An ‘Elaborate Scheme’

COUNCIL REACTS TO REPORT OF MISSING MONEY

FARMINGTON — The city’s former finance director and court clerk used an “elaborate scheme” to change District Court records to hide the fact that money was missing from court revenues, said Kim Williams, assistant legislative auditor with Arkansas Legislative Audit.

Jimmy Story, who worked for the city of Farmington for 21 years, is accused of misappropriating revenues from Farmington District Court and the city’s general fund for eight years, according to an investigative report issued Oct. 13 by Arkansas Legislative Audit during a meeting of the Legislative Joint Auditing Committee.

The report shows that Story received cash revenues for the court and city but did not deposit the money into appropriate bank accounts.

“He was going in and altering the guilty pleas and saying the judge had changed it,” Williams said. “It took time to keep up with it.”

The audit report states that Story made more than 14,000 illegal adjustments to fabricate reasons that fines, costs and fees collected were not entered into the court’s case-management system.

Graham Nations, District Court judge, released the following statement after the legislative audit report was made public: “Our court has been aware of this ongoing investigation for some time, and we have been working closely with all investigative authorities throughout this process. As this involves an ongoing investigation and probable court action, it would be inappropriate for anyone to comment. Our judicial system is based entirely

on the people’s ability to trust our courts to always do what is right. We look forward to a speedy and just resolution of this matter.”

Of the total, $1.5 million is missing from District Court fines, costs and fees, while $43,629 is missing from the city’s general fund.

Story resigned from the city Dec. 6, 2016, but discrepancies were not discovered until after he left. City officials took their concerns to the Washington County Prosecuting Attorney’s office and it was recommended to turn the investigation over to the FBI and Legislative Audit.

Story is under federal investigation for misappropriation of funds, according to a spokesman with the U.S Attorney’s office in Fort Smith.

This is the second time in four years the city of Farmington has had problems with missing money.

Dan Ledbetter, Farmington’s former Public Works director, was charged with felony theft of property on Nov. 8, 2013. He pleaded guilty to felony theft on Aug. 12, 2014.

Ledbetter admitted to selling city business permits to a local builder and depositing the money into his personal business account, instead of distributing and reporting the funds to the city of Farmington.

Ledbetter was sentenced to 60 months supervised probation and agreed to pay restitution. He reimbursed the city the full amount owed, $61,186.

Two City Council members last week said they planned to ask more questions in the future.

“I’m sick over it,” said alderman Bobby Morgan. “I don’t know how we let it get this far when we had people who were auditing our books.”

Morgan said he believes the City Council should be involved because council members represent the taxpayers.

“What do we do to see that this doesn’t happen again? It’s happened twice,” Morgan added.

Personally, Morgan said, he does not think the city should accept any cash payments. He recommends surveillance cameras be placed at City Hall.

“I promise you, I am going to ask questions,” Morgan said. “I may make some people mad — but that’s too bad.”

Council member Linda Bell drove to Little Rock to sit in on the Legislative Audit Committee meeting. In that meeting, Farmington Mayor Ernie Penn and city business manager Melissa McCarville answered questions and outlined what steps were being taken to safeguard city funds.

As court clerk and finance director, Story was the sole employee responsible for preparing and making bank deposits, reconciling bank statements and entering information in the the court’s case-management system.

The city has since hired a deputy clerk and will segregate duties in the four-person office so no single person has control over deposits, cash, reporting or reconciliations.

Bell said she feels comfortable with the new processes put in place at City Hall to make sure it will not happen again.

“We certainly will learn from things like this,” Bell said. “I think it will make us a stronger government.”

She said she learned a lot from being at the Legislative Audit Committee meeting and spent time last week observing in District Court in Farmington and observing the court clerk.

Bell said she knows people in the community are wondering “how in the world did this happen?”

She’s wondered the same thing, she said, adding, “It did and it was pretty masterful. Lesson learned.”

The lesson she has learned, Bell said, is that she needs to be better informed. To do so, she said, she will have to get out in the field, not just attend a City Council meeting once a month.

“To be a part of the City Council and a part of city government, I need to have a working knowledge. That is what I see as my ultimate responsibility in serving the city of Farmington.”

Council member Diane Bryant said she is glad the city now has new safeguards in place.

“It just hurts me,” Bryant said. “It’s just so devastating to think someone did this.”

State Sen. Uvalde Lindsey of Fayetteville is a member of the Joint Legislative Audit Committee and was at the meeting on Farmington’s audit.

Lindsey said the corrective action the city has taken is what the committee wanted to hear.

“That’s the biggest concern,” Lindsey said. “Yes, it happened. Let’s stop the next person from doing it.”

Penn said the city should be eligible to receive $300,000 in reimbursements through fraud insurance from the Arkansas Municipal League. However, from what he understands, this money would not be available until the case has been adjudicated.

The city basically is in a waiting game. Penn said he hopes Story will be charged in the near future.

“We’re waiting for the U.S. attorney, FBI and federal agencies to take some type of action,” Penn said. “We’re at their mercy.”

A private accounting firm, Przybysz & Associates of Fort Smith, audited the city of Farmington for the years outlined in the investigative audit — Jan. 1, 2009, to Dec. 6, 2016. A representative with the accounting firm could not be reached for comment.

“I promise you, I am going to ask questions. I may make some people mad — but that’s too bad.” Bobby Morgan Farmington Alderman

“To be a part of the City Council and a part of city government, I need to have a working knowledge. That is what I see as my ultimate responsibility in serving the city of Farmington.” Linda Bell Farmington City Council