BAY ST. LOUIS -- Affidavits signed in 2014 by the mayor and police chief certified the city had $298,000 in its U.S. Department of Justice forfeitures account. But according to its own financial records, the city did not have that money.
Through public-records requests, the Sun Herald obtained documents for the past five years concerning the Bay St. Louis Police Department's federal equitable sharing fund, which holds forfeiture money shared and regulated by the DOJ.
The money in the "DOJ forfeitures fund," as the city council calls it, was noticed missing in August and has been the subject of many heated City Council meetings as well as ongoing federal and state probes.
DOJ forfeitures are money seized during joint operations between federal and municipal law enforcement agencies. The money is restricted by federal statute to use for police-related expenses.
Among the documents the Sun Herald obtained are affidavits signed by Police Chief Mike De Nardo and Mayor Les Fillingame, which are submitted annually to the DOJ.
The affidavits are attached to a five-page form certifying the amount of cash in the DOJ forfeitures account and listing any amount spent or transferred from the account.
The affidavit for Bay St. Louis' fiscal year ending Sept. 30, 2014, states the account had an ending balance of $298,108 with no money spent or transferred that year by the police department.
However, that money appears neither on the city's annual budget nor on its revenue-and-expense report for that year. There is no line item to account for any federal sharing or DOJ forfeitures money on either financial report.
A preliminary audit released in August reported the city failed to properly separate the DOJ money from other funding sources and did not have the money restricted as of Sept. 30, 2014.
The DOJ mandates federal forfeitures money be controlled via a separate account or accounting code.
At an Aug. 18 meeting, the City Council grilled the mayor on the whereabouts of the money when they noticed there was only about $80,000 in the general operating account, which holds money from many sources.
The mayor told the council the forfeitures money was being deposited into the city's general operating account and "was definitely being spent on the police department."
According to the affidavits, however, the last time the police department spent any DOJ forfeitures money was in 2011, when it spent $1,207. The ending balance of the DOJ forfeitures account that year was $238,434.
The council did not have access to the affidavits recently obtained by the Sun Herald.
Also at the Aug. 18 meeting, council members had asked why the forfeitures money was not being held in a separate account.
Fillingame told them he was not aware of the mandate that the money be separated, saying the DOJ guidelines must have recently changed.
"If they changed the guidance on it, and it looks like we will end up putting it into a separate fund, that was not the guidance in the years prior to," the mayor said at the time.
However, those guidelines have not changed since at least 2009, and Fillingame has signed affidavits every year since 2010, certifying he read and understood the DOJ guidelines on how the city must maintain its federal forfeiture money.
The guidelines are also spelled out on the fourth page of the affidavits. They mandate the money be internally controlled via a "separate revenue account or accounting code" as money from "other sources must not be commingled" with the DOJ money.
Chief De Nardo, who filled out the affidavits, said he never actually saw the money in the DOJ account. He said the city did not supply him with a bank statement for September 2014 to show him the $298,000 was actually there.
He said he believed the money was there based on the information he had received from the U.S. Marshals Service and the city finance department.
De Nardo said any time his department receives a share of federal forfeitures, he gets an email from U.S. Marshals Service regarding the amount to be deposited, as well as a deposit notice from the city.
The DOJ requires two signatures on the affidavits, one from the "agency head," such as the police chief, and the other from the "governing body head," such as the mayor.
According to the DOJ's "Guide to Equitable Sharing for State and Local Law Enforcement Agencies," the agency head, De Nardo, determines and authorizes all purchases from its federal forfeitures account, and the governing body head, Fillingame, is the official with "budgetary oversight" of the police department.
Review or investigation?
Several council members have argued with the mayor over whether there is a criminal investigation or merely an informal review into the missing DOJ money.
When Councilman Joey Boudin called it an "investigation" during an Oct. 20 meeting, Fillingame countered, saying there is no investigation but merely a "DOJ review."
According to the police chief, both are partly correct.
De Nardo said the Office of the State Auditor has dispatched criminal investigators to the city to investigate the matter, and the DOJ has sent an "assessment team" to review and probe the city's financial records.
"They were right on what they said but just had the wrong agency," De Nardo said, referring to the council's claims that it is an investigation.
De Nardo said he wrapped up all of his meetings with DOJ officials in October and expects them to render a conclusion as early as this week, but the status of the state auditor's investigation remains unknown.
"When it involves federal funds, you can bet the truth will come out," Boudin said. "The best of the best work under the DOJ."
Calls to the mayor were not returned.