The Atlanta Journal-Constitution
Report details agency's slush fund
Investigators describe misuse of seized assets, deception by division of state Revenue Dept.
A division of the Department of Revenue unlawfully held onto millions of dollars in seized funds and a high-ranking agent misled his superiors to justify spending it on vehicles, Fitbits and exercise equipment, state inspectors have found.
The report by the Office of the Inspector General, released Tuesday, confirmed reporting last year by The Atlanta Journal-constitution and Channel 2 Action News showing that Revenue’s Office of Special Investigations used money seized in tax investigations as an office slush fund.
The AJC and Channel 2 investigations led Revenue to end its practice of keeping seized cash and assets and return $2.1 million of that money to the state treasury, where it should have gone in the first place. The Inspector General’s investigation began after it received complaints from a lawyer representing reality show personalities Todd and Julie Chrisley, the report noted.
The spending by Revenue’s investigation division was “clearly wasteful” and “gave the appearance of extravagance,” the report found. It noted that some of the substantiated allegations against Josh Waites, who once headed the division, have been forwarded to the State Attorney General for possible criminal prosecution.
Revenue Commissioner Robyn Crittenden, who took over the department in July, thanked the Inspector General’s Office for the investigation and pledged further reforms.
“The department is actively moving forward to ensure the findings highlighted in this report are remedied,” Crittenden said Tuesday. “We are focused on the mission of the Department of Revenue to promote public confidence and compliance while providing excellent customer service. We are committed to consistently doing the right thing and serving the taxpayers of Georgia with integrity and accountability.”
David Cooke, Waites’ attorney, called the Inspector General’s report “misleading, incomplete and just plain wrong.”
“Had he bothered to interview Mr. Waites prior to writing it, he would know that,” Cooke said.
The Inspector General’s investigation revealed new findings that allege Waites disregarded legal advice provided by a top state prosecutor. He also intentionally misled Revenue’s leadership about its ability to collect and spend the seized money, the report said.
This includes Waites sending a Sept. 24, 2019, email to his superiors that included only part of an email he received earlier that day after he sought advice from Pete Skandalakis, executive director of the Prosecuting Attorneys Council of Georgia.
Waites edited Skandalakis’ reply, which he then forwarded to Revenue leadership, to make it appear Skandalakis approved the spending of the money, the Inspector General’s report said. Deleted from the forwarded email to leadership was Skandalakis’ opinion that the money instead “should be sent to the state treasury,” the report said.
Skandalakis said his office “consistently provided sound legal advice to Mr. Waites” because the office’s only objective was to make sure “the law as written is followed.”
Skandalakis applauded the Inspector General’s investigation and noted that, when collected lawfully, seized funds and property derived from illegal activities can be a valuable tool for fighting crime.
“It is, therefore, incumbent upon all of us, law enforcement officers and prosecutors, to adhere not only to the letter of the law but the spirit of it as well,” he said.
State Department of Audits and Accounts records show Revenue took in more than $5.1 million in asset forfeiture funds from 2016 to 2019. Revenue discontinued the practice in March 2020.
Waites resigned from the agency that same month just as the AJC and Channel 2 were about to report he falsely stated in his job application he had a degree from a college that doesn’t exist.
Inspector General Scott Mcafee said Waites was interviewed in February 2020 about a discrepancy in his job application, but did not call him back in when the probe widened.
Mcafee said the spending was well-documented. “There is nothing that can be explained away from an interview,” he said.
Under Waites’ watch, his office
spent about $800,000 on vehicles, $321,000 on office furniture, $40,000 on fitness equipment and $6,660 on Fitbit devices, the report said.
The AJC previously reported that the division also used the funds to buy engraved firearms, stress balls shaped like beer mugs, wireless headphones, a toaster oven and commemorative law enforcement badges.
The misconduct “did not form overnight, but was years in the making,” Mcafee said. The investigation “revealed an office culture at the highest levels of leadership within Office of Special Investigations that disregarded any semblance of their professional responsibilities.”
Mcafee thanked Revenue’s current leadership for cooperating with the investigation. “Unfortunately the misused money highlighted here is something taxpayers will never see returned in full,” he said.
Mcafee’s investigation also found that former Revenue Commissioner David Curry, a Republican running for the 10th Congressional District, violated conflict of interest rules. This occurred in December 2019, when a barbecue restaurant Curry owned catered an event for 40 Revenue employees.
At Waites’ suggestion, Curry allowed his restaurant in Mcdonough to supply the food and beverages, the report said, adding that the restaurant did not retain any documentation to show how much was paid.
The report said Revenue staff filed numerous complaints about the event. They had to pay for their own meals and felt pressured to attend because they knew their boss owned the restaurant, the report said.
On Tuesday, Curry said he offered to treat his staff at the voluntary luncheon but was advised against it due to the potential for an ethics violation. “Each employee who chose to participate paid for their own meal individually and was charged a fair-market rate of $9.95 per person,” he said.
At Revenue, Waites headed a number of high-profile cases, but the abuse of the seized funds came to light largely due to his pursuit of the Chrisleys, whose TV show “Chrisley Knows Best” debuted in 2014. Their lawyer, Chris Anulewicz, filed a complaint against Waites and his office last year, the Inspector General noted.
In 2019, the Chrisleys settled a tax evasion case with the Department of Revenue for $150,000, but they also stand indicted in federal court on tax evasion and other charges. (The Chrisleys also have sued Waites for defamation, a case that is still pending.)
The Inspector General’s report noted that Waites’ office improperly filed a type of request to the U.S. Treasury Department reserved for investigating suspected terrorists and money launderers to gain access to the Chrisleys’ financial records. And it criticized Waites for posing for photos with seized furnishings from the Chrisleys’ home.
“By posing on the Chrisleys’ furniture, Director Waites and other senior DOR leadership undermined DOR’S ability to maintain a position of impartiality in the enforcement of state laws,” the report concluded.