Mannsville audit reveals irregularities

Findings include possible embezzlement, misspending

Staff Writer rellis@oklahoman.com

MANNSVILLE — A state audit of the town of Mannsville has revealed possible embezzlement and financial irregularities totaling more than $70,000.

Mannsville is a small town of fewer than 1,000 people about 15 miles west of Tishomingo in south central Oklahoma.

The failure of Town Treasurer Shonda Barnes to properly do her job and a lack of oversight by town trustees are to blame for much of the financial mismanagement, auditors

said.

“This is a case where they were not providing oversight and there was way too much control with one employee,” said State Auditor Gary Jones.

Barnes denied any wrongdoing Friday.

“I rarely had any access to the money,” Barnes said, adding that it was other employees who did most of the postings for cash payments on utility bills and credit adjustments that auditors found problematic.

Johnston County District Attorney Craig Ladd said Friday that he is reviewing the audit report for potential criminal charges.

Auditors found financial irregularities in a number of areas, including the handling of utility payments, petty cash, payroll and a Rural Economic Action Plan (REAP) grant.

“Internal controls over the collection and processing of utility revenues were inadequate and almost non-existent,” auditors said, adding that the town was unable to properly account for at least $10,000 in utility payments — many of which were paid with cash.

Auditors identified another $40,000 in “questionable expenditures” that were made with petty cash, a credit card, debit card or from general funds.

Inmate lunches

Between March 2012 and December 2015, the town spent “more than $29,000 on food purchases that were not properly supported with receipts and were not adequately documented as to their municipal purpose,” auditors said.

Nearly $15,000 of that was spent on “inmate lunches” at two local establishments, including $8,063 that was spent at Bill’s Cafe, where the town treasurer’s ex-husband and daughter were employees or proprietors, auditors said.

Jones, the state auditor, said the town should not have been spending any money on inmate lunches because the prison system provides inmates with sack lunches.

Barnes defended the decision to buy lunch for inmates, saying they worked hard and saved the town “at least $90,000.” She said there were only two restaurants in town at the time and the purchases were alternated between them.

Barnes said the practice of buying inmate lunches is common with other governmental entities in the area that use inmate labor.

‘Fictitious’ documentation

Auditors alleged that Barnes submitted a $4,212.10 “fictitious invoice” to the Southern Oklahoma Development Association for the reimbursement of funds in connection with the REAP grant and that another $3,044.91 “fabricated invoice” was submitted to Johnson County for reimbursement of grant expenditures.

The document the town represented as being a $4,212.10 invoice from an electric supply company was really just a price quote the town had obtained five months earlier, auditors said.

Barnes insisted the town really did pay the electric supply company and said she didn’t understand the auditor’s finding.

Jones said the audit took a lot longer than it should have and will end up costing a lot of money because the town had incomplete records and town officials were not very cooperative.

Attempts to stop audit

Jones said former state Rep. Fred Stanley of Madill met with both his office and the local district attorney’s office in an attempt to stop the audit.

Stanley told The Oklahoman that he was just trying to explain to them that an audit would be a waste of money because critical records had been stolen or destroyed, making a proper audit impossible.

A few years ago, town officials uncovered a scheme in which an employee appeared to be improperly crediting her own utility account and accounts of family members, Stanley said.

After that employee came under suspicion, she quit suddenly and officials discovered that records that could have implicated her had been destroyed or come up missing, Stanley said.

Curiously, a portion of those records resurfaced at the town hall more than a year after the initial request for a state audit was made, prompting a strange letter to the auditor’s office from Mannsville Mayor Don Colbert.

“I do not have any explanation for this miraculous discovery,” Colbert said in his letter. “I can only assume that these files were intentionally brought into the office and have been returned to the office to impede the investigation and to aid in the demise of the current city administration.

“It seems to me that those responsible for removing the files initially and the one responsible for returning the files should be accountable for their actions and should be prosecuted for the crimes they have committed.”