Investigation of sheriff's office finds insufficient records but no embezzlement

ejohnson@bradenton.comJune 30, 2012 

MANATEE -- The final report on an investigation into the Inmate Commissary Fund at the Manatee County Sheriff's Office has found insufficient documentation of expenditures and revenues, but no signs of embezzlement.

The findings brought a sharp rebuke from Sheriff Brad Steube, but at the same time acknowledgement that documentation was incomplete.

The review "was able to identify some areas where process improvements can and will be made," Steube said in a written response.

R.B. "Chips" Shore, clerk of District Court and comptroller, released the report Friday afternoon. Millie Blevins, director of internal audit, and five other auditors looked at thousands of documents and receipts, evaluating ICF expenditures and revenues.

The investigation began in April at the request of Steube, after allegations of embezzlement and other wrongdoings were made by Charles Smith, president of the local Southern Christian Leadership Conference chapter, who is up for re-election as a Palmetto commissioner; and William Waldron, Steube's opponent for sheriff.

"We were very careful because this is a political issue," Shore said. "We wanted to make sure every 'T' was crossed and every 'I' dotted. Overall, it was a very good audit. We nailed down some points to fix."

They audited a 15-month period ending March 31. The fund's total expenditure for the period was $621,180, of which 89 percent, or $553,215, was deemed appropriate.

Five percent, or $32,453, of expenditures were insufficiently documented, which prevented the auditors from determining whether it was spent appropriately. Six percent, or $35,512, was inappropriately spent out of the commissary fund instead of the sheriff's budget, according to the report.

Blevins said the investigation also found about $200,000 -- primarily for salaries of those who work for the inmate commissary programs -- that could have been spent from the fund, but were not.

In a written response to the review, Steube states the sheriff's office "adamantly disagree(s) with the audit's conclusion that 6 percent of the reviewed expenditures were inappropriate."

Previously, the sheriff's office completed an eight-month internal investigation that found two former high-ranking officials used the agency's property for personal benefit and allowed other employees to do the same.

The investigation sustained allegations of conduct unbecoming an officer against former jail supervisor Major James Higginbotham and Sgt. Frank "Buddy" Parks for misusing property -- including horse feed, bales of hay and machinery. Allegations of unlawful conduct were not sustained.

The state attorney's office did not press charges. Higginbotham and Park are now retired.

'Weak control environment'

The just-released clerk's review cites a "lack of oversight and a weak control environment within the management of ICF during the period under review. Recent changes in the top management staff at the jail have provided MCSO an opportunity to correct and improve these areas of concern."

The investigation was originally conducted according to Florida Model Jail Standards. However, after consulting with attorneys, the team decided those were ambiguous and "loosely written," Shore said. The team then visited the jail, speaking with employees involved with jail industries, cost avoidance and vocational programs to help determine what expenditures would be appropriate.

"We're testing what his folks told us," Blevins said. "The people that work out in the jail told us what is considered appropriate for ICF."

As a result, Steube said he questions the legal basis of the investigation's findings.

"My initial reaction was, 'Can you quote me a statute, policy, rule, procedure, or order that would put this in the 'no' (inappropriate expense) column?' And I've yet to get a response to that," Steube said.

Steube received legal opinions in addition to feedback from surrounding sheriff's offices, all supporting Manatee County's ICF expenditures.

"We have been spending it on what we believe will help the welfare of the inmates, and that interpretation can be very broad-based on the statutes," Steube said.

Shore's investigation made 27 recommendations to the sheriff's office, including the advice to seek an attorney's opinion on specified concerns in spending.

Other recommendations include proper documentation of expenditures, revenues and inventory.

"I agree with the auditor's position on insufficient documentation," Steube said. "We've already started processing a better way of tracking items that are purchased and used."

A majority of expenditures deemed inappropriate stem from a difference in what costs ICF will cover in its industry, vocational and cost-avoidance programs. ICF may pay for all expenditures of industry programs, in which inmates produce items for sale. In vocational and cost-avoidance programs at the jail, ICF should pay only for indirect expenses such as equipment, maintenance and training/tuition expenses.

Expenditures categorized as inappropriate include:

n 18.3 percent of auto body expenditures, primarily for the direct expense of paint that should have been paid by the department requesting the labor, because auto body is a cost-avoidance program;

n 27.6 percent of carpentry class expenditures for materials used to build cabinets for a transportation office;

n Less than 1 percent of diesel expenditures for maintenance parts of a PAL cart and mower purchases, because the diesel program is vocational and cost avoidance;

n 25.4 percent of general operating expenditures for cattle labor, farm radio upgrade, kitchen appliances, portable phones for inmates and visitation center video equipment upgrade, because those are not associated with overall inmate welfare;

n 1.3 percent of horticulture expenditures for direct expenses of vegetables used to feed inmates, because horticulture is a vocational program;

n 70.7 percent of laundry and pressing expenditures for replacement of headers and piping and relocation of laundry equipment, because those are not associated with overall inmate welfare;

n 3.7 percent of meat processing expenditures for direct expenses used to feed inmates, because meat processing is a cost-avoidance program;

n 1.1 percent of sewing class expenditures for direct materials, because it is a cost-avoidance program;

n 90.1 percent of visitation building expenditures for parking lot and access road because that is a county responsibility.

Expenditures with a lack of documentation to determine appropriateness include:

n 1.5 percent of aquaculture expenditures;

n 30.6 percent of carpentry class expenditures;

n 15.6 percent of diesel expenditures;

n 19.1 percent of general operating expenditure;

n 2.9 percent of welding expenditures of supplies not reimbursed.

Areas classified with 100 percent appropriate spending include barber, clergy and religion, commissary, indigent packages, law library, program unity, sewing building and shirts expenditures.

In his written response, Steube addresses each area of concern with an explanation of why he believes expenses were appropriate, as well as procedures followed at the jail.

Other observations of concern include lack of Inmate Commissary Committee meeting minutes preceding January 2006 that would contain the intention of each ICF program when established, as well as inconsistency in revenue documentation.

As a result of the review, minutes will be filed electronically for an indefinite amount of time and a system will be implemented to document inventory and sales, according to Steube's written response.

In regard to salaries that could be paid from ICF but are not, Steube said fluctuating time in which workers are completing ICF-related duties would make that expenditure difficult to track.

"We erred on the side of caution," Steube said. "We never wanted to put ourselves in a position where we are paying them but their time is not spent there."

Smith commended Shore and the audit team for completing the investigation. But Smith said he will have private investigators as well as law enforcement and government officials look over the report and push for further review if necessary.

"The sheriff's office will become a better place on what he (Shore) has done so far, but there are some things we still don't have answers to," Smith said. "We don't have documentation on some things and that raises a red flag to me. The embezzlement and misappropriation of funds could still be true; this just means they cannot prove it."

Waldron could not be reached for comment.

"This audit shows that, in fact, there was no embezzlement but also that we are good stewards of the taxpayers' money in the way we've been operating the Inmate Commissary Fund," Steube said.

Elizabeth Johnson, Herald crime reporter, can be reached at 941-745-7041.

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