ethics ReviewDistrict (Note 1) (a+b+c) a b c Declined (Note 2) Violation (Note 3)

1st 23 2 2 8 4 9$9,249 $103,592 $48,433 $367,664

2nd 38 43 2 1 1 14 6 14

$743,434 $24,112 $4,902 130,587 32,840 138,607

3rd 11 0 3 7 1244,199 40,591 5,607

4th 1 1 1126,149

5th 1 1 17,725

6th 37 7 7 12 2 16775,302 441,997 1,999 219,476

7th 3 1 1 2

202,113 1,118

8th N 3 0 2 111,345 2,270

8th S 6 2 2 3 1131,414 37,549

9th E 3 0 1 21,170 18,756

9th W 2 1 1 1 844,897 812

10th 5 1 1 2 229,250 338 596

11th E 1 1 10,151

11th W 3 1 1 25,880 25,055

12th 2 1 11,000 4,000

13th 14 1 1 8 557,204 187,119 25,210

14th 12 4 4 3 3 281,707 94,840 15,684 5,026

15th 7 3 3 4 60,850 3,535

16th 4 1 1 230,225 43,134

Exhibit I

Prosecuting AttorneysSummary of Disposition Reports of Matters Referred by Legislative Joint Auditing Committee

For the Period January 1, 2010 through December 31,2010

Case Results Charges Not Filed

5

Number ofMatters Charges Acquitted/ Insufficient Under

Judicial Referred Filed Conviction Pending Dismissed Prosecution Evidence Ethics ReviewDistrict (Note 1) (a+b+c) a b c Declined (Note 2) Violation (Note 3)

17th 9 3 2 1 1 3 2$11,839 $869 $1,122 $19,395 $998

18th E 3 1 1 1 160,094 1,100 15,248

18th W 1 1 9,560

19th E 0

19th W 1 13,090

20th 17 5 3 2 6 6540,884 14,267 131,611 176,887

21st 4 1 1 39,157 40,250

22nd 7 1 1 679,636 18,787

23rd 5 1 1 2 267,224 2,588 1,428

Matters Charges Acquitted/ Insufficient Under

Referred Filed Conviction Pending Dismissed Prosecution Evidence Ethics Review(Note 1) (a+b+c) a b c Declined (Note 2) Violation (Note 3)

Totals 223 40 33 5 2 1 82 42 58

$3,575,442 $241,361 $9,249 $4,902 $1,446,730 $251,602 $1,018,257

Note 1: Includes matters referred in previous years

Note 2: Prosecutor indicated evidence was not sufficient to sustain a criminal case

Note 3: Matter is under review by a law enforcement agency

Note 4: Dollar amounts reflect, in most instances referred amount, if applicable

Totals (Note 4)

Source: Prosecuting Attorneys' disposition reports

Exhibit I

Prosecuting AttorneysSummary of Disposition Reports of Matters Referred by Legislative Joint Auditing Committee

For the Period January 1, 2010 through December 31,2010

Case Results Charges Not Filed

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Judicial District Population: 93,718 Fletcher Long, Jr. Circuit Judges: 5 Prosecuting Attorney

Matters Reported by Legislative Joint Auditing Committee

Lee County

City of Marianna (Audit Period: 1/1/09 - 12/31/09):

2010 $1,692 salary advances to Clerk/Treasurer.

Status per Prosecuting Attorney: Noted the salary advances to the City Clerk/Treasurer and the reimbursement for the same. No action is required.

City of Marianna (Audit Period: 1/1/08 - 12/31/08):

2010 $8,000 undocumented disbursements to paving contractor.

Status per Prosecuting Attorney: Prosecuting Attorney contacted the Mayor’s Office to inquire about the $8,000 payment made to a contractor beyond the contract terms without supporting documentation. The City provided him a letter dated October 5, 2010, from the contractor and a receipt to the contractor from the City reflecting repayment to the City of the aforesaid $8,000.

Phillips County

Barton-Lexa School District (Audit Period: 7/1/08 - 6/30/09):

2010 $5,183 improper disbursements to, or on behalf of, Superintendent for unused sick leave in apparent conflict with District policy ($5,100) and items purchased which did not have a District purpose ($83). Of this amount, $63 has been reimbursed.

Status per Prosecuting Attorney: The dispute regarding the $5,100 for unused sick leave which Mr. Vent caused to be paid himself seems to revolve around whether Vent was authorized to receive this $5,100 because he had given due notice of his retirement, or whether he was entitled to receive the money only upon separation from service as well as retirement. The resolution of this dispute falls back on the district policy which states “retiring teachers will be paid for unused sick leave.” Obviously, Mr. Vent was retiring. The practice of the district, however, was to pay employees for unused sick leave only upon actual separation from service to the district. Mr. Vent has not been formally separated from service. This is a conflict that will have to be resolved by a court, and I cannot say that the payment to Mr. Vent involves a violation of the criminal law. Case is closed until additional facts are provided.

First Judicial District Cross, Lee, Monroe, Phillips, St. Francis, and Woodruff Counties

9

1st Judicial District (continued)

Phillips County

Barton-Lexa School District (Audit Period: 7/1/08 - 6/30/09) (continued):

2010 $1,400 unauthorized compensation to District Treasurer ($700) and Superintendent’s Secretary ($700).

Status per Prosecuting Attorney: From the language of Legislative Audit’s letter to the Prosecuting Attorney, there is no question that the District Treasurer and the Superintendent’s secretary performed the service in question. The shortcoming is that the additional service was not approved by the board, and the board did not request a deviation from the ethics law. I do not think this will occur again, and do not intend to take any further action on it. Case is closed.

$3,044 conflict of interest disbursements to a Board member’s spouse.

Status per Prosecuting Attorney: I think that this matter has rectified itself and I do not believe that it will be reoccurring. Apparently the services were genuinely rendered and were necessary. Case is closed.

City of Helena-West Helena (Audit Period: 1/1/08 - 12/31/09):

2010 $20,424 improper disbursements to Mayor ($1,955), Treasurer ($2,413), former Alderman ($79), employees ($13,401), and vendors and other organizations ($2,576).

$3,666 Mayor’s checks for reimbursement of improper disbursements were returned by bank for insufficient funds and remain uncollected.

$68,797 paid to various hotels, restaurants, businesses, organizations, and individuals without adequate documentation or documented business purpose.

$543 improper disbursements for parties.

$180,215 disbursements paid by debit card rather than prenumbered checks, in conflict with state law, and majority of debit card activity was not recorded in City’s ledger.

$10,491 improper disbursements for videotaping City Council meetings and copying videos after the City Council voted to discontinue paying video-related expenditures.

$2,000 improper disbursements for donations to two organizations.

$23,005 undeposited bond and fine receipts. Sarah Angel, Bond and Fine Clerk, admitted misappropriating funds for personal use.

$58,523 conflict of interest disbursements to employees ($5,620), employee-owned businesses ($26,970), business owned by City Inspector ($18,933), and City Clerk’s son ($7,000).

Status per Prosecuting Attorney: The matter of the 1/1/08 – 12/31/09 audit is under active investigation by the Arkansas State Police. The matter was given to an investigator after a conference between Prosecutor, Legislative Audit personnel, and Arkansas State Police Special Agent. As soon as the results of the investigation are submitted, Prosecutor will report that fact to Legislative Audit as well as any intentions in regard to the matter.


10


Phillips County (continued)

City of Helena-West Helena (Audit Period: 1/1/07 - 6/30/09):

2009 City was not in compliance with Ark. Code Ann. §§ 14-59-101 to -118 regarding proper accounting procedures for municipalities as noted below:

Cash receipt and disbursement journals were not properly maintained.

Monthly bank statements were not presented to City Council. Six-month financial statements were not prepared nor published. Accounting records were not auditable at engagement start date.

Status per Prosecuting Attorney: The Treasurer lost his bid for re-election and since his most serious sanction is for his failure to keep the records charges in this case was removal from office, it was deemed to moot and the case dismissed.

Helena-West Helena School District (Audit Period: 7/1/08 - 6/30/09):

2010 $34,781 improper disbursements to Superintendent ($735), Interim Business Manager ($236), five Board members ($1,058), and 100 employees ($32,752). Disbursements consisted of items not documented for a public purpose, travel advances not subsequently documented, alcoholic beverages, and expenses incurred for personal excursions of Board members while attending a National School Boards Association conference.

$52,536 undocumented disbursements to restaurants and other businesses while personnel were in business travel status. Note: Arkansas Department of Education took control of the District on June 20, 2011. Status per Prosecuting Attorney: It seems Superintendent Willie C. Williams’ plan of corrective action appropriately addresses the negative findings by Legislative Audit. It is my opinion that no further action is required by my office. Case is closed.


2007 $1,458 unauthorized salary disbursements to former Superintendent Shirley T. J. Graham.

Status per Prosecuting Attorney: The case against Shirley Graham has been dismissed as they were unable to locate a witness in the State of New York who could testify as to her non-attendance at the conference for which she claimed expenses. Furthermore, one of these school district cases was tried to a jury and the jury returned a unanimous verdict of acquittal after about 45 minutes deliberation. I did not anticipate and do not anticipate that there would be any different result as to the other school district officials, and therefore, did not see the sense in wasting the time and money of Circuit Court personnel to futilely try a defendant who will be acquitted.


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Phillips County (continued)


2005 $7,791 unauthorized salary disbursements to Shirley T. J. Graham, former Superintendent.

Status per Prosecuting Attorney: Same response as page 10.

St. Francis County

Palestine-Wheatley School District (Audit Period: 7/1/08 - 6/30/09):

2010 $43,964 conflict of interest disbursements to Superintendent’s spouse ($42,844) and District Treasurer’s spouse ($1,120) without Board resolution or Department of Education approval.

Status per Prosecuting Attorney: The Prosecuting Attorney has spoken to the present Superintendent of the Palestine-Wheatley School District and has been told that the Palestine-Wheatley School Board of Directors had approved the contract for the speech therapy services rendered by the Superintendent’s spouse. Prosecuting Attorney has advised the Superintendent that it will be necessary for the School Board of Directors to pass a specific resolution approving retroactively the services and specifying the reason why it was necessary to purchase those services from the Superintendent’s spouse.

Prosecuting Attorney also spoke to the Superintendent about payment of services for $1,120 to the District Treasurer’s spouse. The District had a structure that was destroyed by fire and it was necessary to remove the slab from the school premises. The school district contracted with the Treasurer’s spouse for these services because it was important to get the job done immediately. Prosecuting Attorney was told that no one else was available to perform the services for a price equal to or less than that paid to the District Treasurer’s spouse. The Board of Directors is also to pass a resolution retroactively approving this expenditure and recognizing the facts as set out in this paragraph.

Assuming that the Board of Directors takes the action specified in this letter, and assuming that they properly notify the State Board of Education as to their actions in regard to the speech therapy services, then Prosecutor sees no further need for any action in regard to these matters. Case is closed.


12


Woodruff County

Town of Widener (Audit Period: 1/1/05 - 12/31/07):

2008 $5,404 alleged fuel theft that was not reported to an applicable law enforcement agency.

$625 unauthorized disbursements to Mayor. Fully reimbursed.

$800 improper compensation to employee for work performed on private property using Town equipment during normal working hours. Status per Prosecuting Attorney: There will be no further developments in relation to the theft charge until and unless a suspected culprit is developed and Prosecutor doubts this will happen at this late date. The matters relating to the Mayor and the Mayor’s employee are ethics matters and there will no action taken in regard to that.

Note: No matters were reported in Cross and Monroe Counties.


13

Scott Ellington (Current) Judicial District Population: 276,581 Michael Walden (2010) Circuit Judges: 11 Prosecuting Attorney


Clay County

Town of Datto (Audit Period: 1/1/08 - 12/31/09):

2010 $576 conflict of interest disbursements to Mayor without an authorizing ordinance.

Status per Prosecuting Attorney: Ethics matter currently under review.

City of St. Francis (Audit Period: 1/1/08 - 12/31/09):

2010 $911 conflict of interest disbursements to Mayor ($610), Mayor’s spouse ($206), and Recorder/Treasurer ($95) without an authorizing ordinance.

Status per Prosecuting Attorney: Authorizing ordinance received from City of St. Francis approving payment. This matter is concluded and satisfactorily resolved.

Craighead County

Arkansas State University - Childhood Development Associate Program (CDA) (Audit Period: 8/7/02 - 8/7/09):

2010 $747,190 misappropriated fees. CDA Program Coordinator Virginia

DeMaine identified as responsible individual. Bond Trust Fund reimbursed losses totaling $249,000.

Status per Prosecuting Attorney: DeMaine pled guilty to mail fraud and money laundering in federal court and was sentenced to 41 months imprisonment on each count, to run concurrently. Upon release from prison, DeMaine will be on supervised release for three years. Restitution of $733,009 was also ordered.

Arkansas State University System (Audit Period: 7/1/09 - 6/30/10):

2010 $84,034 unauthorized payments for unused sick leave to non-classified employees upon their retirement from the University.

Status per Prosecuting Attorney: Arkansas State Legislature has taken corrective measure by passing Senate Bill 354 which amends Ark. Code Ann. § 21-4-505, which addresses this issue. Case is closed.

Second Judicial District Clay, Craighead, Crittenden, Greene, Mississippi, and Poinsett Counties

14

2nd Judicial District (continued)


Craighead County (continued)

City of Caraway (Audit Period: 1/1/08 - 12/31/09):

2010 $2,350 improper disbursements for donations to private entities.

Status per Prosecuting Attorney: Correspondence received from Mayor advising that the city sponsored activities for educational purposes. The use of the word “donation” was not appropriate and the city believes that contributing to the education of its people benefits the city and its population. No further action to be taken.

Craighead County (Audit Period: 1/1/08 - 12/31/08):

2010 $5,578 jail commissary fund receipts not deposited. Of this amount, $1,500 was reimbursed. Sheriff’s Office Manager, who resigned from employment, was custodian of these funds.

Status per Prosecuting Attorney: Prosecutor declined to file a criminal charge in the matter. Due to the failure to segregate duties and the lack of internal controls in this matter, Prosecuting Attorney does not feel pursuing this matter in criminal court could be justified. Many persons may well have access to these funds, with many of those being jail inmates. Success at jury trial with the State’s burden of proof would be extremely difficult at best.

Crittenden County

Town of Anthonyville (Audit Period: 1/1/07 - 12/31/08): 2010 $1,343 undocumented reimbursements to Mayor ($986) and

Recorder/Treasurer ($357).

$8,539 undocumented credit card payments.

$992 improper disbursements for purchases not for Town purposes.

$341 improper disbursements for flowers and partial payment of funeral expenses.

Status per Prosecuting Attorney: City ordinance approving payments of $8,539 to the Mayor and Recorder/Treasurer. There was also language stating the city would repay the street account for expenditures not street related, but $1,684 was not addressed. Because the city has been put on notice regarding disbursements for flowers and undocumented reimbursements and because of the age of this infraction, this matter will be closed with no further action taken.

15



Crittenden County (continued)

City of Gilmore (Audit Period: 1/1/05 - 1/7/09):

2009 $797 improper expenditure for a holiday meal for City officials/employees and their family members.

$1,440 unauthorized compensation to Payroll Clerk Cathy Moore.

$17,548 disbursement for purchase of a building the Mayor acquired for nonbusiness purpose. Subsequently, the Mayor reimbursed $13,994, leaving a balance of $3,554 due the City.

$1,300 conflict of interest disbursements to an alderman for labor costs without an authorizing ordinance.

The Council established, by ordinance, a police court in 1993. Section 19 of Amendment No. 80 to the Arkansas Constitution removed the constitutional basis for police court jurisdiction effective January 1, 2005. However, the Court continued to function until October 2006. Police citations are adjudicated in the Marion District Court. The Judge was compensated $15,600 during the period January 1, 2005 through March 1, 2008, of which $6,800 was paid after the Court ceased to operate in October 2006.

Status per Prosecuting Attorney: Letter was sent to Mayor instructing him to take immediate action to correct the problem and provide proof of such correction. The Mayor has made no response. As of August 2011, no additional correspondence received from the City of Gilmore. The matter justifies further investigation by local law enforcement. The matter is considered pending at this time, subject to said investigation.

Town of Jennette (Audit Period: 1/1/07 - 12/31/08):

2009 $2,865 conflict of interest disbursements to Council member’s son for mowing ($1,980) and Mayor for contract labor ($885) without an authorizing ordinance.

$40,126 undocumented disbursements for 2008 ($29,275) and 2007 ($10,851).

$2,010 undocumented reimbursements to Recorder/Treasurer ($1,120) and Mayor ($890).

$9,360 inadequately documented vehicle mileage reimbursement to Mayor in 2007. Travel reimbursement forms included mileage for 22 weekend days.

$3,158 inadequately documented vehicle mileage reimbursement to the Recorder/Treasurer in 2007. Travel reimbursement forms included mileage for four trips to the same location on the same weekend day.

$20,009 undocumented vehicle mileage expense reimbursements to the Mayor ($13,862) and Recorder/Treasurer ($6,147) in 2008.

Status per Prosecuting Attorney: These matters are the subject of an ongoing Arkansas State Police investigation. Recorder/Treasurer resigned from office and did not run for re-election. Theft of property charges were filed against Recorder/Treasurer, who pled guilty. Restitution of $5,118 was ordered, in monthly installments of $167 and probation of 36 monthly. The Mayor did not run for re-election.

16




Town of Jennette (Audit Period: 1/1/07 - 12/31/08) (continued):

Status per Prosecuting Attorney (continued): Mayor was charged and a criminal case is pending in Crittenden County Circuit Court.

Town of Jennette (Audit Period: 1/1/06 - 12/31/06):

2008 $1,472 undocumented and conflict of interest disbursements to Mayor

($1,320), Recorder/Treasurer ($50), and a Council member ($102).

$22,615 undocumented disbursements to a home project contractor ($17,956) and various other individuals/vendors ($4,659).

Status per Prosecuting Attorney: See response on page 15.

Town of Jericho (Audit Period: 1/1/09 - 12/31/09):

2010 $18,389 inadequately documented disbursements to, or endorsed by, Mayor ($15,142) and to Police Chief ($3,247).

Status per Prosecuting Attorney: The Town of Jericho is the subject of an ongoing Arkansas State Police investigation. No charging decision has been made as yet.


2009 $16,545 inadequately documented disbursements of which $3,923 was

paid to the Mayor and $950 to the Police Chief.

Status per Prosecuting Attorney: The Town of Jericho is the subject of an ongoing Arkansas State Police investigation. No charging decision has been made as yet.


2008 $12,692 unauthorized compensation payments to elected officials

($9,300) and undocumented disbursements ($3,392) to elected officials and other vendors/individuals. Payments made to Mayor ($5,250), Recorder/Treasurer ($2,200), Council members ($3,975), Fire Chief ($225), other vendor/individuals ($642), and cash ($400).

Status per Prosecuting Attorney: The Town of Jericho was investigated and after review of the criminal investigation, a determination was made by previous prosecuting attorney not to prosecute the Mayor.

17




Town of Sunset (Audit Period: 1/1/07 - 12/31/08):

2009 Violations of certain fiscal responsibility and management laws as defined and applied to municipalities by Ark. Code Ann. § 14-77-102(2)(B).

Status per Prosecuting Attorney: The City of Sunset passed an ordinance allowing the employment of family members, and the mayor reimbursed the city for health premiums not withheld from his pay. By receiving letter from Legislative Audit, the City was put on notice that donations to individuals and churches are not appropriate.

City of Turrell (Audit Period: 1/1/07 - 12/31/08):

2009 $2,235 unauthorized compensation to Court Clerk ($960) and

Bookkeeper ($1,275) without an authorizing ordinance.

$1,775 unauthorized bonuses to Mayor ($500), Bookkeeper ($375), and eight other employees ($900) without Council approval. The Council voted not to retroactively approve the bonuses. Subsequently, the Council adopted motion for employees to repay bonuses to City, but no payments have been received.

$3,627 improper credit card charges for fuel placed in personal vehicles of Mayor ($1,745), Bookkeeper ($1,313), and Court Clerk ($569).

Status per Prosecuting Attorney: The City of Turrell is the subject of an ongoing Arkansas State Police investigation. The investigation resulted in the Prosecuting Attorney’s Office pursuing legal action to have the Mayor removed from office for nonfeasance. However, the mayor resigned from office. Because of the acrimonious relationship between the former mayor and the former city council, the previous prosecuting attorney, with assistance from deputy prosecutor, determined that no criminal charges should be filed in this case.

18



Greene County

Greene County Technical School District (Audit Period: 7/1/08 - 6/30/09):

2010 $4,534 child care program fees not deposited. A District management investigation was inconclusive as to custodian. Subsequently, $3,724 was recovered from parents who replaced checks that were not deposited.

Status per Prosecuting Attorney: Prior Prosecuting Attorney determined that the funds were lost, or that no determination could be made regarding the loss of the remaining uncollected funds, therefore no further action would be taken unless a suspect surfaces.

City of Oak Grove Heights (Audit Period: 1/1/07 - 12/31/08):

2010 $1,880 conflict of interest disbursements to Marshal without an authorizing ordinance.

Status per Prosecuting Attorney: The City of Oak Grove Heights passed an ordinance authorizing the payment. No further action will be taken.

Mississippi County

Armorel School District (Audit Period: 7/1/08 - 6/30/09):

2010 $2,547 improper disbursements to three classified employees, each with a 260 day contract, for overtime. The employees received overtime compensation for holidays, snow days, and Christmas and Spring breaks.

Status per Prosecuting Attorney: Prior Prosecuting Attorney forwarded Legislative Audit correspondence to Armorel School District thereby putting the school district on notice that such payments were not appropriate. The file was then closed because collection of the stated payments from employees’ wages would likely occur and no criminal wrong doing was apparent. No further action will be taken.

Town of Etowah (Audit Period: 1/1/08 - 12/31/08):

2010 $4,487 conflict of interest disbursements to Mayor’s mother without an authorizing ordinance.

Status per Prosecuting Attorney: The Town of Etowah passed an ordinance approving the employment of family members of city officials. No further action will be taken.

City of Keiser (Audit Period: 1/1/08 - 12/31/09):

2010 $4,902 unauthorized compensation to Recorder/Treasurer who prepared the payroll.

Status per Prosecuting Attorney: The City of Keiser was reimbursed the amount of $4,902 by the Recorder/Treasurer. Prior Prosecuting Attorney decided not to file charges against the recorder/treasurer since full restitution was made.

19



Poinsett County

City of Fisher (Audit Period: 1/1/07 - 12/31/08):

2010 $21,536 conflict of interest disbursements to Recorder/Treasurer without an authorizing ordinance.

Status per Prosecuting Attorney: City of Fisher responded to Legislative Audit finding regarding payment to the Recorder/Treasurer. In the City’s response the mayor provided a copy of an ordinance passed in 2005 which city officials believe approved payments of this nature. This matter will remain under review for further determinations to be made if necessary.

City of Lepanto (Audit Period: 1/1/08 - 12/31/09):

2010 $1,043 improper credit card charges for fuel purchased and placed in Mayor’s personal vehicle.

$603 conflict of interest disbursements to Police Chief without an auth-orizing ordinance.

Status per Prosecuting Attorney: This matter is pending and warrants further investigation.

City of Trumann (Audit Period: 1/1/08 - 12/31/09):

2010 $3,450 conflict of interest disbursements to Clerk/Treasurer’s husband without an authorizing ordinance.

Status per Prosecuting Attorney: The City of Trumann passed an ordinance authorizing the disbursements.

Weiner School District (Audit Period: 7/1/08 - 6/30/09): 2010 $22,698 undocumented credit card charges.

Note: Wiener School District was annexed on July 1, 2010 by the Harrisburg School District.

Status per Prosecuting Attorney: This remains pending and warrants further investigation.

20

Judicial District Population: 70,645 Henry H. Boyce Circuit Judges: 3 Prosecuting Attorney


Jackson County City of Campbell Station (Audit Period: 1/1/07 - 12/31/09):

2010 $16,800 conflict of interest disbursements to Council member’s spouse without an authorizing ordinance.

Status per Prosecuting Attorney: Although the procedures to authorize these payments may have been statutorily improper, this office does not consider there to be any criminal intent underlying this matter. This matter is considered closed.

Lawrence County Lawrence County (Audit Period: 1/1/08 - 12/31/08):

2010 $226,770 inadequately documented disbursements to an independent contractor in 2009, 2008, and 2007. During 2008, this individual worked 302 days of which 50 were on weekends or holidays primarily providing courthouse maintenance and janitorial services. Based on Internal Revenue Service guidelines, an employer-employee relationship may exist between the County and independent contractor.

Status per Prosecuting Attorney: Deputy Prosecuting Attorney assigned to case determined that no criminal laws had been broken and no further action is needed. This matter is considered closed.

Town of Portia (Audit Period: 1/1/07 - 12/31/09):

2010 $2,400 conflict of interest disbursement to Mayor’s son-in-law without an authorizing ordinance.


Town of Powhattan (Audit Period: 1/1/07 - 12/31/09):

2010 $9,168 conflict of interest disbursements to elected officials without an authorizing ordinance.


Third Judicial District Jackson, Lawrence, Randolph, and Sharp Counties

21

3rd Judicial District (continued)


Randolph County Town of O’Kean (Audit Period: 1/1/07 - 12/31/09):

2010 $3,107 conflict of interest disbursements to elected officials and/or immediate family members without an authorizing ordinance.

Status per Prosecuting Attorney: Although the procedures to authorize these payments may have been statutorily improper, this office does not consider there to be any criminal intent underlying this matter.

Ravenden Springs Volunteer Fire Department (Audit Period: 1/1/07 - 10/31/09):

2010 $12,029 undocumented disbursements. These included checks issued to “cash” ($2,850), Pulaski Bank ($300), former Fire Department Secretary ($450), Fire Department Chief ($20), and various vendors ($8,409).

Status per Prosecuting Attorney: Deputy Prosecuting Attorney assigned to case declined to prosecute based upon questionable proof of criminal responsibility as well as the satisfaction by the board of directors of the fire department with regard to restitution which had been made by a former employee. This matter is considered closed.

Sharp County

City of Cherokee Village (Audit Period: 1/1/07 - 12/31/09):

2010 $11,800 conflict of interest disbursement to a business partially owned by a city employee without an authorizing ordinance.

Status per Prosecuting Attorney: Deputy Prosecuting Attorney assigned to the case determined that no criminal activity had occurred. This matter is considered closed.

Twin Rivers School District (Audit Period: 7/1/08 - 6/30/09): 2010 $5,607 undocumented credit card charges.

$12,116 conflict of interest disbursements to a company owned by an employee’s brother without Board resolution or Department of Education approval.

Status per Prosecuting Attorney: This matter has been referred to the Arkansas State Police Criminal Investigation Division. This matter is pending per State Police report.

Town of Williford (Audit Period: 1/1/07 - 12/31/09):

2010 $2,000 conflict of interest disbursements to an individual serving as an Alderman during 2009 and 2008 and Mayor during 2007 without an authorizing ordinance.

$5,400 undocumented payments to Recorder/Treasurer.

Status per Prosecuting Attorney: Although the procedures to authorize these payments may have been statutorily improper, this office does not consider there to be any criminal intent underlying this matter.

22

Judicial District Population: 218,782 John Threet Circuit Judges: 6 Prosecuting Attorney


Washington County

University of Arkansas, Fayetteville (Audit Period: 7/1/09 - 6/30/10):

2010 $126,149 unauthorized, non-University related purchases by Jami Coker, an employee. Coker pled guilty to theft of property, fraudulent use of a credit card, and forgery in the second degree. Restitution of $126,149 was ordered. Bond Trust Fund reimbursed losses totaling $125,149.

Status per Prosecuting Attorney: Coker pled guilty to Theft of Property, Fraudulent Use of a Credit Card, and Forgery in the Second Degree. Coker was sentenced, with each count to run consecutively, to a total of 482 months, with 458 months suspended imposition of sentence, and the remaining 24 months to be served in the Regional Punishment Facility. Restitution of $126,149 was ordered to be made in monthly payments of $275 beginning 90 days after release from the Regional Punishment Facility.

Note: No matters were reported in Madison County.

Fourth Judicial District Madison and Washington Counties

23

Judicial District Population: 105,419 David Gibbons Circuit Judges: 4 Prosecuting Attorney


Franklin County

City of Altus – Police Department (Audit Period: 3/1/09 - 7/27/10):

2010 $7,725 bond and fine funds were not deposited. Administrative Assistant Madelyn Hill, who resigned employment, was custodian of these funds. Bond Trust Fund reimbursed losses totaling $6,725.

Status per Prosecuting Attorney: Hill pled guilty to Theft of Property, Class B Felony, and was sentenced to 72 months probation. Hill was ordered to pay restitution of $ 12,525 of which $7,725 was to be paid to the City by no later than July 31, 201. Monthly installments are to be made to Legislative Audit to cover $4,800 in investigative expenses. In addition, Hill was ordered to pay costs plus a fine of $1,850.

Note: No matters were reported in Johnson and Pope Counties.

Fifth Judicial District Franklin, Johnson, and Pope Counties

24

Judicial District Population: 393,193 Larry Jegley Circuit Judges: 17 Prosecuting Attorney


Perry County

East End School District (Audit Period: 7/1/07 - 6/30/08):

2009 $3,093 improper transactions. Band instrument rental fees and fundraising sales deposited in two non-District bank accounts ($1,983), undocumented credit card charges ($40), and unauthorized, undocumented cash withdrawals ($1,070) by David Yarbrough. Yarbrough paid band invoices totaling $400, leaving $2,693 owed the District. Bond Trust Fund reimbursed losses totaling $1,693.

Status per Prosecuting Attorney: Former band director David Yarbrough was found guilty by jury of Theft of Property, Class C Felony, and sentenced to 12 months probation. Yarbrough was also ordered to pay fines and costs totaling $1,190.

Town of Fourche (Audit Period: 1/1/09 - 12/31/09):

2010 $724 conflict of interest disbursement to Mayor’s and

Recorder/Treasurer’s son without an authorizing ordinance.

Status per Prosecuting Attorney: No charges filed. Perryville School District (Audit Period: 7/1/07 - 6/30/08):

2009 $1,275 conflict of interest disbursements to a business owned by a

District employee without board resolution.

Status per Prosecuting Attorney: No charges filed. Pulaski County

City of Alexander (Audit Period: 1/1/08 - 12/31/09):

2010 $17,748 unauthorized compensation to Police Chief ($6,639), Assistant Police Chief ($5,772), and Fire Chief ($5,337).

Terms of a lease-purchase agreement (Agreement) for the purchase of two police cars are a loan of $44,700 with an annual interest rate of 6.25% to be repaid by a monthly payment of $977 for 5 years. The total lease price is $58,669 of which $13,969 represents interest. The Lessor-provided amortization schedule indicated a loan amount of $48,528, or $3,828 more than the Agreement, with an annual interest rate of 8%.

Sixth Judicial District Perry and Pulaski Counties

25

6th Judicial District (continued)

Pulaski County (continued)

City of Alexander (Audit Period: 1/1/08 - 12/31/09) (continued):

2010 Terms of the Agreement for the purchase of a fire truck are a loan of $50,000, no stated interest, to be repaid by a monthly payment of $884 for 7 years. The total lease price is $74,325 of which $24,325 represents interest. The Lessor-provided amortization schedule indicated a loan amount of $52,859, or $2,859 more than the Agreement, with an annual interest rate of 9.5%.

Terms of the prior year Agreement for the refinancing of six existing lease purchases are a loan of $350,000 with an annual interest rate of 9.9% to be repaid by a monthly payment of $4,971 for 14 years. The total lease price is $835,099 of which $485,099 represents interest. The Lessor-provided amortization schedule indicated a loan amount of $435,975, or $85,975 more than the Agreement, with an annual interest rate of 9% to be repaid over a 12 year period. The City continued making monthly payments on this loan during 2009 and 2008.

The Agreement does not comply with Ark. Const. amend. 78 which indicates municipalities may incur short-term financing obligations having a term not to exceed five years.

Status per Prosecuting Attorney: No criminal charges filed.

City of Alexander (Audit Period: 1/1/07 - 6/30/08):

2009 A lease-purchase agreement (Agreement) was executed to refinance six existing lease-purchase agreements with First Government Lease Company (Lessor). Terms of the Agreement are a loan of $350,000 with an annual interest rate of 9.9% to be repaid by a monthly payment of $4,971 for 14 years. The total lease price is $835,099 of which $485,099 represents interest. The Lessor-provided amortization schedule indicated a loan amount of $435,975, or $85,975 more than the Agreement, with an annual interest rate of 9% to be repaid over a 12 year period.

The Agreement does not comply with Ark. Const. amend. 78 which indicates municipalities may incur short-term financing obligations having a term not to exceed five years.

As a condition of the refinancing Agreement, the Lessor paid the existing lease agreements totaling $305,250, leaving a balance of $44,750 due the City. Of this amount, the Lessor paid only $31,650 in December 2007, leaving $13,100 due the City. Subsequently, on June 30, 2009, the Lessor paid $11,558 which leaves $1,542 due the City.



26



Arkansas Department of Finance and Administration - Employee Benefits Division (EBD) (Audit Period: 7/1/06 - 6/30/07):

2008 Concerns regarding two professional/technical service contracts issued

to PDB Enterprises, Inc. and Pearce Enterprise, Inc.


Arkansas Department of Finance and Administration - Little Rock Revenue Central Office (Audit Period: 7/15/04 - 10/2/08):

2009 $247,589 misappropriated personalized license plate fees. Special

License Clerk Karen Brewer identified as custodian and her employment was terminated. Bond Trust Fund reimbursed losses totaling $249,000.

$10,666 misappropriated sales tax and vehicle title registration fees. Central Office Cashier Kenyatta Withers identified as custodian and her employment was terminated. Bond Trust Fund reimbursed losses totaling $9,666.

Status per Prosecuting Attorney: Brewer pled guilty to one count of Theft of Property, Class B Felony, was sentenced to 216 months incarceration, 24 months suspended imposition of sentence, and ordered to pay restitution of $190,000. Restitution to be paid in monthly installments of $1,000 to begin 30 days after release. Withers was charged with Forgery in the First Degree and Theft of Property, pled guilty, was sentenced to 48 months probation and ordered to pay restitution of $10,666 with monthly installments of $175 starting June 25, 2011.

Arkansas Department of Health (Audit Period: 6/1/03 - 8/20/08):

2009 $42,673 improper travel expense reimbursements to employees Craig

Burger ($35,674) and Mark McIntosh ($6,999). In addition, travel expense reimbursements of $9,101 remain questioned as to authenticity. Burger and McIntosh were determined to have submitted falsified travel expense documentation and their employment was subsequently terminated.

Status per Prosecuting Attorney: On August 8, 2011, Craig Burger was sentenced in Pulaski County Circuit Court to 8 years in Arkansas Department of Correction plus 12 years suspended and restitution of $30,300 to Arkansas Department of Health and $15,000 to Legislative Audit for investigative cost. Restitution set at $400 per month after release. Mark McIntosh was charged with one count of Theft of Property, pled guilty, and ordered to 60 months probation and 50 hours of community service. Full restitution was paid prior to conviction.


27



Arkansas Livestock Show Association (Audit Period: 1/1/09 - 12/31/09):

2010 $5,169 undocumented credit card purchases. Subsequent to the report date, the Association provided adequate documentation for $544 of the undocumented purchases, leaving $4,625 as undocumented.


Arkansas State Land Department (Audit Period: 7/1/08 - 6/30/09):

2010 Land Commissioner Mark Wilcox’s spouse was involved in an accident while driving a state-owned vehicle for nonbusiness purposes on September 6, 2008. Although no damages were reported to the state-owned vehicle, the Agency paid $995 to repair damage to the other vehicle. Subsequently, Wilcox reimbursed $995 to the Agency on August 11, 2010.

…..

$4,558 undeposited receipts. Arkansas State Police and Little Rock Police Department both declined to pursue the matter due to inconclusive evidence, low dollar amount, and the possible suspect no longer employed by the Agency.


Brothas and Sistas, Inc. (Audit Period: 4/1/09 - 3/31/10):

2010 $6,132 undocumented expenditures.



28



Lottery Commission (Audit Period: 7/1/09 - 6/30/10):

2010 $3,470 travel reimbursement requests submitted by Executive Director lacked proper approval by a designated travel supervisor.

$16,189 travel payments/reimbursements in conflict with state laws and travel regulations. Hotel expenses were paid above the federal per diem rate without prior authorization by the Agency’s Executive Director ($9,616); charges to the travel credit card not supported by adequate documentation, the documentation did not match the amount charged, nor appear to be an original ($1,872); documentation to support travel credit card statements/TR-1 reimbursements for airline ticket purchases were screen prints from an airline/travel booking website printed prior to an actual flight confirmation ($2,814); travel expenses paid on behalf of, or reimbursed to, the Vice President of Gaming, for which a business purpose was not adequately documented ($1,423); and other reimbursements in conflict with various state laws and travel regulations including receipts not matching the dates listed on travel reimbursement forms, excess mileage reimbursement, exceeding federal per diem rate for meals incurred during overnight travel, reimbursement for meals without overnight travel, and reimbursement for tips above the 15% allowed by state law ($464).

$6,296 improper retroactive payments to two employees.

Travel regulation R1-19-903 states mileage shall be computed and reimbursed using map mileage. Auditor was unable to adequately test marketing sales representatives’ travel due to insufficient documentation. Information provided on employees’ travel reimbursement forms was vague and/or incomplete limiting the Agency’s ability to properly review the supporting documentation prior to payment. In addition, auditor was unable to verify miles traveled in order to recalculate mileage reimbursement for accuracy. Travel reimbursements for marketing sales representatives totaled $198,983, including one employee who was reimbursed $18,858 for 44,900 miles driven during a ten month period.

Ark. Code Ann. § 23-115-206 (a) (1) requires the Commission to establish effective internal controls. To effectively establish internal controls, management should communicate policy and procedures to all staff. Management did not communicate the policy and procedures for the accrual and use of compensatory time to exempt staff until August 3, 2010 for time purportedly earned between July 1 and November 30, 2009. Subsequent to the issuance of the formal policy, numerous changes were made by management including a suspension of compensatory time usage. In addition, management was unable to properly account for the potential compensatory time resulting in ten different versions of compensatory time being submitted for audit. Due to the numerous changes made to the compensatory time policy, at the end of audit fieldwork, it remains unclear what the Agency had established as policy. Status per Prosecuting Attorney: Under review.


29



Martin Luther King, Jr. Commission (Audit Period: 7/1/07 - 6/30/08):

2009 $88,650 undocumented expenditures. Subsequently, the Agency

obtained invoices totaling $65,997 from various vendors. Analysis of one invoice from the Peabody Hotel in Little Rock revealed two Commission employees who reside in Little Rock had hotel charges of $1,325 and ten other individuals had hotel charges of $2,760 for which the Agency was unable to provide an explanation or justification.


Pulaski County Special School District (Audit Period: 3/1/04 - 2/19/10):

2010 $439,745 misappropriated funds by Mechanical Systems Supervisor James Diemer. Bond Trust Fund reimbursed losses totaling $249,000.

$72,918 unauthorized salary compensation to Superintendent which was subsequently reimbursed to the District.

$25,039 paid to Superintendent as salary/benefits overpayments ($17,203) and as reimbursement for, or charged on District credit card, unallowable, undocumented expenses ($7,836).

$3,677 cash advances to Board members for unallowable and questioned travel expenses.

$2,391 credit card purchases for which a business purpose could not be determined ($1,815) and finance and late payment charges ($576).

$11,975 overpayment to a vendor in November 2006 was not fully reimbursed until May 28, 2009.

$969 questioned purchases paid with Federal grants funds for women’s undergarments at Dillard’s ($311), athletic apparel at Lady Foot Locker ($464), and athletic shoes at Finish Line ($194).

$31,536 Jacksonville High School Activity Fund collections not deposited in bank account. Bookkeeper Rosalind Taylor was charged with theft of property. Note: Arkansas Department of Education took control of the District on June 20, 2011. Status per Prosecuting Attorney: Diemer pled guilty to Theft of Property from a Government Entity which Received Federal Funds, Class C Felony, in Federal Court. Diemer was sentenced to 18 months imprisonment and upon release will be on supervised release for 3 years. Restitution of $387,442 was ordered. During imprisonment, Diemer will pay as restitution 50%, per month, of all funds that are available to him. Upon release restitution payments will be reduced to 10%, per month, of gross monthly income.

Civil charges have been filed by the District against former Superintendent James Sharpe seeking damages of $25,039.


30



Pulaski County Special School District (Audit Period: 3/1/04 - 2/19/10) (continued):

Status per Prosecuting Attorney (continued): Rosalind Taylor, former bookkeeper at Jacksonville High School pled guilty to theft of property is schedule to be sentenced November 8, 2011.

Remaining issues are under review.

Pulaski County Special School District (Audit Period: 3/1/09 - 11/30/10): 2010 $23,919 unallowable expenses paid to, or on behalf of, Superintendent.

$1,360 unallowable expenses paid to, or on behalf of, Board members.

$6,223 improper disbursements to employee for moving expenses not included in employment contract ($5,899) and unallowed expenses ($324).

$1,974 improper disbursements to a consultant for mileage reimbursements not included in contract.

$9,741 salary overpayments to three employees.

$1,799 improper reimbursements to Grant Writer for supplies not for District use ($1,564), questioned mileage reimbursements ($65), and duplicated mileage reimbursement ($170).

Status per Prosecuting Attorney: Under review.

City of Sherwood (Audit Period: 1/1/07 - 12/31/07):

2009 $219,913 improper transfer of funds from City’s bank account to several non-City bank accounts via unauthorized use of the Clerk/Treasurer’s electronic access (user name and password) to the bank account. The City has recovered $53,635 and received $50,000 from their insurance company. $7,165 improper transaction. City contributed funds to a nonprofit corporation.



31

Judicial District Population: 50,776 Eddy R. Easley Circuit Judges: 2 Prosecuting Attorney


Grant County Grant County (Audit Period: 1/1/08 - 12/31/09):

2010 $1,118 reimbursement to Juvenile Probation Officer for purchases that appear not for public purposes.

Status per Prosecuting Attorney: The Juvenile Probation Officer used court funds in the amount of $377 and $741 in 2009 and 2008 respectively to buy Christmas gifts for under privileged children in Grant County. She is now aware that these types of expenditures are not allowable and will not expend court funds in the future for such purposes. No criminal charges were filed because of the absence of criminal intent.

Hot Spring County Arkansas Department of Parks and Tourism – DeGray Lake Resort State Park

(Audit Period: 7/1/04 - 11/30/08):

2010 $202,113 misappropriated park revenue. Parks Administration Support Coordinator and bookkeeper Carla Beatty was custodian of the funds.

Status per Prosecuting Attorney: Carla Beatty has been charged in Hot Spring County Circuit Court (30CR-11-099-1) with one count of Theft of Property and five counts of Attempt to Evade or Defeat Tax. The amount of the alleged theft is $202,113. The matter is pending.

Town of Friendship (Audit Period: 1/1/07 - 12/31/08):

2009 Fines and costs revenue for the years 2008 and 2007 totaled $76,742 and $109,264 which represented 56% and 71%, respectively, of the Town’s expenditures, less capital expenditures, transfers, and debt service in the preceding year.

Status per Prosecuting Attorney: The number of tickets issued decreased substantially from the year ended December 31, 2007 to the year ended December 31, 2008. Mayor and Chief of Police advised that subsequent to the audit period, a plan was implemented by Friendship to insure that it is in compliance with the “Arkansas Speed Trap Law.” Prosecuting Attorney has requested that this matter be addressed by Legislative Audit during the audit of Friendship for the year 2010.

Note: As of report date, the 2010 audit is in progress.

Seventh Judicial District Grant and Hot Spring Counties

32

Christi McQueen (Current) Judicial District Population: 31,606 Ashley Parker (2010) Circuit Judges: 2 Prosecuting Attorney


Hempstead County Hope School District (Audit Period: 7/1/08 - 6/30/09):

2010 $2,270 unauthorized compensation to Payroll Clerk/Custodian. Of this amount, $185 has been reimbursed.

Status per Prosecuting Attorney: This matter was referred to the prosecutor’s office on March 25, 2010. The unauthorized compensation to the payroll clerk/custodian, Danita Thomas, who prepared her own overtime calculations, was $2,270, of which $185 has been reimbursed, leaving an amount due of $2,085. In a settlement agreement, the Hope School Board elected not to proceed against Ms. Thomas for further reimbursement and Ms. Thomas agreed to resign her positions. Prosecutor has made several contacts with Ms. Thomas’ attorney, Marcia Barnes, who has since sent documents, with more forthcoming, which she believes are pertinent to the issue of criminal liability. The investigation of this matter is still pending.

Town of Oakhaven (Audit Period: 1/1/08 - 12/31/09):

2010 $3,120 conflict of interest disbursements to Mayor’s spouse, who was appointed Recorder/Treasurer on December 8, 2008 ($1,870), and Mayor ($1,250) without an authorizing ordinance.

Status per Prosecuting Attorney: This matter was referred to the prosecutor’s office on October 1, 2010. There were two unauthorized disbursements, specifically, $1,870 to the Mayor’s spouse and $1,250 to the Mayor. The Mayor, Summer Bright, informed prosecutor that her husband had been paid to work for the town before she took office and he continued to do similar work after she assumed office. Mayor Bright provided prosecutor a copy of minutes of the January 6, 2011, town meeting which reflected a motion and a second, with unanimous approval, “to continue to allow the Bright family to do contract labor for the town.” The minutes indicated the town would meet with Legislative Audit to ensure compliance with audit. Prosecutor determined that the unauthorized disbursement was an ethics matter. No further action will be taken.

Eighth Judicial District-North Hempstead and Nevada Counties

33


Hempstead County (continued)

Town of Patmos (Audit Period: 1/1/08 - 12/31/09):

2010 $8,225 conflict of interest disbursement to Recorder/Treasurer’s son without an authorizing ordinance.

Status per Prosecuting Attorney: This matter was referred to the prosecutor’s office on September 3, 2010. The Recorder/Treasurer’s son was paid $8,225 for labor without an authorizing ordinance. Prosecutor interviewed the Mayor/Recorder/Treasurer, Elizabeth Peters, and reviewed Ordinance No. 1-2010, dated September 13, 2010, which she provided. The ordinance provides as follows: “That Randy Peters be appointed the grounds keeper and general maintenance provider of all of the properties of the Town of Patmos…” Prosecutor determined that the unauthorized disbursement was an ethics matter. No further action will be taken.

Note: No matters were reported in Nevada County.


34

Carlton Jones (Current) Judicial District Population: 51,107 Brent Haltom (2010) Circuit Judges: 3 Prosecuting Attorney


Lafayette County Lafayette County (Audit Period: 1/1/08 - 12/31/09): 2010 $1,451 unallowable disbursements from the Sheriff’s Inmate Account.

Status per Prosecuting Attorney: Sherriff’s office has repaid funds to Lafayette County and Prosecutor is satisfied with steps taken by Sherriff’s office to resolve the finding.

Miller County Fouke School District (Audit Period: 7/1/08 - 6/30/09):

2010 $2,052 conflict of interest disbursements to a business owned by a District employee without Board resolution.

Status per Prosecuting Attorney: After discussion with Superintendent Tommy Tyler, the previous Prosecuting Attorney was satisfied the proper steps were taken to address the findings of the audit.

City of Garland (Audit Period: 1/1/07 - 7/31/09):

2009 $3,000 unearned payroll advances to Recorder/Treasurer Janice Hanson.

Status per Prosecuting Attorney: The discrepancies alleged on the part of Janice Hanson while she was recorder/treasurer are the subject of a criminal action. In Case# CR 2009-464-1, State of Arkansas vs. Janice Hanson, the defendant is charged with one (1) count of Theft of Property over $1,500, a Class “C” Felony. Hanson was ordered to pay restitution of $3,000 in lieu of 24 months probation.

$86,042 for two lease-purchase agreements executed by the Mayor for three used police squad cars and a 1979 GMC tanker and other fire equipment. Neither of the lease agreements were approved by the City Council nor has the City made any payments. A default judgment for $4,319 plus court costs was awarded the lease company and the City paid $5,466, but the potential liability the City may encumber due to the leases is unclear. The GMC tanker was sighted, but the vehicles and other fire equipment related to the lease-purchase agreements could not be located.

$10,098 outstanding account balance with a wireless telephone service provider. Account was cancelled by the vendor.

Status per Prosecuting Attorney: See response on page 35.

Eighth Judicial District-South Lafayette and Miller Counties

35

8th Judicial District-South (continued)

Miller County (continued)

City of Garland (Audit Period: 1/1/04 - 7/31/07):

2008 $48,800 undocumented disbursements to Mayor Yvonne Dockery ($6,400) (Note 1), Preston Lemay ($9,000), and two former City employees Lee Morris Cullins ($14,000) and David Johnson ($19,400).

$1,959 undocumented travel reimbursements to Mayor Yvonne Dockery ($681), Recorder/Treasurer Janice Hanson ($1,149), and former Recorder/Treasurer Lateta Briggs ($129).

$4,900 undocumented disbursements to a vendor.

$1,667 water and sewer receipts over deposits.

$7,747 unauthorized credits to water and sewer customer accounts of City employees and elected officials.

Bond Trust Fund reimbursed losses totaling $132,074.

Status per Prosecuting Attorney: Ms. Dockery was prosecuted in the United States District Court for the Western District of Arkansas for her conduct while in office. In Case # 4:09 CR 40021-001, Ms. Dockery, was found guilty on July 23, 2010, of three (3) counts of mail fraud in violation of 18 U.S.C section 1341. Those convictions are in relation to the thefts she committed from Garland City and are reflected in your audits. For these convictions, Ms. Dockery was sentenced to thirty (30) months imprisonment and ordered to make restitution in the amount of $128,414.

Miller County (Audit Period: 1/1/08 - 12/31/08):

2010 $26,000 unauthorized disbursements for malpractice insurance policy deductibles not within terms of contract executed between the County and a doctor to provide medical services for County inmates.

Status per Prosecuting Attorney: Miller County’s expenditure of $26,000 for malpractice insurance policy deductibles was ratified by the Quorum Court on December 15, 2008.


36

Judicial District Population: 22,995 C. A. Blake Batson Circuit Judge: 1 Prosecuting Attorney


Clark County

Arkadelphia School District (Audit Period: 7/1/08 - 6/30/09):

2010 $11,439 conflict of interest disbursements to a nonprofit organization for which a District employee also served as the organization’s Executive Director without Board resolution or Department of Education approval.

Status per Prosecuting Attorney: Approval was granted from Arkansas Department of Education on August 10, 2010. No criminal conduct to prosecute.

City of Gurdon (Audit Period: 1/1/07 - 12/31/09):

2010 $1,170 improper disbursement to a vendor for supplies for a private business.

Status per Prosecuting Attorney: Billing error and payment error. Private business returned funds. No criminal conduct to prosecute.

Town of Whelen Springs (Audit Period: 1/1/07 - 12/31/09):

2010 $7,317 conflict of interest disbursements to elected officials and/or their immediate family members without an authorizing ordinance.

Status per Prosecuting Attorney: Authorizing ordinance was passed on January 20, 2011. No criminal conduct to prosecute.

Ninth Judicial District-East Clark County

37

Judicial District Population: 55,309 Bryan Chesshir Circuit Judges: 2 Prosecuting Attorney


Howard County Upper Southwest Regional Solid Waste Management District (Audit Period: 1/1/99 - 7/31/09):

2010 $844,897 misappropriated funds ($756,360) by, and undocumented disbursements ($88,537) to, Executive Director Joe H. Ball.

Status per Prosecuting Attorney: Ball pled guilty to three counts of mail fraud in Federal Court. He was sentenced to six months imprisonment on each count, terms to run concurrently. Upon release from prison, will be on supervised release for two years on each count, terms to run concurrently, with the first six months to be spent on home detention. Prior to sentencing, Ball reimbursed the District $756,360.

Little River County City of Ogden (Audit Period: 1/1/07 - 12/31/09):

2010 $812 improper disbursements for Christmas dinners on behalf of Council members and their spouses.

Status per Prosecuting Attorney: After reviewing the audit report and speaking with the Mayor of Ogden, I believe that this was an unintentional act involving this statue and the City, through the Mayor, has indicated that the problem will not reoccur. I do not believe criminal charges are warranted.

Note: No matters were reported in Pike and Sevier Counties.

Ninth Judicial District-West Howard, Little River, Pike, and Sevier Counties

38

Judicial District Population: 76,678 Thomas Deen Circuit Judges: 5 Prosecuting Attorney


Ashley County City of Montrose (Audit Period: 1/1/09 - 12/31/09):

2010 The City entered into an agreement to sell two City-owned lots, terms of $200 down, and $100 a month for ten months.

Status per Prosecuting Attorney: No charges filed.

Chicot County Dermott Special School District (Audit Period: 7/1/06 - 6/30/07): 2008 $29,250 duplicate payment to a service provider using Title I grant funds.

Status per Prosecuting Attorney: Smith was found guilty of Theft of Property Lost, Mislaid, Delivered by Mistake, Class D Felony by the court. Smith received a deferred judgment and was placed on 12 month suspended imposition of sentence. Restitution of $29,250 and fines and costs of $435 were also ordered. Restitution was paid on February 14, 2011.

Desha County Dumas School District (Audit Period: 7/1/08 - 6/30/09):

2010 Conflict of interest transactions with a financial institution in which a Board member held a direct financial interest without Board resolution or Department of Education approval.


City of Mitchellville (Audit Period: 1/1/08 - 12/31/08):

2010 $596 conflict of interest disbursement to a Council member without an authorizing ordinance.

Status per Prosecuting Attorney: No charges filed. Drew County Drew County (Audit Period: 1/1/07 - 12/31/07):

2009 $338 solid waste charges not included on the Solid Waste Clerk’s personal account because it was improperly inactivated.


Note: No matters were reported in Bradley County.

Tenth Judicial District Ashley, Bradley, Chicot, Desha, and Drew Counties

39

Judicial District Population: 19,019 Robert Dittrich Circuit Judge: 1 Prosecuting Attorney


Arkansas County

School of Excellence (Audit Period: 7/1/08 - 6/30/09):

2010 $10,151 conflict of interest disbursement to a Board member’s spouse without Board resolution or Department of Education approval.

Status per Prosecuting Attorney: Following receipt of initial report, Prosecuting Attorney sent letter to Roger A. Norman on November 22, 2010, pointing to the fact the report did not contain the name of either the school board member or the spouse. The Prosecuting Attorney’s letter contained the following statements:

“In the event I mistaken in this assumption, please update this report immediately with identification and specification which would allow an investigation and charging decision to be made. If I do not hear further from you or your field auditors, I will assume no further action on my part is requested or contemplated.”

No additional information was submitted to the Prosecuting Attorney by Legislative Audit personnel.

Eleventh Judicial District-East Arkansas County

40

S. Kyle Hunter (Current) Judicial District Population: 91,569 Steve Dalrymple (2010) Circuit Judges: 6 Prosecuting Attorney


Jefferson County City of Altheimer (Audit Period: 1/1/08 - 12/31/09):

2010 $5,880 improper disbursement to a garnishor on behalf of Recorder/Treasurer Wanda Barnes, but the garnishment was not withheld from Barnes’ gross salary. Barnes reimbursed the City as of report date.

Status per Prosecuting Attorney: Barnes pled guilty to Theft of Property, Class A Misdemeanor, was sentenced to 12 months probation, 60 hours community service, and fines, fees, and costs totaling $1,280. Barnes paid restitution of $5,880 and was also required to resign as City Recorder/Treasurer.

Dollarway School District (Audit Period: 7/1/08 - 6/30/09):

2010 $4,209 missing equipment. Three computers, assigned to employees who are no longer employed by the District could not be located. A fourth computer costing $1,397 had been stolen and the police were notified according to District personnel; however, a police report was not provided.

Status per Prosecuting Attorney: This matter was discussed with Superintendent of Dollarway Schools and was advised that each former teacher was contacted and each indicated they had turned in their assigned computer. I was advised that new procedures had been implemented in the school district to prevent this issue in the future. Therefore, no further action will be taken by this office.

University of Arkansas at Pine Bluff (Audit Period: 7/1/09 - 6/30/10):

2010 $20,846 misappropriated funds of two agency accounts, Miss UAPB and Coronation. Unauthorized purchases of personal clothing by Dean of Student Involvement and Leadership Dovie Burl ($1,530) and personal clothing for pageant participants ($19,316).

Status per Prosecuting Attorney: On November 22, 2010, the previous Prosecuting Attorney, Stevan B. Dalrymple, was notified of information disclosed in an audit report of the University of Arkansas System for the year ended June 30, 2010. According to the Internal Audit Department (IAD), the Dean of Student Involvement and Leadership, Dovie Burl, made unauthorized purchases of personal clothing costing $1,530 and subsequently reimbursed the amount to the University. No further action will be taken by this office.

Eleventh Judicial District-West Jefferson and Lincoln Counties

41

11th Judicial District-West (continued)

Jefferson County (continued)

University of Arkansas at Pine Bluff (Audit Period: 7/1/09 - 6/30/10) (continued):

Status per Prosecuting Attorney (continued):

Also IAD discovered the University expended $19,316 for personal clothing and care expenditures for pageant participants and recommended these expenditures be reimbursed utilizing private discretionary funds. I have discussed this issue with Chancellor Davis and was advised that the University has no discretionary fund from which to reimburse the money. I am advised that these expenditures have been a long standing practice of the University and there has never been an audit issue. However, based upon this audit, this practice will not continue unless discretionary funds are raised. No further action will be taken by this office.

Note: No matters were reported in Lincoln County.


42

Judicial District Population: 125,744 Daniel Shue Circuit Judges: 6 Prosecuting Attorney


Sebastian County

City of Bonanza (Audit Period: 1/1/09 - 12/31/09):

2010 $4,000 conflict of interest disbursements to an employee ($3,500) and

Council member ($500) without an authorizing ordinance.

$1,000 undocumented as to use. City issued a check for $7,000 to a bank and obtained a cashier’s check for $6,000, payable to a vendor, to purchase a fire truck. The remaining $1,000 was received back from the bank as cash, which was not documented as to use or redeposited in a City bank account.

Status per Prosecuting Attorney: While this is a breach of Ark. Code Ann. § 14-42-407 there is no criminal penalty for a violation of this subsection, therefore, no criminal charges could be filed on either of these two matters. As to the $1,000 for which documentation could not be secured at the time of the audit, during the investigation undertaken by Arkansas State Police, $712 could be accounted for with approximately $287 being unaccounted for. After the subject of the investigation passed a polygraph examination, the investigator concluded that it was “very plausible for the receipts and paperwork to have been misplaced.” Therefore, in that matter, no criminal charges could be filed.

Twelfth Judicial District Sebastian County

43

Judicial District Population: 114,484 Robin J. Carroll Circuit Judges: 6 Prosecuting Attorney


Calhoun County Calhoun County (Audit Period: 1/1/08 - 12/31/08):

2010 $5,146 conflict of interest disbursements to spouses of two elected officials for various services without an authorizing ordinance.

Status per Prosecuting Attorney: This was not a criminal matter and no further action will be taken.

City of Thornton (Audit Period: 1/1/08 - 12/31/09):

2010 $775 unauthorized disbursements. City Clerk ($413) and Water Department Clerk ($362) purchased fuel using the City’s fuel charge account in conflict with City Council policy.

$511 cellular usage fees incurred over basic plan by two employees.

Status per Prosecuting Attorney: There was insufficient evidence to proceed with a criminal prosecution.

Cleveland County Cleveland County School District (Audit Period: 1/1/09 - 12/31/09):

2010 $1,700 improper transaction. Utilizing Title I funds, the District contracted with a vendor to provide after-school tutoring. Ronald Sims, Elementary Principal, received $1,700 from the same vendor while being paid by the District, using Twenty-First Century grant funds, for after-school tutoring.


Thirteenth Judicial District Calhoun, Cleveland, Columbia, Dallas, Ouachita, and Union Counties

44


Columbia County Columbia County (Audit Period: 1/1/08 - 12/31/08):

2010 Circuit Judge received drug court user fees of $136,017 and again deposited these funds in a bank account under his, rather than the County Treasurer’s control. Grant funds were expended without appropriation by Arkansas General Assembly or Columbia County Quorum Court.

$35,515 improper disbursements to Deputy Prosecuting Attorney ($22,600) and Public Defender ($12,915) for services rendered which appeared to be part of these employees’ official duties.

Status per Prosecuting Attorney: Reviewed documents regarding the Columbia County Drug Court and Judge Chandler’s response to Legislative Audit and believe the Drug Court is in compliance with state and federal laws so no further action will be taken.

City of Magnolia (Audit Period: 1/1/08 - 12/31/09):

2010 $17,100 conflict of interest disbursements to a business owned by a City policeman without an authorizing ordinance.

Status per Prosecuting Attorney: This was not a criminal matter and no further action will be taken.

Ouachita County Southern Arkansas University Tech (Audit Period: 7/1/06 - 3/31/10):

2010 $57,204 misappropriated funds by Kelley Starr, former Accountant of Student Records.

Status per Prosecuting Attorney: Starr charged with five counts of Theft of Property, each a Class B Felony. Starr pled guilty to Suspended Imposition of Sentence on September 26, 2011 to approximately $12,000. A non-jury trial has been scheduled to address sentencing.

Union County Strong-Huttig School District (Audit Period: 7/1/08 - 6/30/09):

2010 $2,430 unauthorized disbursements from an activity fund bank account maintained by the elementary principal.

Conflict of interest disbursements to a company owned by the elementary principal and/or her spouse. The employee’s relationship with the company was not disclosed to the District.

Elementary principal used a computer owned by the District to maintain accounting records for her personally owned business.



45


Union County (continued)

Strong-Huttig School District (Audit Period: 7/1/09 - 6/30/10):

2010 $2,964 conflict of interest disbursements to a company owned by the elementary principal and/or her spouse. The employee’s relationship with the company was not disclosed to the District.


Union County (Audit Period: 1/1/09 - 12/31/09):

2010 A Quorum Court member served as Commander of the Union County

Sheriff’s Reserve Unit without an authorizing ordinance.

$10,171 unaccounted for funds. The Sheriff’s Office reported funds missing from the prepared bank deposit ($1,000) and also discovered three other instances of unaccounted for funds ($9,171). The employee responsible for the prepared bank deposit reimbursed $1,000. Bond Trust Fund reimbursed losses totaling $8,171.

Status per Prosecuting Attorney: The County adopted an appropriate ordinance to resolve the first issue. In regards to the second issue, at the present time there is insufficient evidence to prove which employee may have been responsible for theft, but the case remains open in the event further evidence is presented.

Note: No matters were reported in Dallas County.


46

Judicial District Population: 103,399 Ron Kincade Circuit Judges: 4 Prosecuting Attorney


Baxter County

Baxter County (Audit Period: 1/1/08 - 12/31/08):

2010 The airport commission executed a loan agreement with a local financial institution for term in excess of ten years in violation of an amendment to the state constitution which indicates short-term financing obligations of a county cannot exceed five years. In addition, the contract appears to convey a security interest in airport property in conflict with state law which provides an airport commission lacks authority to encumber an airport and its related properties and facilities.

Status per Prosecuting Attorney: Requested a conflicts prosecutor review this matter since Prosecutor advises Baxter County on legal issues.

Boone County Omaha School District (Audit Period: 7/1/08 - 6/30/09):

2010 $5,676 conflict of interest disbursement to an employee for carpentry services without Board resolution or Department of Education approval.

Status per Prosecuting Attorney: Prosecutor received a report on the school district paying an employee $5,676 for carpentry services without school board approval. School officials determined that the school received at least $5,676 in value for the services performed and no criminal charges are warranted and none will be filed.

City of Harrison Water and Sewer Department (Audit Period: 1/1/08 - 10/31/09):

2009 $61,150 customer meter deposits not deposited. Billing Department

employee Sarah Reese ($61,050) and Assistant to Finance Director Terri Willis ($100) identified as responsible individuals. Employment for both individuals was terminated. Reese was charged with theft of property. Bond Trust Fund reimbursed losses totaling $60,050.

Status per Prosecuting Attorney: Reese was found guilty of Theft of Property, Class B Felony, and was sentenced to 10 years probation. Reese was ordered to pay restitution totaling $8,500 and fines and costs totaling $1,470. Codefendant Terry Willis pled guilty to charge of Theft of Property, Class A Misdemeanor on August 18, 2010 and paid restitution in the amount of $100.

Fourteenth Judicial District Baxter, Boone, Marion, and Newton Counties

47


Boone County (continued)

Harrison School District (Audit Period: 7/1/07 - 6/30/08):

2009 $150 conflict of interest transaction. Two employees purchased lawn mowers from the District without proper authorization from District management or Board of Directors.

Maintenance Supervisor Gary Bray used District equipment for non-District purposes.

Status per Prosecuting Attorney: Prosecutor referred matter to Harrison Police Department, Criminal Investigation Division. Prosecutor received the investigative file and at that time it was referred to Deputy Prosecuting Attorney for prosecution. After review by Deputy Prosecutor, it was determined that it would be difficult to obtain a conviction, therefore no charges will be filed.

Newton County

Compton Fire Association (Audit Period: 1/1/05 - 12/31/08):

2010 $5,026 unauthorized and undocumented disbursements by Lora Wenzel, former Association Secretary/Treasurer. Wenzel reimbursed $5,026.

Status per Prosecuting Attorney: Matter was referred to Arkansas State Police for a criminal investigation. The investigative file was received on June 27, 2011. Although Prosecutor will need to assess all the facts as provided by the investigation, it appears as if it will be impossible to prove beyond a reasonable doubt the matters necessary to obtain a conviction.

Newton County (Audit Period: 1/1/07 - 12/31/08):

2009 $2,727 Sheriff’s Office bond and fine revenue was not deposited.

Former Sheriff’s Office bookkeeping supervisor Jenny Lafollette, custodian of the funds, was charged with theft of property.

Status per Prosecuting Attorney: The defendant, Jenny Lafollette pled guilty of Falsifying Records, Class A Misdemeanor and Obstructing Governmental Operations, a Class C Misdemeanor on March 16, 2011. She paid restitution in the amount of $2,497 and was given 12 months of unsupervised probation.


48


Newton County (continued)

Newton County (Audit Period: 1/1/07 - 12/31/08) (continued):

2009 County Judge approved the following claims for payment without adequate supporting documentation:

$50,095 to Danny Ruff for hauling or dozer work. Documentation consisted of invoices having the same appearance and invoice number in the approximate range as invoices submitted by two other vendors in unrelated transactions.

$42,150 to L.A. Tidwell, LTD for equipment ($31,500) and Tim Tidwell Construction Company for supplies ($10,650).

$40,760 to House Farms and Todd House. Documentation consisted of four different types of invoices. Documentation also included invoices having the same appearance and invoice number in the approximate range as invoices of two other vendors in unrelated transactions. In addition, vendor signature on invoices was inconsistent.

$37,402 to M.L. Jones Construction, Inc. for dozer/grader work and loads of gravel. Documentation consisted of generic invoices stamped with the vendor name. Invoices were issued out of order and blank invoices, stamped with the name and address of M.L. Jones Construction Inc., were in the possession of the County Judge.

$30,110 to Davidson Excavating, a company not registered with the Secretary of State or listed in the telephone directory. Documentation is questionable because invoices reflected the address of another vendor and had the same format as Tabor Excavating. Several invoices also appear to have been altered with “white-out.”

$9,440 to Flud’s Lumber and Construction for dozer work and hauling gravel.

$3,215 to Melton Farms for clay fill. Documentation was inconsistent and appeared to have the same format as several other vendors and an invoice appeared to have been altered with “white-out.”

$400 to Jimmy Christian for labor without documentation of type of service performed or rate of pay.

$525 to Jimmy Christian for equipment. Documentation was a generic invoice with the same appearance and invoice number in the approximate range of invoices of two other vendors in unrelated transactions.


49


Newton County (continued)

Newton County (Audit Period: 1/1/07 - 12/31/08) (continued):

2009 Without a Quorum Court ordinance authorizing transactions and without adequate supporting documentation, the County Judge approved the following payments in apparent conflict with state ethics and claim processing laws:

$388 to Tabor Excavating, a company owned by Quorum Court member Mike Tabor.

$800 to Feed Lot Farm Supply, a business owned by Tabor’s stepfather. Documentation for this payment was different than other purchases from this vendor and the check was secondarily endorsed by Tabor.

$9,470 to minor children of County Road Foreman Stanley McCutcheon for gravel.

The County Judge approved the following purchases without complying with county purchasing laws:

$31,840 for two generators without soliciting bids.

$58,400 for two used dozers without obtaining a 500 hour use certificate from the vendor.

In addition, the County Judge approved the purchase of a truck for $4,600 in September 2007. The truck was traded at a value of $2,500 to L.A. Tidwell for supplies in March 2008.

Bond Trust Fund reimbursed losses totaling $68,140.

Status per Prosecuting Attorney: Harold Smith, former County Judge, pled guilty to one count of mail fraud in U. S. District Court on July 19, 2010. Smith was sentenced to 12 months and one day imprisonment. Upon release, shall be on supervised release for two years. Restitution of $69,140 was ordered to be paid immediately. If not paid immediately, any unpaid financial penalty imposed shall be paid during the period of incarceration in quarterly payments of $25 or 10% of the defendant’s quarterly earnings, whichever is greater. After incarceration, any remaining balance shall become a special condition of supervised release and shall be paid in monthly installments of $200 or 10% of the defendant’s net monthly household income, whichever is greater, with the entire balance to be paid in full no later than one month prior to the end of the two-year period of supervised release. The remaining matters appear to be ethical issues with a Quorum Court member and the employee. The Quorum Court member no longer serves as Quorum Court member and the employee no longer works for Newton County. The County did receive goods and services for the money. Therefore, no criminal theft charges will be pursed against these individuals.

Note: No matters were reported in Marion County.


50

Judicial District Population: 77,044 Tom Tatum, II Circuit Judges: 3 Prosecuting Attorney


Conway County

City of Morrilton (Audit Period: 1/1/08 - 12/31/08): 2010 The Mayor authorized a street employee to use a city track hoe in one

instance in 2010 for a nonbusiness purpose.

Status per Prosecuting Attorney: No action taken. Morrilton Youth Association (Audit Period: 1/1/09 - 12/16/09):

2010 $1,126 misappropriated funds by Association Treasurer Heather Simpson. Simpson reimbursed $900, leaving $226 owed to the City.

Status per Prosecuting Attorney: Felony charges were filed against Heather Simpson for Theft of Property, a Class “C” Felony in Conway County. A Misdemeanor judgment was entered on November 12, 2010 and the Defendant was ordered to complete 80 hours of community service and pay fines and costs in the amount of $700.

Logan County Arkansas Dance Team Association (Audit Period: 7/1/06 - 4/24/09):

2009 $45,064 unauthorized disbursements. Former Paris School District High School Activity Secretary, Debbie Gann, was custodian of these funds as well as those of the District Activity Funds.

Status per Prosecuting Attorney: Ms. Gann pled guilty to Obtaining a Signature by Deception and Fraudulent Use of a Debit Card. Ms. Gann was sentenced to 6 month’s confinement, 60 months probation after release and ordered to pay $40,661 to the Arkansas Dance Team Association.

Paris School District (Audit Period: 7/1/07 - 6/30/08):

2009 $14,660 District activity funds not deposited. Paris School District High

School Activity Secretary Debbie Gann, custodian of these undeposited funds, was suspended from District employment and subsequently resigned. Bond Trust Fund reimbursed losses totaling $13,660.

Status per Prosecuting Attorney: Ms. Gann pled guilty to Obtaining a Signature by Deception and Fraudulent Use of a Debit Card. Ms. Gann was sentenced to 6 months confinement, 60 months probation after release and ordered to pay $14,660 to Paris School District.

Fifteenth Judicial District Conway, Logan, Scott, and Yell Counties

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Logan County (continued)

Town of Subiaco (Audit Period: 1/1/07 - 12/31/09):

2010 $1,725 undocumented and unauthorized disbursements for meals.

Status per Prosecuting Attorney: No action was taken. Scott County

Scott County (Audit Period: 1/1/09 - 12/31/09):

2010 $1,041 improper transaction for 100 hours of sick leave transferred from payroll clerk to another employee, who was her daughter, without deducting the leave from the payroll clerk’s balance. Sick and vacation leave was transferred among employees without a County policy authorizing this activity.

Status per Prosecuting Attorney: No action was taken.

City of Waldron (Audit Period: 1/1/09 - 12/31/09):

2010 $769 advertising sales proceeds not remitted to City Treasurer for deposit in a bank account.

Status per Prosecuting Attorney: Met with Waldron Police Department and there has been a change in the policy/procedures so that these monies are appropriated through the correct procedures.

Note: No matters were reported in Yell County.


52

Judicial District Population: 100,952 Don McSpadden Circuit Judges: 4 Prosecuting Attorney


Independence County

Independence County (Audit Period: 1/1/08 - 12/31/09): 2010 The County Equalization Board reduced the property valuation from

$562,900 to $506,350 on a parcel of land in August 2009. Subsequently on September 4, 2009, the County Judge issued a court order reducing the same property valuation from $506,350 to $330,000 without following all the procedures noted in Ark. Code Ann. § 26-27-318.

Status per Prosecuting Attorney: Not considered to be a referral as a criminal matter, but an ethical violation.

Izard County Izard County (Audit Period: 1/1/08 - 12/31/09):

2010 $30,225 conflict of interest disbursements to a vendor owned by the County Judge’s sons ($28,706) and to a vendor owned by the County Judge’s brother ($1,519) without an authorizing ordinance.

Acting beyond his scope of authority, the Sheriff maintained three bank accounts outside the County Treasurer’s control. In addition, financial transactions relating to these accounts were not handled in accordance with basic accounting laws prescribed by state law. According to the Sheriff, funds received and deposited in one account were primarily donations; however, documentation existed that indicated numerous receipts were for restitution and fines associated with court cases. Of the $24,067 disbursed from this account, supporting documentation was available for only $6,013. Based on available documentation and/or check notations, disbursements included purchases of equipment and guns ($12,862) and supplies ($2,573); a salary advance ($400); donations ($950); and payments ($1,055) to, and a cash withdrawal ($3,000) by, the Sheriff. The Sheriff stated the cash withdrawal of $3,000 on April 10, 2009 should have been from his personal bank account and he reimbursed these funds on May 8, 2009.

Another of the bank accounts the Sheriff maintained was opened with a deposit of $25,080 of cash seized during a drug case in April 2007. The prosecuting attorney did not file a complaint within 60 days to initiate forfeiture proceedings as required by state law and the Sheriff is still in possession of the seized property as of report date.

Status per Prosecuting Attorney: In regards to the County Judge, this was determined to be an ethical violation. In regards to the Sheriff, this matter has been turned over to a Special Prosecuting Attorney.

Note: No matters were reported in Cleburne, Fulton, and Stone Counties.

Sixteenth Judicial District Cleburne, Fulton, Independence, Izard, and Stone Counties

53

Judicial District Population: 85,791 Chris Raff Circuit Judges: 3 Prosecuting Attorney


Prairie County

Des Arc School District (Audit Period: 1/1/07 - 6/30/09):

2010 $1,122 unauthorized compensation to District teacher who subsequently repaid the funds.

Status per Prosecuting Attorney: Prosecuting Attorney requested an Arkansas State Police investigation into this matter of salary payments to a school employee; disputed payment has been reimbursed to school district; no evidence of criminal activity found, but rather a bookkeeping matter. Case has been closed.

City of DeValls Bluff (Audit Period: 1/1/08 - 12/31/09):

2010 $17,899 District Court revenue not deposited. District Court Assistant Clerk Stacey Roddy indicated misappropriating District Court funds, resigned from employment, and subsequently reimbursed the Court.

Status per Prosecuting Attorney: Criminal charges of Theft of Property, Class B Felony were filed in Circuit Court against defendant Stacey Roddy. Defendant was convicted of felony theft and sentenced to 60 months probation; full restitution has been paid to the City of DeValls Bluff. Case has been closed.

City of DeValls Bluff (Audit Period: 1/1/04 - 10/12/05):

2005 $11,839 District Court receipts over deposits. Custodian identified as Stacy Tackett, former District Court Clerk. Tackett reimbursed the City $11,839.

Status per Prosecuting Attorney: Prosecuting Attorney filed criminal charges in Prairie County Circuit Court on May 4, 2007 charging Tackett with Class B Felony Theft of Property. Defendant was convicted of felony theft and sentenced to 36 months probation, full restitution has been paid. Case has been closed.

City of Hazen (Audit Period: 1/1/09 - 12/31/09):

2010 $869 Police bond and fine revenue not deposited. Police Department Clerk Shannon Bokker indicated misappropriating bond and fine revenue. Bokker, whose employment was terminated, reimbursed $642 to the City, leaving a balance owed of $227.

Status per Prosecuting Attorney: Prosecuting Attorney requested an Arkansas State Police investigation into the matter. Prosecuting Attorney has filed criminal charges of Theft of Property, Class C Felony against defendant Shannon Bokker in Circuit Court, case is now pending in Circuit Court.

Seventeenth Judicial District Prairie and White Counties

54


White County

City of Bald Knob Water and Sewer Department (Audit Period: 1/1/07 - 8/31/10):

2010 Solid waste fees are considered a General Fund revenue source and the Water and Sewer Department should transfer these collected fees monthly. The Department collected solid waste fees of $105,653 and $96,792 during the periods October 1, 2008 through August 31, 2010 and January 1, 2007 through September 30, 2008, respectively. However, the solid waste fees of $96,792 collected prior to October 1, 2008 were not remitted to the General Fund, but were retained by the Department. Subsequently, the City established a method to account for the solid waste fees within the General Fund. Of the $105,653 collected for solid waste fees during October 1, 2008 through August 31, 2010, the Department transferred $74,223 to the General Fund, leaving an amount due of $31,430.

Status per Prosecuting Attorney: Prosecuting Attorney requested an Arkansas State Police investigation into the matter and is awaiting the results of said investigation.

Town of Letona (Audit Period: 1/1/07 - 12/31/09):

2010 $8,406 conflict of interest disbursements to two Council members for mowing services ($4,305) and to a business owned by the Mayor ($4,101) without an authorizing ordinance.

Status per Prosecuting Attorney: Prosecuting Attorney wrote letter to Mayor (August 2010) instructing her to review the applicable law and ensure the town council take appropriate legal steps to comply with Arkansas law in the future with respect to any such related party transactions. Case has been closed.

City of Pangburn (Audit Period: 1/1/07 - 12/31/09):

2010 $1,000 conflict of interest disbursement to business owned by a Council member for carpet and installation without an authorizing ordinance.

Status per Prosecuting Attorney: Prosecuting Attorney wrote letter to Mayor (October 2010) instructing him to review Ark. Code Ann. § 12-42-107 regarding related party transactions so this type of violation of Arkansas law will be avoided in the future. Case has been closed.

White County (Audit Period: 1/1/08 - 12/31/09):

2010 $18,395 conflict of interest disbursements to a business owned by a county employee without an authorizing ordinance.

$998 improperly voided receipts. Former Deputy Collector was custodian of two receipts totaling $615. Collector was unable to identify custodian of the two remaining receipts totaling $383.

Status per Prosecuting Attorney: Prosecuting Attorney sent a letter to the White County Judge advising the county to pass the proper ordinances in the future before paying referenced “related party transactions” and cited the appropriate Arkansas law on the matter which directions to comply. Case has been closed.

Prosecuting Attorney requested an Arkansas State Police investigation into the matter involving former Deputy Collector and is awaiting the results of said investigation.


55

Judicial District Population: 96,024 Steve Oliver Circuit Judges: 4 Prosecuting Attorney


Garland County Garland County-Cedar Glades Park (Audit Period: 1/1/04 - 12/31/08):

2010 Park Project Coordinator Donald George, whose employment was terminated on December 2, 2008, established and maintained two bank accounts outside of County control. Adequate accounting records were not maintained nor was documentation available to support financial transactions relating to these accounts. Funds totaling $15,248 were spent without adequate supporting documentation and included checks issued to cash ($4,790), George ($600), and his daughter ($300).

Status per Prosecuting Attorney: This matter was presented to Prosecutor on September 9, 2010. It was forwarded to the Garland County Sheriff’s Department on September 10, 2010, for investigation and is still under investigation.

Garland County (Audit Period: 1/1/07 - 12/31/07):

2008 $60,094 landfill receipts over deposits. Landfill Clerk Rosa Bailey, whose employment was terminated, identified as custodian.

Status per Prosecuting Attorney: Ms. Bailey pled guilty on August 2, 2011, to the charge of Theft of Property Over $2,500. She was sentenced to a term of 120 months probation. Restitution was determined to be $29,907 to be paid at the rate of $242 per month beginning October 10, 2011. Said restitution shall be allocated as follows: $11,625 to the Arkansas Legislative Joint Audit Committee, and $18,282 to the Garland County Treasurer’s Office.

Town of Lonsdale (Audit Period: 1/1/08 - 12/31/09):

2010 $1,100 conflict of interest disbursements to Recorder/Treasurer’s spouse for mowing services without an authorizing ordinance.

Status per Prosecuting Attorney: Ethical matter, no charges filed.

Eighteenth Judicial District-East Garland County

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Andy Riner (Current) Judicial District Population: 30,149 Tim Williamson (2010) Circuit Judge: 1 Prosecuting Attorney


Polk County

Wickes School District (Audit Period: 7/1/08 - 6/30/09):

2010 $9,560 improper transactions. The District issued two checks for

supplies to a vendor; however, these checks were cashed by another party who has refunded only $2,390 to the District, leaving a balance due of $7,170.

Status per Prosecuting Attorney: All monies have been repaid to the Wickes School District. No criminal charges will be filed in this matter due to the fact that no criminal intent can be established on the part of any party involved in the questioned transactions. Our office considers this matter closed.

Note: No matters were reported in Montgomery County.

Eighteenth Judicial District-West Montgomery and Polk Counties

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Judicial District Population: 27,446 Tony Rogers Circuit Judge: 1 Prosecuting Attorney


No matters reported in Carroll County.

Nineteenth Judicial District-East Carroll County

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Judicial District Population: 221,339 Van Stone Circuit Judges: 6 Prosecuting Attorney


Benton County Town of Garfield (Audit Period: 1/1/09 - 12/31/09):

2010 $3,090 conflict of interest disbursements to family members of

Recorder/Treasurer for contract labor and services without an authorizing ordinance.

Status per Prosecuting Attorney: This matter was referred on October 1, 2010, for investigation into the Town’s having paid $3,090 to family members of the Recorder/Treasurer throughout 2009 for general type labor, mowing, and related lawn services, without the Town’s governing body having first issued an ordinance authorizing such payments pursuant to Ark. Code Ann. § 14-42-107. The status of this matter is that it is still under review by Prosecutors office.

Nineteenth Judicial District-West Benton County

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Cody Hiland (Current) Judicial District Population: 138,727 Marcus Vaden (2010) Circuit Judges: 5 Prosecuting Attorney


Faulkner County Hilltop Fire District #51 (Audit Period: 1/1/06 - 9/30/09): 2010 $5,403 misappropriated funds by Donald Wilkins, Jr. who was removed

as Fire Chief in December 2009. Lack of adequate internal controls and management oversight relating to the disbursement process resulted in a possible misappropriation of additional District funds totaling $59,720 paid to Wilkins.

$3,500 travel trailer purchased from Federal Surplus Property, but District did not comply with the agency’s usage of equipment regulations.

Status per Prosecuting Attorney: A charge of felony theft has been filed against Donald Lee Wilkins, former chief of the Hilltop Fire District #51. The Class B felony was filed October 16, 2010 and a pre-trial hearing has been set for August 5, 2011.

Town of Mount Vernon (Audit Period: 1/1/08 - 12/30/09):

2010 $8,864 improper purchases and charges. Unauthorized payments for cellular telephone and internet services ($3,717) paid on behalf of the Mayor and members of her family, unauthorized purchases ($2,777) made by the Mayor and identified as nonbusiness purchases, and purchases of a washing machine ($489) and lawn mower ($1,881) charged to the Town’s credit accounts with vendors by the Mayor. Subsequently, these credit purchases ($2,370) were paid, in installments, by the Mayor to the vendors. Of the improper purchases and charges, the Mayor, who resigned December 31, 2009, owes the Town $6,494.

Status per Prosecuting Attorney: A charge of felony theft has been filed against Anneliese Armstrong, former Mayor of Mount Vernon. The Class C felony was filed June 16, 2011 and the case is scheduled for a pre-trial hearing on October 6, 2011.

Twentieth Judicial District Faulkner, Searcy, and Van Buren Counties

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Faulkner County (continued)

Town of Twin Groves (Audit Period: 1/1/06 - 12/31/08):

2010 $108,654 unauthorized and undocumented disbursements. Mayor, in office for 2007 and 2008, ($307); Mayor, in office for 2006, ($588); Recorder/Treasurer ($2,351); daycare employees ($105,042); and purchase of books from a college for an employee ($366).

$12,854 undocumented disbursements to Wal-Mart. After obtaining vendor invoice information, purchases were summarized by description and amount, however, a business purpose could not be ascertained and some purchases did not appear to be for a public purpose.

$2,120 undocumented disbursements payable to “cash.”

$1,483 unallowable disbursements from Fire – Act 833 Fund. Of this amount, Recorder/Treasurer indicated $424 was used to purchase tires for her vehicle.

Status per Prosecuting Attorney: The prior administration determined that prosecution was not warranted in this matter and closed the investigation. I was not privy to the decision making process as it relates to not pursuing this matter, but it is my understanding that a letter of caution was forwarded to the Town of Twin Groves by this office. Unfortunately, I do not possess a copy of the letter in either electronic form or paper copy. In the absence of the actual letter, I was able to obtain an article from the Log Cabin Democrat which references portions of the prior prosecutor’s letter to the Town of Twin Groves.

University of Central Arkansas (Audit Period: 7/1/08 - 6/30/09):

2010 $4,528 inventory items reported missing to University Police included LaserJet printer ($1,128) from President’s Suite in Wingo Hall and Towle sterling silverware ($3,400) from President’s home.

Status per Prosecuting Attorney: Matters involving the University of Central Arkansas are subject to a federal investigation. Any potential action taken by Prosecutors office will be deferred until such time as the federal investigation is complete.


2010 $15,884 unauthorized expense reimbursement checks to Gregory Gordon, President of a student fraternity. Gordon was charged with three felony offenses and one misdemeanor offense.

Status per Prosecuting Attorney: Gordon was charged with Theft of Property, Burglary and Fleeing on Foot and sentenced to 120 days of probation. Gordon was ordered to pay restitution and fees in the amount of $19,777 to the University of Central Arkansas at the rate of $123.14 per month.


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2009 $400,000 unauthorized bonus compensation to President Lu Hardin. The University was subsequently reimbursed $100,000 by an individual member of the Board of Trustees and $200,000 by Mr. Hardin. The University also recovered payroll withholdings of $100,000 from appropriate agencies.

The employment agreement for Mr. Hardin provided, upon resignation,

compensation of earned, but unpaid salary and benefits prorated through the effective date of resignation. On August 28, 2008, Mr. Hardin resigned effective September 16, 2008, and his separation agreement, executed on September 2, 2008 (2008 Agreement), contained clauses for sabbatical and severance payments using public funds as follows:

Sabbatical payments totaling $234,381, in monthly installments, during the period September 2, 2008 through June 30, 2009, as well as the continuance of all fringe benefits.

Compensation of $821,841, in monthly installments, not to exceed $252,874 in any fiscal year during the period July 1, 2009 through September 30, 2012, or a lump sum payment of $670,000 by July 10, 2009, and health insurance premium payments by the University until September 30, 2012.

Subsequently, on March 20, 2009, another separation agreement (2009 Agreement) executed between the Board of Trustees and Mr. Hardin voided the severance payment clause of the 2008 Agreement. The 2009 Agreement contained a severance payment of $585,170 to Mr. Hardin and $11,822 for payroll matching taxes using private funds obtained from the University of Central Arkansas Foundation, Inc. Unless Mr. Hardin secures employment with comparable insurance coverage, he may remain on University’s health insurance program through September 30, 2012, with each party paying its respective share of the monthly insurance premium.

Op. Att’y Gen. no. 2008-186 indicates a board of an institution of higher

education may agree by contract to a sabbatical or severance payment upon an employee’s resignation or termination assuming the agreement was supported by mutual consideration and payment amount was not so unreasonable as to constitute a gratuity. According to the Attorney General, examples of payments supported by consideration include payment of compensation due under terms of former employment and payment in settlement of a bona fide dispute.

Considering Mr. Hardin’s employment and separation agreements and Op. Att’y Gen. no. 2008-186, we question whether the sabbatical and health insurance premium payments are supported by mutual consideration and/or a policy which requires employees granted a sabbatical to return to work after the sabbatical.


62



University of Central Arkansas (Audit Period: 7/1/07 - 6/30/08) (continued):

2009 $171,219 the University paid, or is committed to pay, for salary and fringe payments to three employees who resigned employment for services not performed during the period January 19, 2007 through June 30, 2009. These employees are Executive Vice-President ($25,935), Secretary to the President ($61,645), and Vice-President of Communications/Professor ($83,639).

The employment agreement of the University Head Football Coach (Coach) contained a clause to annually compensate Coach for participation in a television show presenting the University’s football team report during football season. Coach was to receive $32,500, $25,000, and $25,000 for 2007, 2006, and 2005 football seasons, respectively. If the University used public funds to pay these amounts, Coach would have received funds in excess of the position appropriation. Therefore, the University of Central Arkansas Foundation, Inc., (Foundation) accepted responsibility for payment of the contract amounts for Coach’s television show by reimbursing the University. However, the Internal Audit Office discovered the following questioned transactions occurred during the 2005 through 2007 football seasons.

Athletic Department invoiced ($32,500 for 2007, $25,000 for 2006, and $25,000 for 2005) the University’s primary advertising and marketing vendor (Vendor) for a football show “sponsorship.” Senior Vice-President Joe Darling was in charge of the Vendor account and these sponsorship amounts corresponded with amounts Coach received for the television show.

Vendor paid the Purple Circle (part of the Foundation) in 2005 and 2006 and the Athletic Department in 2007 for amounts invoiced by the Athletic Department and simultaneously invoiced the University the same amounts to recoup payments to the Purple Circle and Athletic Department.

Vendor invoices were submitted to the University for payment and coded as advertising expense.

The University, using public funds, paid the Vendor.

The University and the Vendor appear to have converted public funds to private funds, which the Foundation used to reimburse the University for contract amounts paid Coach for the television show.

The University executed a three-year agreement (Agreement) on May 17, 2004 with an individual and a corporation, owned by the same individual, to establish and operate an entity (Entity) to publish and distribute a magazine, The Oxford American. The Agreement provided for the Entity to operate on the University campus and the University to provide office space, office equipment and supplies, utilities, computers and related equipment, and telephone service, as well as services of three work-study students. To finance the operations of the Entity, the Agreement and applicable amendments also stipulated the University would advance funds totaling $550,000. The parties extended the Agreement for another three years on May 17, 2007, and as of April 2, 2008, the University


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University of Central Arkansas (Audit Period: 7/1/07 - 6/30/08) (continued): advanced additional funds of $10,000 and $140,000, resulting in a total of $700,000 advanced to the Entity for operational costs. The Agreement appears to conflict with the Arkansas Constitution. Repayment terms in the Agreement maintain, in the event the Entity shall be in a position of positive cash flow as determined by the Entity’s Board of Directors, the Board shall authorize distribution of twenty-five percent (25%) of such cash flow to the University until amounts advanced to the Entity are repaid. In addition, the Agreement required amounts the University advanced to the Entity be evidenced by a promissory note. However, a promissory note was not executed until April 2, 2008, nor was it collateralized. The promissory note for $700,000 indicated $140,000 was due six months from the date of the note and the remaining $560,000 was due under the original Agreement terms. As of report date, the University has not received any payment.

The University created the Strategic Growth Institute (SGI) in 2007 and hired an Executive Director and a Managing Director, both of whom live out of state. The mission of SGI is to offer community and economic development solutions for communities of all sizes through advanced consulting services. Program revenues and expenses were $339,862 and $321,031, respectively. The Executive Director owns a corporation, based in Georgia, which provides similar services as SGI. Three contracts were executed, on behalf of the University, between the Executive Director’s company and other entities in apparent conflict with Ark. Code Ann. § 21-8-304, which prohibits state employees from using their positions to secure privileges not available to others. Further, the University compensated the Executive and Managing Directors in excess of state salary limits by $1,977 and $2,437, respectively.

The Internal Audit Office (IAO) of the University conducted investigations involving cash shortages of:

$1,000 from a cashier’s drawer during fall registration on August 20, 2008; and

$2,000 from a cashier’s drawer during fall registration on August 22, 2007.

To assist with the investigation, the IAO contacted the University’s Police Department. Although the cashiers were custodians of these funds, the IAO and Police Department were unable to determine who was responsible for the missing cash.

Status per Prosecuting Attorney: Lu Hardin was charged with defrauding and obtaining money by false and fraudulent pretenses and wire fraud relating to the $400,000 unauthorized bonus compensation. Hardin pled guilty and was sentenced to five years of probation and ordered to perform 200 hours of community services each year of probation. Other matters involving the University of Central Arkansas are subject to a federal investigation. Any potential action taken by Prosecutor’s office will be deferred until such time as the federal investigation is complete.


64


Faulkner County (continued) Vilonia School District (Audit Period: 7/1/08 - 6/30/09): 2010 $125,000 misappropriated funds by two employees and a volunteer, all

of whom were arrested and charged with theft of property of athletic gate ticket and concession sales. Both employees resigned from employment. Bond Trust Fund reimbursed losses totaling $5,000.

Status per Prosecuting Attorney: Ricky Huey pled guilty to 10 counts of Theft of Property, Class B Felonies, was sentenced to 84 months probation, 200 hours community service, and ordered to pay restitution of $125,000 with $119,000 paid immediately and remaining $6,000 and fines, fees, and costs of $10,490 to be paid in monthly installments of $80. Rebecca Huey pled guilty to three counts of Misdemeanor Theft of Property charges and was sentenced to 12 months supervised probation, and payment of fines, costs, and fees totaling $1,240 with $1,000 fine suspended on condition of successful completion of all outlined terms. Rebecca Huey was also sentenced to 100 hours community service. Ruth Huey pled guilty to one count of Misdemeanor Theft of Property and was sentenced to 12 months supervised probation and payment of fines, costs, and fees totaling $1,240 with $1,000 fine suspended on condition of successful completion of all outlined terms.

Van Buren County

Van Buren County (Audit Period: 1/1/08 - 12/31/09):

2010 $1,140 Sheriff’s bond and fine revenue not deposited. Former Sheriff’s

office bookkeeper Lizabeth Carlo, whose employment was terminated October 15, 2008, indicated she misappropriated these funds. Carlo reimbursed $1,140 to the County.

Status per Prosecuting Attorney: Prosecutor was unable to locate file relating to the investigation referenced in the May 2, 2011 request from legislative audit. As a result, Prosecutor has requested a copy of files from legislative audit for review. A determination concerning the filing of charges will be made subsequent to review of file and a report of disposition concerning the matter will be made to legislative audit at that time.

Note: No matters were reported in Searcy County.


65

Judicial District Population: 61,948 Marc McCune Circuit Judges: 2 Prosecuting Attorney


Crawford County City of Cedarville (Audit Period: 1/1/08 - 12/31/09): 2010 $11,326 improper transaction. Mayor intercepted a vendor refund check

and deposited it in a bank account titled “Mayor Account.”

$14,545 improper transactions. Subsequent deposits to the “Mayor Account” included franchise tax revenue ($3,592), refunds ($66), miscellaneous revenue ($2,620), citation settlements ($642), and mileage reimbursement checks written to the Mayor from the general and street funds ($7,625).

$14,379 undocumented disbursements from the “Mayor Account.”

Status per Prosecuting Attorney: This matter was investigated by the FBI and turned over to the US Attorney for the Western District of Arkansas for prosecution.

Van Buren School District (Audit Period: 7/1/09 - 6/30/10):

2010 $9,157 misappropriation of funds. A District employee, whose

employment was terminated, was arrested on suspicion of theft of cash.

Status per Prosecuting Attorney: Ginger Garcia pled guilty to Theft by Deception, Class A Misdemeanor. The Court shall withhold imposition of sentence for a period of one year, conditioned upon good behavior. Garcia was ordered to pay restitution of $9,157 and fines and costs of $1,170. She was also ordered to perform 40 hours community service at the Crawford County Courthouse and immediately surrender her Arkansas teaching license.

Twenty-first Judicial District Crawford County

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Judicial District Population: 107,118 Ken Casady Circuit Judges: 4 Prosecuting Attorney


Saline County

Arkansas Committed to Education Foundation (Audit Period: 1/1/06 - 12/31/09):

2010 $79,636 misappropriated funds by former Executive Director Brandie L. Jones. Jones reimbursed the total amount.

Status per Prosecuting Attorney: Brandie Jones was convicted of a felony theft. Jones was sentenced to 36 months supervised probation, $150 in court costs, $100 fine, and a $20 booking fee. Jones paid full restitution of $79,636 to the Foundation and was ordered to pay restitution to Legislative Audit in the amount of $7,840 for costs associated with the investigation.

Town of Bauxite (Audit Period: 1/1/05 - 12/31/06):

2008 $13,438 additional compensation to Mayor Eddie Jones for water and

sewer work without an authorizing ordinance.

$1,550 undocumented/unauthorized payments to Mayor Eddie Jones ($800) and Police Chief William Davis ($750).

$1,376 missing equipment. Computer leased by Police Chief William Davis, with lease payments made by Police Auxiliary Fund, could not be located.

$880 undocumented disbursements from the Police Auxiliary Fund for two handguns that were not in possession of the Town.

$693 undocumented disbursements with Police Auxiliary funds.

Status per Prosecuting Attorney: This was referred to the Arkansas State Police for further investigation, but Prosecuting Attorney has not yet received information regarding the investigation. As it has been more than three years since the alleged conduct took place, we do not expect to file criminal charges. It is likely that any charges would be barred by the statue of limitations.

Saline County (Audit Period: 1/1/08 - 12/31/08):

2010 $850 improper transaction. Library Fund paid for a summer outing for staff and their family members.

Status per Prosecuting Attorney: Actions occurred under previous Library administration and new administration has taken corrective action. Our office will not be filing criminal charges, case has been closed.

Twenty-second Judicial District Saline County

67

Chuck Graham (Current) Judicial District Population: 68,356 Will Feland (2010) Circuit Judges: 3 Prosecuting Attorney


Lonoke County

Town of Allport (Audit Period: 1/1/07 - 12/31/08):

2010 $1,000 improper transaction. Proceeds from sale of police department vehicle were not deposited in a City bank account.

Status per Prosecuting Attorney: Sufficient information was not provided to support the filing of criminal charges in this matter.

Carlisle School District (Audit Period: 7/1/08 - 6/30/09):

2010 $588 conflict of interest disbursement to an employee for catering services without Board resolution.

Status per Prosecuting Attorney: Prosecuting Attorney’s office has notified the Carlisle School District of the inappropriate manner in which the $588 for catering services for the school was handled. This is an ethical issue and no charges will be filed.

City of Lonoke (Audit Period: 1/1/09 - 12/31/09):

2010 $1,588 improper transactions. Receipts not deposited ($1,160) and checks deposited, but not receipted ($428). Individual responsible could not be determined. Subsequently, two employees reimbursed $1,260 to the City, leaving unaccounted for funds of $328.

Status per Prosecuting Attorney: Per the City Attorney, they were unable to determine who was responsible for the missing funds. Two employees reimbursed the city $1,260. The City has developed better procedures for the control over funds. No charges will be filed.

Lonoke County (Audit Period: 1/1/08 - 12/31/08):

2009 $67,224 misappropriated funds. Custodian of these funds was Sheriff’s Office Bookkeeper Cassandra Pitts, whose employment was terminated. Bond Trust Fund reimbursed losses totaling $66,224.

Status per Prosecuting Attorney: Pitts pled guilty to Theft of Property, Class B Felony, was sentenced to 120 months suspended imposition of sentence, and ordered to pay costs and fees totaling $800 and restitution totaling $38,908 in monthly installments of $649.

Twenty-third Judicial District Lonoke County

68

23rd Judicial District (continued)


Lonoke County (continued)

Lonoke School District (Audit Period: 7/1/08 - 6/30/09):

2010 $840 conflict of interest disbursement to an employee for carpentry services without Board resolution.

Status per Prosecuting Attorney: The Prosecuting Attorney’s Office has notified the Lonoke School District of the inappropriate manner in which the $840 carpentry work for the school was handled. This is an ethical issue and no charges will be filed.

APPENDIX A ARKANSAS CODE ANNOTATED SECTION 10-4-419

10-4-419. Report of improper or illegal practices.

(a) (1) If an audit report presented to the Legislative Joint Auditing Committee or the appropriate standing subcommittee of the Legislative Joint Auditing Committee reflects evidence of improper practices of financial administration or inadequacy of fiscal records, the Legislative Auditor shall report the evidence to the appropriate executive official or officials affected thereby and to the governing body of the entity of the state or political subdivision of the state.

(2) If the findings relate to an entity of the state, the Legislative Auditor shall also report the findings to the Chief Fiscal Officer of the State.

(3) If the findings relate to a prosecuting attorney's office, the Legislative Auditor shall also report the findings to the Attorney General for review and appropriate action.

(b) (1) If an audit report presented to the Legislative Joint Auditing Committee or the appropriate standing subcommittee of the Legislative Joint Auditing Committee reflects evidence of apparent unauthorized disbursements or unaccounted-for funds or property by a public official or employee, the Legislative Auditor shall promptly report the transactions in writing to the prosecuting attorney for the county in which the entity of the state or the political subdivision of the state is located, the Governor, the appropriate executive official or officials affected thereby, and the governing body of the entity of the state or political subdivision of the state.

(2) If the findings relate to an entity of the state, the Legislative Auditor shall also report the findings to the Chief Fiscal Officer of the State.

(3) If the findings relate to a prosecuting attorney's office, the Legislative Auditor shall also report the same to the Attorney General for review and appropriate action.

(c) (1) The Legislative Auditor shall notify and cooperate with the appropriate prosecuting attorney on all matters that appear to involve a criminal offense.

(2) Upon request and with the approval of the cochairs of the Legislative Joint Auditing Committee, the Legislative Auditor shall cooperate in any other investigations by the appropriate prosecuting attorney, the Department of Arkansas State Police, or any other state or federal law enforcement agency.

(d) (1) While the Legislative Joint Auditing Committee is not established as an agency to effect through its own direct action the correction of improper practices of financial administration or the inadequacy of fiscal records, the prosecution of defaulting public officials, or the improvement of accounting systems in any entity of the state or political subdivision of the state, it is nevertheless determined that the action or nonaction on the part of the appropriate public officials in respect to the correction of the matters when called to their attention or in respect to the institution of criminal proceedings where proper, has pertinent bearing upon the question of the necessity for future remedial legislation.

(2) It is for this reason that the Legislative Joint Auditing Committee is authorized to inform public officials to the extent provided by law of the findings of the Legislative Auditor in respect to any such matters.

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Appendix A: Arkansas Code Annotated Section 10-4-419

(e) (1) If the Legislative Joint Auditing Committee determines that an entity of the state or a political subdivision of the state has not corrected the deficiencies noted in one (1) or more previous reports, the Legislative Joint Auditing Committee may request the prosecuting attorney of the judicial district in which the entity of the state or the political subdivision of the state is located to take appropriate action to assure that the records of the entity of the state or the political subdivision of the state are maintained in accordance with law.

(2) If the prosecuting attorney fails or refuses to take appropriate action within a reasonable time after receipt of notice from the Legislative Joint Auditing Committee that an entity of the state or a political subdivision of the state is not maintaining its records in substantial compliance with law, the Legislative Joint Auditing Committee may request the Attorney General to take such appropriate action as may be necessary to assure that the records of the entity of the state or political subdivision of the state are maintained in compliance with law.

(f) (1) By June 30 of each year, the Attorney General and each prosecuting attorney to whom the Legislative Joint Auditing Committee has reported a matter under this section shall file with the Legislative Joint Auditing Committee a disposition report on the status of the matters that have not been previously reported as resolved to the Legislative Joint Auditing Committee.

(2) Each disposition report shall include, but is not limited to:

(A) The date the matter was reported to the Attorney General or the prosecuting attorney;

(B) The amount of loss or funds unaccounted for in connection with the matter;

(C) The status or disposition of the matter; and

(D) Other comments pertinent to the investigation or disposition of the matter.

History. Acts 2005, No. 2201, 7; 2009, No. 446, 1.

Amendments. The 2009 amendment deleted the Legislative Council and preceding the Legislative Joint Auditing Committee in two places, and made a minor stylistic change.

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Appendix A: Arkansas Code Annotated Section 10-4-419

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APPENDIX B MEMORANDUM OF UNDERSTANDING

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