Hands in the Till: Embezzlement of Public Monies in Mississippi

Chapter 4. City Clerks

4. City Clerks Officials of Mississippi cities are required to establish accountability for and protect allmoniesthatflowinto their cities. Theyarealso required to account for disbursements properly and to ensure the legality of disbursements. Annual audits are required for each of the state's incorporated municipalities. These audits are usuallyperformed by CPAfirms.In fact, the OSAis prohibited bystatute from auditing amunicipality unless a complaint hasbeenfiled with it alleging wrongdoing, or a strong indication of wrongdoing has been discovered in another manner. Section 7-7-211(7) of the Mississippi Code is relevant to this matter: [The OSA has the authority] [t]o post-audit and, when deemed necessary, preaudit and investigate the financial affairs of the leveeboards;agencies created by the Legislature or by executive order of the Governor; profit or nonprofit business entities administering programs financed by funds flowing through the State Treasury or through any of the agencies of the state, or its subdivisions; and all other public bodies supported by funds derived in part or wholly from public funds, except municipalities which annually submit an auditprepared by a qualified certified public accountant using methods and procedures prescribed by the department... (emphasis added). Shirley Ferrell, Belzoni Deputy City Clerk Thomas N. Turner,Jr., served as alderman of the city of Belzoni for seventeen years before being elected mayor.He had served seventeen years in the part-time position of mayorwhenhe discoveredaproblem in the city'swater department in 1998. Turner,who was also the city's computer operator, discovered the problem while converting the water department records from a manual card systemto acomputerized data basesystemin late February1998. During the conversion process,Turnercomparedthe total monies receivedfor 0€t service deposits from approximately twenty-two hundred new customers to the total recorded in the city's accounts for customer deposits. The total received for deposits was$72,896,but the total deposited into the city's account for customer deposits was only $36,578, a difference of $36,318.Turneradvised the board of aldermen of the situation and contacted the Hörne CPAGroup to request an audit of the customer deposit account. The Home Group's audit determined that bank deposits to the customer deposits account werenot made in atimely manner. Bankdeposits weremade at three-, four-, and six-month intervals. That is, deposits were only made when a box in which deposits were accumulated filled up! The audit also revealed that two receipt books were missing from fiscal year 1994 and that the only receipt book used in 1998was missing. The auditors noted that the instances of funds not being deposited into the bank account increased during the Christmas season. The Home Group's audit showed that, for the total period reviewed, funds received by the city for water deposits exceeded the amount deposited to the bank account by $29,450.Shirley Ferrell,deputy city clerk and water clerk, was the only person who made bank deposits to the city's water service customer deposits account. The Public Integrity Division of the Mississippi Attorney General's Officebegan an investigation of the missing funds. AGinvestigators Tony Shelbourn and Joey Turnage interviewed Mayor Turner and the Home Group's Andrea Kimbrell on April i, 1998. The interview revealed that ShirleyFerrell had been "loaning" water department funds to two city employees, Dona Rush, city clerk, and bookkeeper Vergie Hayes. Turner told the investigators that on March i, 1998, while he was working in city hall converting the water department's records to a computer system, he found two personal checks in the cash box. There was a May 1997 check from Dona Rush for $500 and a November 1997 check from Vergie Hayes for $300. On March 2, Turner told both Rush and Hayesthat the checks should be deposited into the city's account immediately. However, the Home Group's audit revealed that the checks had not been deposited. When Turner inquired as to why the checks had not been deposited, he was informed that Rush and Hayes had replaced the checks with cash. Turner and Kimbrell explained to the investigators that money had been taken from the water department's cash box and the personal checks used to replace it. The checks werekept in the cash box for an extended period asthey were passed overby Ferrellin making bank deposits. This practice resulted in illegal loans of city monies being made to city employees. Turner and KimBelzoni «1 brell also noted that they did...