Members of the county’s Financial Management Committee closed the book on an investigation into audit findings and a fraud complaint on the collection and appropriation of funds under the previous Sheriff’s administration.
Carter County Sheriff Dexter Lunceford presented members of the Committee with a report detailing the findings of the state audit, information that was learned by the auditors in their investigation, and the actions he and his staff have taken to prevent similar incidents from happening in the future.
During the auditor’s investigation, state officials discovered that funds were being given to the Sheriff’s Office from outside agencies as donations or revenue and were not being remitted to the County Trustee’s Office as is required by state law. Carter County operates under the Financial Management Act of 1981 which requires all revenue or donations to be collected through the Trustee’s Office and then disbursed through the Finance Department following approval of the county’s governing body.
Local and state officials said they did not know these expenditures were being made, that Mathes was receiving any funds or donations, or that separate accounts existed.
The auditor’s also questioned an attempted expenditure by Mathes from the Sheriff’s Office’s Drug Fund.
The findings of the auditor’s investigation were turned over to the Tennessee Bureau of Investigation and the District Attorney’s Office.
During a previous Financial Management Committee meeting in August, Lunceford informed the committee members that the TBI and District Attorney’s Office had decided not to pursue any charges against former-Sheriff Chris Mathes regarding the findings of the investigation.
On Wednesday, Lunceford told the committee his report only dealt with the findings of the audit and the actions taken by his department in response.
“We’re not going to answer any questions about the TBI investigation,” Lunceford said.
Financial Management Committee Chairman Ray Lyons asked the members to take a few minutes to read through the report so action could be taken during the meeting and not delayed until January when the committee will meet again.
After reading through the report, Carter County Mayor Leon Humphrey made a motion that the committee take no further action regarding the audit or investigation.
“The TBI and the Attorney General’s Office have taken a stance on this and in their opinion this is closed,” Humphrey said. “We’ve taken every action possible in this Committee and this Commission. Two years later we’re back and case closed and we’re moving on.”
His motion received a second from Committee member Bobbie Gouge-Dietz and passed unanimously on a vote.
Lyons said he would like to keep the report from being made public and in his opinion as chairman of the committee the report should remain confidential. He then asked County Attorney Josh Hardin, who was in attendance to give an opinion as to whether or not the report to could be confidential and not made available to the public.
“If there were an ongoing investigation it could remain confidential,” Hardin said, noting the TBI investigation was closed and the committee had just decided to take no further action. “My advice is to release it to the public.”
Following that advice, Humphrey made a motion to release the report immediately to the public. The motion was seconded by Committee member Danny Ward and passed unanimously on a vote.
The Elizabethton Star obtained a copy of the report following the committee meeting.
According to the report, the investigation began in September 2014 when Lunceford took over the position of Carter County Sheriff after Mathes’ term ended on August 31, 2014. Lunceford said he found some issues of concern regarding a privately held bank account that contained funds used to purchase items or services for the Sheriff’s Office. Lunceford took his concerns to then-Carter County Finance Director Ingrid Deloach, who then filed a Fraud Complaint on behalf of Carter County with the Tennessee Comptroller’s Office which initiated an audit and investigation.
In November 2014, the Comptroller’s Office released a report that questioned nearly $76,000 in expenditures by the Sheriff’s Office and accounting practices used by the Mathes administration. The questions surrounded an account held by Tennessee Blind Enterprises (TBE), the vendor which operates the commissary program at the Carter County Detention Center, and expenditures made from that account for the benefit of the Sheriff’s Office.
In his report to the committee, Lunceford listed the following specific examples from the investigation regarding the TBE account.
• “$2,300 check to a Northeast Community Credit Union account (an account without a name attached). The TBE vendor Missy Hammonds, state that on August 12, 2014, former Sheriff Mathes directed her to write a $2,300 check to a Northeast Community Credit Union account. This credit union account is now known to belong to Mr. Mathes’ personal secretary, Ms. Jessica Harris. This check was written after the TBE Commissary vendor, missy Hammonds, stated that she refused to follow Mr. Mathes’ direction to write a check to Ms. Harris for a ‘bonus.’ This was not a donation of goods or services, but of cash.”
• “$2,400 ‘Things’ check. The TBE Vendor, Missy Hammonds, stated that on August 12, 2014, former Sheriff Mathes directed her to write a check to ‘Things’ or ‘Things Advertised’ for $2,400. The note with the check stated that this was payment for a 12 month anti-drug awareness poster display – $200/month for a total of $2,400. No one in the Carter County Sheriff’s Office department leadership or Drug Unit was aware of this invoice, contract, or requirement. We could not find any display and ‘Things’ appeared to be a closed business. It was later determined that this payment was for the display of one (1) anti-drug awareness poster placed on the wall of a business located in Johnson City operated by the former owner of ‘Things,’ Mr. Jarvis Bennett for a period of 12 months.”
• “E-Cigarettes. The TBE Commissary vendor was concerned that former Sheriff Mathes required her to purchase 1,000 e-cigarettes for re-sale in the jail at a price of $17 each from Mr. Jarvis Bennett (owner of ‘Things’). The TBE Vendor, Ms. Hammonds, reported that she could purchase this same e-cigarette on the open market for $6 each. Ms. Hammonds stated that she felt coerced to purchase the e-cigarettes at the $17 price or lose her contract. The vendor stated that she attempted to sell the e-cigarettes at $20 each in the jail and they failed to sell due to the high price. Later, the TBE vendor stated that former Sheriff Mathes directed her to sell them at $15 each which resulted in a $2 per cigarette loss.”
In December 2014, the Carter County Finance Department filed a second Fraud Complaint with the Comptroller’s Office regarding the suspected improper disbursal of county revenues on behalf of Mathes by a company called Law Enforcement Publications. According to the Comptroller’s Office, the accumulative amount disbursed appears to be at least $36,000 and potentially as much as $42,000 over a six-to-seven year period during the Mathes Administration.
Those funds were revenues due to county from the sale of advertisements on the annual Sheriff’s Office calendar.
According to the report, a representative of Law Enforcement Publications, David Henry, said they had executed a contract with Mathes seven or eight years prior as an agreement to produce the calendar, sell ads and return $6,000 each year in proceeds to the Sheriff’s Office to be spent at Mathes’ discretion. “Mr. Henry stated that the former Sheriff directed him each year to write six (6) $500 checks to various individuals for ‘cash scholarships’ and that the remaining $3,000 would be spent as directed by Mathes on items for the Sheriff’s Office,” the report states.
According to the report, the concern involving the Drug Fund at the Sheriff’s Office deals with a check written by Mathes to East Tennessee ATV for the amount of $3,000 for “undercover camper and equipment storage cost.” The check was returned to the Sheriff’s Office by the bank as “not authorized” due to the fact it only had one authorized signature and any checks written from the Drug Fund account require two authorized signatures.
The report states that Mathes and his secretary both signed the check but the Harris was deemed as an unauthorized signer by the bank.
“An initial inquiry into this invoice revealed that no one at the Sheriff’s Department was aware of a contract or requirement to store one of the Sheriff’s Department’s old Federal Emergency Management Agency (FEMA) trailers on East Tennessee ATV’s lot,” the report states. “The Sheriff’s Office Executive Officer stated that East Tennessee ATV told him previously that they would store the trailer for free. Later, in his response to the audit findings, former Sheriff Mathes stated that the money was to be paid to the East Tennessee ATV for ‘a covert office/meeting place.’ No one in the Drug Unit or Sheriff’s Office was aware of any such office, meeting place, or agreement.”
In the report, Lunceford listed the following recommendations and remedies, many of which he said had already been implemented by his department:
• All revenues generated from the operation of the jail commissary should be remitted by the TBE Manager directly to the County Trustee on a monthly basis and all operating expenses should be appropriated by the County Commission and paid through the County Finance Department.
• Employee bonuses should only be approved for distribution by the County Legislative Body to ensure fair and equitable distribution of benefits as well as ensuring proper payroll deductions and income tax reporting procedures are followed.
• All revenues generated from the sale of advertisements on the Sheriff’s Department Calendar should be remitted by the Calendar Vendor directly to the County Trustee upon receipt, and all operating expenses should be appropriated by the County Commission and paid through the County Finance Department.
• Recommend we continue to follow the procedures approved by the Comptroller that require two authorized signatures on a check written out of the Drug Control Checking Account and recommend that the two authorized signatures remain only as the Sheriff and his appointed Chief Deputy Sheriff.
• If desired by the County Legislative Body, scholarships or sponsorships should be disbursed only by the County Commission. If desired, recommend the establishment of a scholarship selection committee with specific advertising, screening, and selection criteria for scholarship applicants which should be established to ensure fair and equitable distribution of these funds.
• We recommend the Sheriff should retain the right to approve or deny items for sale by the commissary vendor. However, the Sheriff should not require the vendor to purchase items for sale in the Carter County Commissary from any specific company or sub-vendor in order to prevent the appearance of coercion or impropriety.
• Audit recommendation of recovery of unauthorized compensation. This recommendation is for consideration by the County Legislative Body.