Theft and misuse of public money continue to be a concern as outlined in two reports released Wednesday by the Tennessee Comptroller€™s office.

The 2014 Report of Cash Shortages updates the status of money stolen and missing from Tennessee’s 95 county governments as of June 30, 2014. The report documents money stolen during the 2014 fiscal year, as well as previous fiscal years.

Meigs County has the largest cash shortage at $26,604.17. The county’s finance director is under scrutiny for the missing cash. This latest comptroller’s report shows that the issue still remains unresolved.
Other counties in the Upper Cumberland area with shortfalls include the following:

Bledsoe County – Ambulance Service Department An investigative report dated October 7, 2013, by the Comptroller’s Division of Investigations, Financial and Compliance Unit reported a cash shortage of at least $2,568.04 existed in the Bledsoe County Ambulance Service at April 30, 2013. This report disclosed that the former emergency management services director purchased controlled substances for which its usage is unaccounted, resulting in a cash shortage of at least $2,568.04. On May 7, 2014, this shortage was liquated when the former emergency management services director paid restitution of $2,568.04.

Cumberland County – Veteran’s Service Office The Comptroller’s Division of Investigations, Financial and Compliance Unit issued an investigative report dated August 26, 2013, on the Cumberland County Veteran’s Service Office (VSO), an organization to assist veterans and needy veteran families to obtain government benefits. A cash shortage of at least $134,244.58 was identified in the VSO. On October 3, 2014, the defendant pled guilty to theft over $10,000, received an eight year suspended sentence, and paid $50,000 in restitution. The plea agreement reduced the theft amount by $12,437.79. The remaining $50,000 in restitution is to be paid at $175 per week through the Cumberland County Office of Circuit Court.

Fentress County – Library On January 28, 2014, the Comptroller’s Division of Investigations, Special Investigations Unit issued an investigative report of selected records of the Fentress County Library. The investigation focused primarily on the period January 1, 2010, through May 31, 2013. The investigation revealed that the Fentress County Library Director misappropriated library funds totaling at least $40,217 and historical society funds collected by library employees totaling at least $728. The director used several schemes to divert the funds for personal use. Investigators determined that the director had deposited $7,000 of personal funds into the library account reducing the outstanding balance of misappropriated funds owed to the county of $33,217. In January 2014, the Fentress County Grand Jury indicted the former director on multiple counts of theft, forgery, and one count of official misconduct. On September 25, 2014, the former director pled guilty, received ten years of probation, was ordered to pay restitution of $25,345, and was allowed to pay $200 per month beginning October 2014 toward the restitution. Restitution outstanding totals $24,617.

Fentress County – Office of Sheriff On December 17, 2014, the Comptroller’s Division of Investigations, Financial and Compliance Unit issued an investigative report of selected records of the Fentress County Sheriff. This report provided that on April 2, 2012, the Fentress County Sheriff’s Department seized $2,277 on a drug-related offense. In a plea agreement dated April 30, 2012, the defendant pled no contest to the drug offense and forfeited the $2,277. However, our review of records of the county trustee and Sheriff’s Department disclosed that the forfeited funds were never received by the county trustee or deposited into a Sheriff’s Department bank account. In addition, seizure forms for this drug offense were never submitted to the Tennessee Department of Safety as required by Tennessee Code Annotated, Section 40-33-204(g). As of August 31, 2014, the $2,277 is unaccounted. This cash shortage resulted from a lack of management oversight. This finding has been discussed with the district attorney general.

Morgan County – Office of County Clerk A special report dated February 10, 2011, for the period July 1, 2009, through December 22, 2010, reported a cash shortage of $54,611.33 on December 14, 2010. The state Comptroller’s Office conducted a special investigation with the assistance of the Tennessee Bureau of Investigation resulting in the above-noted cash shortage. Subsequently, the former county clerk liquidated the cash shortage. However, the clerk was also ordered by the Criminal Court of Morgan County, to repay $11,562 to Morgan County for a portion of the extended audit costs associated with the cash shortage. The unpaid balance of the audit costs totals $7,773.

Overton County – Millard Oakley Public Library A special audit report dated June 4, 2012, for the period July 1, 2008, through March 26, 2012, reported a cash shortage of $5,999.53 at March 2, 2012. This cash shortage included disbursements from the library’s checking account for personal expenses of the deputy director totaling $2,289.58. In addition to the personal expenses, the deputy director also collected cash and checks on behalf of a nonprofit organization, Friends of the Library; however, instead of turning the collections over to the Friends of the Library, the deputy director deposited these funds into the library’s checking account in an apparent attempt to balance the library’s books by replacing the cash taken from the library with the nonprofit’s funds. This substitution scheme totaled $3,709.95. On February 18, 2014, the defendant pled guilty to theft of property over $1,000 and received a three-year sentence suspended to three years of supervised probation and 100 hours community service, as well as being ordered to pay restitution of $3,709.95. No restitution has been received as of January 5, 2015.

Putnam County – Office of Assessor of Property An investigative report dated March 27, 2014, by the Comptroller’s Office of General Counsel revealed that the Putnam County Assessor of Property used county funds totaling at least $2,355 to purchase computers and accessories, which he traded or sold for his personal benefit. During the period April 1, 2013, through March 15, 2014, the assessor used a county credit card to purchase at least eight computers and related accessories totaling $2,355. He then sold these computers for cash, kept the cash for his own use, or traded the computers to pay off his personal debts. The assessor acknowledged to Comptroller investigators that he had sold or 26 traded these computers for his personal benefit. On March 24, 2014, the assessor resigned from office, and the Grand Jury indicted the assessor on one count of theft over $1,000 and one count of official misconduct. On December 12, 2014, the former assessor of property pled guilty to theft, agreed to pay restitution of $1,956.77, and agreed to serve three years of probation. He also agreed to a two-year suspended jail sentence for the charge of official misconduct. The former assessor has not paid any of the $1,956.77 restitution to date.

The state’s 95 counties began the last fiscal year with $775,221.12 in cash shortages that had not been recovered. During the year, $675,741.60 worth of new shortages were detected. Counties were able to recover $661,981.49 through restitution payments, insurance claims or other means. That left a net unrecovered shortage of $788,981.23 at the end of the fiscal year.

The Comptroller’s office also released its first report detailing cash shortages and other thefts for Tennessee municipalities, internal school funds, utility districts, housing authorities and other governmental entities. These shortages were reported in fiscal year 2013 and earlier.

Fiscal year 2013 began with $1,640,277 in unrecovered cash shortages. During the year, $4,485,021 in new shortages were detected. A total of $4,932,640 was recovered during the fiscal year, leaving an unrecovered shortage of at least $1,154,633 as of June 30, 2013.

“These reports show why Tennesseans should join our office in helping make government work better,” Comptroller Justin P. Wilson said. “I am pleased to note the continuing efforts to recover substantial amounts of public money, but theft remains a problem. I encourage all government leaders to follow auditors’ recommendations and take the necessary steps to prevent fraud, waste and abuse of public money.”

Both reports provide explanations of how the shortages were discovered, methods used to steal the money, corrective steps taken to prevent future thefts and legal actions taken against those responsible.

To view the 2014 Report of Cash Shortages online, click here (PDF).