Wednesday, June 5, 2019

State Auditor: Pascagoula Misused Bond Money

State Auditor Shad White issued the following statement. 

Today State Auditor Shad White announced his office has issued demand letters to two former City of Pascagoula employees this week. Robert Parker, former city comptroller, and Joseph Huffman, former city manager, received demand letters for exercising improper financial management of bond proceeds. The total amount of both demands is $54,215.17 and includes all investigative costs and accrued interest.

In December 2014 and again in June 2017, the City of Pascagoula entered bond agreements totaling over $27 million. The bond proceeds should have been deposited into a bank account separate from the general fund account to ensure adherence to bond terms, which mandated the bond revenue be spent on infrastructure and other specific projects in the city.

After receiving a complaint, audit investigators determined Parker and Huffman knowingly and improperly transferred bond proceeds into the City’s general fund account. This practice caused the city to forego over $31,500 in interest revenue which would have accrued in the appropriate account. It also created the illusion of a budget surplus. While payments for bond debt were made in a timely fashion, and no money was stolen from the City of Pascagoula, mixing bond money into the general fund account is improper.

“The taxpayers of Pascagoula should know that $14 million is not missing from their bank account, but millions in bond money was spent on general operations in 2014 and 2017,” said White.

“These laws about bond money exist for an important reason. They exist to make sure policymakers don’t tell the public they are taking on a bond debt for one purpose but then actually spend the money on something else. They exist to avoid confusion about how much a city or county actually has to spend on general expenditures, like salaries and administration. The law about spending bond money was not followed in this case, creating a lot of turmoil in Pascagoula.”

District Attorney for the 19th District Angel Myers McIlrath said, “The State Auditor’s Office conducted a thorough investigation into the City of Pascagoula’s finances, as a result of concerns brought to them and my office by Mayor Maxwell.  The Grand Jury, after having heard the details and outcome of the investigation, determined that there was no criminal wrongdoing and I am confident in their decision.  The fact that the Grand Jury did not find any criminal conduct does not preclude the State Auditor from pursuing civil remedies based on their investigation.”

The demand letter issued to Parker is worth $47,395.91, and the letter issued to Huffman is worth $6,819.26. Each amount corresponds to the amount of foregone interest revenue during the tenure of each man at the City of Pascagoula, respectively.

The employment of Parker and Huffman was covered by a $50,000 and $162,000 surety bond, respectively. Surety bonds are similar to insurance designed to protect taxpayers from corruption.

If either man fails to pay the full amount of the demand within 30 days of delivery, the case will be referred to the Mississippi Attorney General to be litigated.


Anonymous said...

Maybe I am missing something, but it looks like these 2 did not profit from this transaction. The entities that did profit apparently were the banks which served as the depositories. Instead of the banks paying the legally required rate of interest, apparently they deposited into low or non interest bearing accounts. The banks should be on the hook for interest they should have paid for the use of these funds.

Anonymous said...

$54k is a drop in the bucket compared to the $14 million hole the City "discovered" just last year, but I guess its newsworthy.

Anonymous said...

Shad White best not make an improper U turn lest he get life in prison.....

Karma....she’s for real

Anonymous said...

Is this the same Pascagoula whose Mayor will be the new PSC Commissioner because the Mississippi GOP kicked Perry Parker off the ballot?

Anonymous said...

Go Mr. Shad!

Anonymous said...

Just another case the Attorney General Jim Hood will throw in the trash, just like Canton Municipal Utilities. HOOD WONT GET the white vote from Lake Caroline!!!!

Anonymous said...

At least one person in MS expects state and city employees to know what they are doing and actually do it. Good to see.

Anonymous said...

Shad better watch his back, the ole boys don't like an auditor who actually does his job. He must have no plans for higher office.

Anonymous said...

@9:33 Two things:

1) Exactly....soooo, just who are Phil Bryant and Stacey Pickering? As State Auditors they uncovered zilch compared to Mr. White.....that's a lot of looking the other way for the good ole' boys. Mississippi is corrupt stem to stern.

2) May be that YOU should watch your back. By the time Mr. White finishes uncovering all the embezzlement, there may not be many good ole' boys or girls left. He hasn't been in office that long, and has already found over half a billion dollars wasted or stolen.

Anonymous said...

It does seem that White is doing WAY more that any others that have held his position. It also looks like the only thing that will happen is the perpetrators of the wrong doing will get their names drug through the mud and will have a tarnish applied to them.

The losers in this are the insurance companies that hold the surety bond and the tax payers.

Anonymous said...

3:00 pm. You are are missing something. Deposit arrangements between most municipalities and banks are competitively bid with banks submitting sealed bids for specific accounts for specific periods of time. The rate of interest was competitively evil bank cheated the public. The two politicians comingled bond and general funds, meaning they misappropriated bond funds for public (not personal) use. General fund accounts would have a lower rate of interest competitively bid than escrow accounts. However, the interest foregone results from the principle being spent.....not a bank refusing to pay a market rate of interest.

Anonymous said...

I NEVER listen to that gourd-head JT on Supertalk; however, I did listen today when he had Shad on. This young man makes perfect sense and is a pleasant change in state government. No, I don't know him from Adam. But he is on top of his game and is going to make a difference. His comments were very encouraging. Look for more of the same in most of our 82 counties. Surprise Surprise.

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