DMR pours more than $1.4 million into fishing boats in South Mississippi

DMR pours more than $1.4 million into recreational fishing boats

Sun HeraldDecember 8, 2012 

BILOXI -- The state Department of Marine Resources, headed by Bill Walker, has since 2007 spent more than $1.46 million in public money on two recreational fishing boats leased from a foundation Walker also manages, state records show.

The Mississippi Marine Resources Foundation's incorporation papers say it was set up to support the DMR's mission to protect and enhance the marine resources of Mississippi. The foundation and the DMR have the same mailing address.

The foundation supplies the DMR with a 36-foot Topaz open fisherman and a 42-foot Californian convertible. Paid for with public money, the DMR leases, upgrades, repairs, maintains and stores the boats, which are valued at $350,000 and $284,000 for insurance purposes.

And the state agency also covered the cost of private insurance from Lemon-Mohler of Ocean Springs for at least $19,000 a year, when the rest of the DMR fleet is insured through the state system.

The foundation acquired the boats from David Harris, who has for years run a boat-donation program in Ocean Springs, first at the YMCA and then at a charity he created in 2008 named YADA, Youth Alternative Development Activities. Boats are donated to the charities for a tax write-off.

Unlike other DMR boats, which are well-marked with the agency's logo, the two foundation boats look like other private vessels.

The DMR handles millions of dollars in state and federal money each year and has this year become the target of state and federal audit investigations.

In an interview last week, Walker told the Sun Herald the DMR leased the boats from the foundation for use in the Artificial Reef Program, "to take people out on the water, educate them about our marine resources, try to explain to them why it's important that those things are protected and conserved."

The hundreds of thousands of dollars spent to upgrade and maintain the boats came mostly from Artificial Reef Program funding.

When asked if the two boats are necessary, Walker said, "I don't know what you mean by necessary. We certainly use them for good."

Asked if they are used for entertaining, he said: "We take people who can be helpful to our department. We do take people out and entertain them on our vessels. And when we do, we do work."

The DMR Artificial Reef Program has a large metal work boat, the Fish Haven, designed to handle equipment needed to monitor the reefs as the staff fishes for samples. It was specially built for the DMR to accommodate the side-scan sonar the staff uses to record images of the reefs under water.

Walker said, however, the two foundation boats are more comfortable for fishing the reefs.

The foundation

The Mississippi Marine Resources Foundation was incorporated almost nine years ago but is not considered a charity by the state, the Secretary of State's Office said last week. The IRS revoked its tax-exempt status in 2010 for failing to file disclosure forms for three years in a row. In November, the IRS reinstated the foundation's nonprofit status, an IRS spokesman said.

The Sun Herald was unable to see public disclosure records of the foundation's transactions either through the IRS website or through a records request to the DMR. Walker said the State Auditor's Office has those documents now. Auditors took documents from Walker's office and two other offices at the DMR in late October as part of an investigation.

Foundation reports filed with the secretary of state list founding officers as John Blossman, Biloxi attorney Robert A. Byrd, Biloxi businessman Jerry Munro and Biloxi accountant Robert L. Culumber. As late as October, the foundation listed John Blossman of Ocean Springs as an officer, but Blossman died in March 2009.

In an interview last week, Byrd, whose name is on one of the boat leases as foundation chairman, told the Sun Herald he is no longer with the organization. He had no further comment, saying, "The best source of information is Dr. (Bill) Walker."

Munro said the foundation board didn't hold meetings or organize events to raise money or get donations.

He said Walker and Byrd handled the paperwork to set it up.

"I've never gone to a meeting other than to sign the paperwork to create it and make it happen," he said.

"I never participated in any activity to go with it whatsoever."

In an interview Nov. 29, Walker acknowledged the foundation owns the boats and that they are expensive for the DMR and the state to maintain.

"There's nothing cheap about keeping vessels in tip-top condition," he said.

"These two boats go way off shore," he said, sometimes 100 to 150 miles to the "rig reefs" -- reefs created from sunken oil rigs.

"We make sure they are seaworthy," he said.

The Topaz

The Topaz was donated to the YMCA under David Harris, was leased directly to the DMR for two years -- during which time it received extensive repairs paid for by the state -- and was then transferred to the foundation.

The Californian was donated to Harris' YADA in Ocean Springs on March 16, 2010, and sold to the foundation six days later.

The Topaz was built in 1984.

In October 2007, the DMR leased it from the Ocean Springs Blossman YMCA for two years for $150,000. David Harris signed the contract for the Y.

Within a month of the lease, the Topaz was outfitted with two Cummins engines from Johnson Diesel Service in Biloxi. Then in December 2008, the DMR paid $64,335 for maintenance on the Topaz.

In January 2009, Walker authorized the state agency to pay $62,750 for work on the Topaz. The payment included $38,750 for the twin engines installed more than a year earlier and $17,000 the YMCA billed the DMR for repairs that date to June 2006 -- 15 months before the DMR leased the boat in 2007.

In 2008, before the lease was up, Harris retired from the YMCA, set up a new charity named YADA and took the boat-donation program with him.

At the end of September 2009, Walker, as head of the DMR, entered into a lease agreement with the foundation for the same Topaz boat.

But the lease started almost six months before the foundation actually took ownership of the vessel. The YMCA sold the boat to the foundation March 11, 2010, according to a bill of sale. There was no price given, but a YMCA board member said it was for a nominal fee.

The Californian

On June 28, 2009, Walker, representing the foundation, leased the now 22-year-old Californian convertible from YADA for two years for $85,000, agreeing to pay additional "service costs" on the boat.

Then a day later, Walker, acting as the DMR's executive director, leased the Californian from the foundation, with Robert Byrd listed as representing the foundation.

These transactions occurred almost nine months before Harris sold the boat to the foundation.

According to Coast Guard vessel-documentation records on both boats, Harris, the YMCA or YADA were never listed as owners of the boats.

In November 2009, Johnson Diesel Service performed $70,380 worth of work on the Californian.

But it wasn't until March 2010 that Harris, representing YADA, and the new director of the YMCA signed the boats over to the foundation.

That was the same year DMR and Walker used $3.6 million in federal CIAP money to buy Harris' boat-storage building and restaurant at the Ocean Springs Harbor, which was on the Jackson County tax rolls at a value of $1.3 million. Appraisals for that land purchase and others have come under scrutiny in a federal audit by the Office of Inspector General at the U.S. Department of the Interior.

The reefs

Both boats, according to insurance and lease documents, were to be used to monitor artificial reefs the DMR sets up in deep federal waters. The reefs, intended to attract fish, are made by sinking defunct oil rigs.

Oil companies donate the rigs and pay the state agency a fee to maintain the rigs as reefs. It's cheaper for companies to sink the rigs rather than to haul them in.

The DMR used the artificial reef account to service and improve the two boats.

As late as Dec. 6, the boats remained in slips in the Biloxi Small Craft Harbor with no names painted on their sterns. But U.S. Coast Guard documentation indicates they have been named Foundation and Foundation II.

Walker and Harris

In three recent interviews, Harris said he didn't remember details about the boats or transactions involving the boats, whether between the original owners and the charities or the two charities and the foundation.

In the first interview, he said he has dealt with a lot of donated boats over more than three decades and he can't remember if he collected money from either sale of the DMR-leased boats or if he let them go to the foundation at no additional cost.

But when asked if there was another instance in the last 10 years in which anyone has leased one of his donated boats for such a large amount, he said no. In fact, he said, he couldn't think of another situation in which he had leased a donated boat.

When asked if he could produce documents of the transactions, he said, "We did have a bit of a problem in our paperwork."

He said when he moved his records from the YMCA to his business, Harbor Landing, flooding got some of his paperwork.

He said he stored the paperwork under the restaurant and in a secured shed behind his house that flooded twice last year.

When asked how the Mississippi Marine Resources Foundation received money, Walker said from private donations.

"No state money goes to the foundation other than reimbursements for insurance on the vessels and whatever they spend on maintenance and repairs, and all of that is covered under a lease agreement between the department and the foundation," he said.

But he said he no longer has the paperwork.

"The State Auditor's Office has all of that," he said.

When asked who donates to the foundation, he said an oil company had donated a rig to DMR and given the foundation a check.

DMR records show from 2000 to 2008, oil companies donated rigs to the DMR, along with more than $7 million to the state to maintain them.

In October 2009, records show, Chevron U.S.A. Inc. donated a rig to DMR. Bill Walker signed the donation papers for the DMR. But the check for $115,162 was made out to the Mississippi Marine Resource Foundation.

Anita Lee, Sun Herald staffer, contributed to this report.

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