BAY ST. LOUIS – The city council on Tuesday voted to file bond claims against Mayor Les Fillingame, two former city clerks and the city's fiscal auditor to recoup more than $300,000 owed to a U.S. Department of Justice forfeitures account.
Municipal officials who handle money are required to take out a surety bond, which ensures against unfaithful performance of the official's duties. Fillingame and the clerks each have a bond of $100,000. Those bonds, along with the fiscal auditing firm's liability insurance, are the sources of money the council wants to file claims against.
The vote passed 7-0 and surfaced after a final accounting report was delivered during Tuesday's meeting, revealing the city owed about $321,000 to a DOJ equitable sharing account, which the council refers to as the “DOJ forfeitures fund.”
The council's decision targets Fillingame, former City Clerk Katherine Smith, former City Clerk David Kolf and the city's independent fiscal auditor, Wright, Ward, Hatten and Guel.
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“I can tell you one thing – it's all (expletive), and it's getting ready to come to roost,” Fillingame said in an interview after the council's decision. 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.
At the Aug. 18 meeting, council members noticed nearly $300,000 missing from the account and called for authorities to investigate. They 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 DOJ money was being deposited into the city's general operating account and "was definitely being spent on the police department."
Becky Hammond, an auditor hired to investigate the forfeitures account as part of a DOJ mandate on the city, delivered her findings Tuesday night after months of speculation by council members that the mayor was borrowing from the DOJ fund to cover the city's cash-flow problems.
Hammond said if the council does not place the total amount into a restricted checking account, the DOJ will demand a reimbursement. A total of about $21,000 is currently in a newly-opened account restricted for DOJ funding, bringing the total owed by the city to about $300,000.
According to federal affidavits obtained by the Sun Herald last year, the last time the police department spent any DOJ forfeitures money was in 2011, when it spent $1,207. Hammond made similar statements Tuesday that affirmed the Sun Herald's previous reporting, saying the affidavits indicate a total of about $45,000 spent over a six-year period.
“In 2011, something happened with the restricted accounts, and they were all closed,” Hammond said, adding she saw no signs of illegal activity.
While trying to explain what happened to the money, Hammond was tripped up several times trying to field a barrage of questions from the council, the mayor and City Attorney Donald Rafferty.
When Fillingame asked her when the financial problems began, Hammond said she reviewed records dating back to 2007.
“This has been a problem going back a long ways,” she said.
According to the city's general ledger, she said, the city never spent the money. However, under more specific questioning by several council members, Hammond said the money wasn't actually in the city's accounts.
“In 2007, actually, the accounting appeared to be different,” she said. It looks like the pooling of cash was set up in 2009.”
“Do we know what this $300,000 was spent on?” Councilman Joey Boudin asked.
“It hasn't been spent,” Hammond said. “(About) $45,000 of it was spent. The other $321,000 is in your accounting.”
Seeking clarification, Boudin asked, “In our accounting – but not in our accounts?”
“Correct,” Hammond said.
The seemingly confused city leaders began prying for a simpler explanation as to the whereabouts of the money but to little avail.
A “much bigger accounting” would be required to determine where things went wrong,” Hammond said. “It's not clear” ... ”You can't just find that bucket of money.”
She compared Bay St. Louis' situation to one she recently encountered in St. Bernard Parish where there was “basically, borrowing from restricted funds.”
Pressing for a more definitive answer, Favre asked if the money was misspent, to which Hammond gave a veiled affirmation.
“Again, I couldn't verify that because of the restricted nature of funds,” she said.
Asking more bluntly, Favre said: “But, if we would have spent it correctly, we wouldn't have to pay it back?”
“Correct,” Hammond said in response.