MOUNTAIN CITY — An investigation into the alleged theft of scrap metal at Johnson County’s solid waste transfer station led to a separate and unrelated misappropriation of transfer station funds discovered by the state comptroller’s office.
The findings of the state audit were announced in a news release on Monday. In the release, State Comptroller Justin Wilson said an employee in the mayor’s office misappropriated more than $40,000 worth of solid waste transfer station collection fees.
The audit report included a finding that said “as a result of allegations we received, our office performed an investigation concerning the removal of scrap metal from the solid waste transfer station by an employee of the Solid Waste Department. During this investigation, Solid Waste Director Tim Keene admitted to us that his son removed scrap metal from the transfer station and sold the metal for personal gain. Tim Keene’s employment with the Solid Waste Department was terminated on April 18, 2011. We could not determine the amount and value of the scrap metal sold.”
Mayor Larry Potter said no charges have yet been placed in the unrelated incidents, but he expected the incident involving the scrap metal to go before a grand jury soon. He said the investigation by the Tennessee Bureau of Investigation into the theft of funds in his office is “still going full blast.”
Potter said he became suspicious about the amount of scrap metal being taken in at the transfer station and got the TBI to investigate. He said the county’s audit was coming due at the time and he informed the auditor to take a close look at the transfer station funds.
“The auditors looked hard at the transfer station and the numbers there. That led them to look harder at the deposits,” Potter said.
Wilson said in the release that the investigators found “that between November 2010 and August 2011, the employee in the county mayor’s office failed to deposit several days’ worth of solid waste collection fees, totaling $21,958.15. The employee also deposited $18,737.40 worth of unreceipted checks for solid waste collections, but removed an equal amount of cash collections that had been receipted. Furthermore, the employee didn’t turn over $800 collected for sewer inspections to the Department of Environment and Conservation.”
The news release reported that when Potter was notified of the cash shortage, he immediately suspended the employee. The cash shortage was reported to the district attorney general.
Potter said he was unaware of that misappropriation at the time. He was focusing on the theft of the scrap metal.
He said he became suspicious about the amount of scrap metal the transfer station was reporting. He said reports showed only $1,148 of metal was sold during the past two years.
“Something did not add up,” Potter said. He began his own surveillance and even took photos which he shared with the TBI when he alerted them.
“The agent thanked me for making his job easy,” Potter said.
With the state auditor coming for the routine annual audit, Potter also alerted him. He said the auditor asked if Potter had notified the state comptroller. The mayor said he had notified TBI and was now notifying him.
Potter said some indication of how much was lost can be seen in the figures of scrap metal sold by the transfer station since April. For the two years before, he said the transfer station sold only $1,148. From April until the middle of October, the transfer station has sold $5,070.
Potter said that discovery led the auditors to take an even closer look at the solid waste funds and led to the discovery of the misappropriation of $40,695 in solid waste funds during an audit conducted on Aug. 24. The audit report indicated the cash shortage was caused by an employee of the mayor’s office not remitting solid waste transfer collections to the county trustee.
The audit report said “we informed the county mayor of the cash shortage on Aug. 24 and he immediately suspended the suspected employee.”
Potter said state law required funds to be deposited within three days, but he said there were sometimes delays as long as 35 days from the time the funds were collected until they were deposited with the county trustee.
“It is always unfortunate when public dollars are misappropriated or public resources are used for personal gain,” Wilson said. “I would ask that anyone who suspects fraud, waste or abuse of taxpayer dollars in our local governments across Tennessee to contact our fraud hotline at 800-232-5454. I also want to commend Johnson County officials for promising to take corrective action promptly after learning of our auditor’s findings.”
The complete audit can be viewed online at: http://www. â€‰ comptroller1.state.tn.us/reposiâ€‰ tory/CA/2011/Johnson.pdfâ€‰ .