[Copyrighted Material Omitted]
[Copyrighted Material Omitted]
[Copyrighted Material Omitted]
[Copyrighted Material Omitted]
[Copyrighted Material Omitted]
[Copyrighted Material Omitted]
Appealed from the Second Judicial District Court for the Parish of Jackson, Louisiana. Trial Court No. 45,300. Honorable Jimmy C. Teat, Judge.
CONVICTIONS AFFIRMED. SENTENCES VACATED. REMANDED FOR RESENTENCING CONSISTENT WITH THIS OPINION.
LOUIS G. SCOTT, CAROL D. POWELL LEXING, Counsel for Appellant.
LESLIE C. THOMPSON, In Proper Person.
JONATHAN M. STEWART, District Attorney, Counsel for Appellee.
KENNETH P. HAINES, LEA R. HALL, JR., Assistant District Attorneys.
Before STEWART, MOORE & PITMAN, JJ.
[49,483-KA La.App. 2 Cir. 1]
A jury convicted Defendant Leslie C. Thompson, the mayor of the Town of Jonesboro (" the Town" ), as charged of three counts of malfeasance in office. As to Count I, the trial court sentenced Defendant to three years at hard labor with a $1,000 fine. As to Count II, the trial court sentenced Defendant to three years at hard labor with a $1,000 fine. As to Count III, the trial court sentenced Defendant to five years at hard labor, with all five years suspended and Defendant placed on supervised probation upon his release from incarceration, with a $1,000 fine and an order to pay court costs. The trial court ordered Counts I and II to run consecutively with each other and concurrently with Count III. It also ordered that, during the course of the five-year supervised
probation, Defendant make restitution to the Town in the amount of $51,792.81. For the following reasons, we affirm Defendant's convictions. We vacate his sentences and remand the matter to the trial court for resentencing consistent with this opinion.
Defendant assumed the office of mayor of the Town on January 1, 2007. On March 5, 2013, the state filed a bill of information charging Defendant with three counts of malfeasance in office in violation of La. R.S. 14:134, 33:404 and 14:24. The bill of information alleged that:
he, being a public officer or public employee, did intentionally fail to perform a duty required of him, as such officer or employee, and intentionally performed such duty in an unlawful manner, and knowingly permitted other public officials and public employees, under his authority, to intentionally refuse or fail to perform such duty lawfully required of him, or perform such duty in an unlawful manner by failing to direct the administration and operation of the
[49,483-KA La.App. 2 Cir. 2] Town of Jonesboro, including all municipal departments, offices, and agencies, in conformity with provisions of state law in that
Count I: on or about June 30, 2007 through June 30, 2012, in violation of La. R.S. 24:513, La. R.S. 24:518, La. R.S. 44:36, and La. R.S. 44:412, he:
1. neglected, failed or refused to furnish the legislative auditor with such papers, accounts, books, documents, films, tapes, and other forms of recordation, including but not limited to computer and recording devices, whether confidential or otherwise, that the legislative auditor has the right to inspect and examine, and
2. denied the legislative auditor access to the office, or to papers, accounts, books, documents, films, tapes, and other forms of recordation, including but not limited to computer and recording devices, whether confidential or otherwise, that he has the right to inspect or examine, and
3. refused, failed, or neglected to transmit to the legislative auditor reports, statements of accounts or other documents upon request as provided by law, and
4. obstructed or impeded, in any manner, the legislative auditor in making the examination authorized by law, and
5. failed to exercise diligence and care in preserving the public records of the Town of Jonesboro for the period or periods of time specified by law for such public records or not preserving and maintaining those records for a period of at least three years from the date on which the public record was made, and
6. failed to establish and maintain an active continuing program for the economical and efficient management of the records of the Town of Jonesboro, and
Count II: between January 2011 and June 2012, in violation of La. R.S. 14:67, La. R.S. 11:1751, and La. R.S. 11:1732(13) he misappropriated or took, with the intent to deprive permanently, a thing of value of a value of one thousand five hundred dollars or more, to-wit: public funds belonging to the Town of Jonesboro in the amount of $13,720.75, which belong to another, without the consent of the other to the misappropriation or taking, and by means of fraudulent conduct, practices, or representations, specifically by providing payments of public funds to the the [sic] Municipal Employees Retirement system for employees who were not actively employed on a permanent
regularly scheduled basis of at least thirty-five hours per week, and
Count III: between January 2011 and June 2012, in violation of, La. R.S. 14:68 he took or used, without the intent to deprive [49,483-KA La.App. 2 Cir. 3] permanently, a movable, to-wit: public funds belonging to the Town of Jonesboro in the amount of $38,072.06, which belong to another, without the consent of the other to the taking or use, and by means of fraudulent conduct, practices, or representations, specifically by providing payments of public funds for Blue Cross Blue Shield of Louisiana insurance premiums for non-employees of the Town of Jonesboro.
On March 15, 2013, the state filed a La. C.E. art. 404(B) notice alleging that the following other crimes, wrongs and acts occurred during Defendant's tenure as mayor:
1. Leslie C. Thompson, acting as mayor of the Town of Jonesboro, made no collection efforts on delinquent utility accounts as noted in the Town of Jonesboro Compliance Audit Issued June 1, 2011 filed in discovery on March 6, 2013.
2. Leslie C. Thompson, acting as mayor of the Town of Jonesboro, made no effort to hold a tax sale for unpaid 2008 property taxes as noted in the Town of Jonesboro Compliance Audit Issued June 1, 2011 filed in discovery on March 6, 2013.
3. Leslie C. Thompson, acting as mayor of the Town of Jonesboro, authorized extended payment terms for town residents of unpaid utility balances as noted in the Town of Jonesboro Compliance Audit Issued June 1, 2011 filed in discovery on March 6, 2013.
4. Leslie C. Thompson, acting as mayor of the Town of Jonesboro, participated in the sale and swapping of real estate without a proper appraisal or board approval as noted in the Town of Jonesboro Compliance Audit Issued June 1, 2011 filed in discovery on March 6, 2013.
5. Leslie C. Thompson, acting as mayor of the Town of Jonesboro, hosted an inauguration ceremony and paid for it with public funds as noted in the Town of Jonesboro Compliance Audit Issued June 1, 2011 filed in discovery on March 6, 2013.
6. Leslie C. Thompson, acting as mayor of the Town of Jonesboro, conducted the business and financial operations of the Town of Jonesboro with significant deficiencies including, noncompliance with audit law, noncompliance with the Local Government Budget Act, noncompliance with the Public Bid [49,483-KA La.App. 2 Cir. 4] Law, lack of financial oversight, lack of accounting expertise, lack of adequate training on accounting system, accounting records in disarray and not complete, bank accounts not reconciled, no clear accounting of dedicated taxes, lack of control over payables and disbursements, customer utility accounts not reconciled, water meter deposits not reconciled, Ad valorem taxes not reconciled, written policies and procedures not complete, lack of control over capital assets, lack of controls over traffic tickets, and no disaster recovery/business continuity plan as noted in the Town of Jonesboro Compliance Audit Issued June 1, 2011 filed in discovery on March 6, 2013.
7. Leslie C. Thompson, acting as mayor of the Town of Jonesboro, mismanaged the operations of the town in such a way that resulted in the appointment of a Fiscal Administrator, Bill Ryder, as evidenced in Fiscal Administrator's Progress Report As of the Close of Business on July 25 - October 8, 2012 filed in discovery on March 6, 2013.
8. Leslie C. Thompson, acting as mayor of the Town of Jonesboro, paid full time benefits to non-full time employees of the Town of Jonesboro as noted in the attached documents as noted in the Investigative Audit issued March 13, 2013 filed in discovery on March 15, 2013.
9. Leslie C. Thompson, acting as mayor of the Town of Jonesboro made personal use of a town vehicle as noted in the Investigative Audit issued March 13, 2013 filed in discovery on March 15, 2013.
10. Leslie C. Thompson, acting as mayor of the Town of Jonesboro failed to make timely reimbursements for unused travel advances as noted in the Investigative Audit issued March 13, 2013 filed in discovery on March 15, 2013.
11. Leslie C. Thompson, acting as mayor of the Town of Jonesboro failed to remit unclaimed property to the State of Louisiana as noted in the Investigative Audit issued March 13, 2013 filed in discovery on March 15, 2013.
On May 7, 2013, a hearing was held on the 404(B) notice. Kevin Kelley, an audit manager with the Louisiana Legislative Auditor's (" LLA" ) Office, testified about the first six alleged acts in the 404(B) notice, which resulted from a compliance audit on the Town that was issued on June 1, [49,483-KA La.App. 2 Cir. 5] 2011, by the LLA. As to the first alleged act, Mr. Kelley stated that a large number of utility accounts were uncollected, which left a substantial balance, and noted that Defendant had no knowledge of any collection efforts and was unaware of the uncollected balance. As to the second alleged act, Mr. Kelley testified that, as a result of the record-keeping problem, the Town could not identify who had and had not paid property taxes. Because of this uncertainty, the Town could not conduct a property tax sale. As to the third alleged act, he stated that Defendant established a program that extended payment terms for unpaid utility balances. As to the fourth alleged act, Mr. Kelley noted that two appraisals were conducted on Town-owned property and that the board of aldermen accepted an offer, but that a different parcel of land was sold. As to the fifth alleged act, he testified that the auditors examined Town records, including bank statements and cancelled checks, regarding a mayoral election celebration party for Defendant. As to the sixth alleged act, Mr. Kelley stated that all of these allegations resulted from reviewing the Town's records, noting the absence of records, and interviews with Town personnel.
William Ryder, the former fiscal administrator for the Town, testified about the seventh alleged act in the 404(B) notice. He stated that he was appointed by the trial court to investigate the Town's financial activities and budget and that he undertook such tasks as ensuring bills were paid and helping prepare a budget.
Greg Clapinski, an investigative audit manager with the LLA, testified about the last four allegations in the 404(B) notice, which resulted from an [49,483-KA La.App. 2 Cir. 6] investigative audit of the Town that was issued on March 13, 2013, by the LLA. As to the eighth alleged act, he stated that the auditors reviewed personnel files, time sheets and payroll records and determined that non-fulltime employees were receiving full-time employee benefits. He stated that they spoke to Defendant about the policy definitions of part-time employees and full-time employees. As to the ninth alleged act, Mr. Clapinski stated that the auditors reviewed records of odometer readings and fuel consumption after receiving information that Defendant drove a Town vehicle to the Dallas area for his daughter's wedding. Mr. Clapinski stated that the total use of the vehicle was approximately 35,000 miles, but the auditors were only able
to confirm approximately 7,200 miles of actual documented business use. As to the tenth alleged act, he testified that the auditors requested Defendant's travel records and reviewed information regarding travel advances that Defendant received. Mr. Clapinski stated that Defendant reimbursed unused portions of travel advancements on an average of 143 days after the advancement was made. As to the eleventh alleged act, he testified that the Town did not report returned water deposits.
After the testimony of the witnesses, the trial court determined that the probative value " would certainly" outweigh any prejudice and, therefore, allowed each act alleged in the 404(B) notice to be introduced into evidence and made part of the record. On August 15, 2013, Defendant filed a notice of intent to seek writs on the trial court's ruling on the 404(B) evidence. On August 23, 2013, this court denied Defendant's motion as untimely. State v. Mayor Leslie C. Thompson, 48,809-KW (La.App. 2d Cir. 8/23/13).
Defendant's Motions to Quash
[49,483-KA La.App. 2 Cir. 7] On March 20, 2013, Defendant filed a motion to quash in which he alleged that the state failed to file the bill of information within four years of the date of the offense, i.e., June 30, 2007, so Count I should be quashed. On April 16, 2013, Defendant filed a second motion to quash in which he argued that La. R.S. 24:513 is unconstitutional, that it has too many parts for Defendant to determine which he is charged with violating and that it deals with the powers of the LLA rather than a mayor. On April 17, 2013, the state filed an objection and response to Defendant's motion to quash. On May 7, 2013, a hearing was held on both of Defendant's motions to quash, and the trial court denied both motions. On August 15, 2013, Defendant filed a notice of intent to seek writs on the denial of his motions to quash. On August 23, 2013, this court denied Defendant's writ as untimely. State v. Mayor Leslie C. Thompson, 48,798-KW (La.App. 2d Cir. 8/23/13).
On August 26, 2013, Defendant filed a motion to quash alleging double jeopardy, contending that La. R.S. 14:134 and 24:518 carry penalties for the same conduct in the same count of the bill of information, which constituted double jeopardy and allowed double punishment for one crime. The parties agreed that the penalties set forth in the statutes would not be included in the jury instructions. The trial court also denied this motion to quash.
Defendant's Motion to Recuse Judge Teat
On March 20, 2013, Defendant filed a motion to recuse Judge Jimmy [49,483-KA La.App. 2 Cir. 8] Teat as the trial judge in this case. He stated that Judge Teat presided over civil cases brought against him as mayor and against the Town, found that Defendant intentionally violated laws relating to the charges in the bill of information, had already adjudicated Defendant as guilty of a crime relating to the bill of information, would not be an impartial judge and had " personal animosity" toward Defendant. On March 22, 2013, the state filed an objection and response to Defendant's motion.
On March 28, 2013, Judge Jenifer Clason presided over a hearing on the motion to recuse Judge Teat. David Dill, the current Town clerk, testified about Judge Teat's involvement in the Essmeier matter and the appointment of a fiscal administrator. He also noted instances where Defendant was ordered by Judge Teat to produce documents.
Investigator Johnny Horton of the Jackson Parish Sheriff's Department testified that he participated in the subpoena process in this case. He stated that the subpoenas were signed by an assistant district attorney and then sent to a judge for signature. Investigator Horton stated that he was not sure which judge signed the subpoenas, but some were signed by Judge Teat.
Judge Clason determined that Defendant did not meet his burden to [49,483-KA La.App. 2 Cir. 9] overcome the presumption that the judge is capable of fairness and impartiality and, citing jurisprudence and La. C. Cr. P. art. 674, denied Defendant's motion to recuse. Defendant notified the trial court of his intent to seek writs on the denial of his motion to recuse Judge Teat. On May 7, 2013, this court denied the supervisory writ. State v. Mayor Leslie C. Thompson, 48,423-KW (La.App. 2d Cir. 5/7/13).
Defendant's Motion for Security Measures
On August 23, 2013, Defendant filed a motion for certain measures for security and to assure a fair trial. He requested that the carrying of weapons " be limited to members of the sheriff's department skilled in courtroom security or to members of the FBI" and specifically stated that the district attorney and his staff should be prohibited from carrying weapons in the courtroom. Defendant further requested that " [a]ll persons who are not sheriff's deputies assigned to court security or persons with the Federal Government should be searched and dispossessed of all weapons before coming into court." On August 26, 2013, the trial court granted the motion and further explained that metal detectors were installed so that anyone entering the courthouse, including lawyers, witnesses, spectators and news media, would have to pass through them. It also noted that the only weapons deemed necessary to be carried in the courtroom are those carried by law enforcement officers.
Defendant's Motion for a Sequestered Jury
On August 26, 2013, Defendant filed a motion for a sequestered jury pursuant to La. C. Cr. P. art. 791. He argued that, because of the small size of the community, it would be impossible for jurors not to hear or see [49,483-KA La.App. 2 Cir. 10] something related to the trial if they were not sequestered. Defendant noted that the case involved the mayor of the largest town in Jackson Parish, that there had been pretrial publicity, that the issues in the case were of general concern to the community and that jurors could access information about the trial with their phones. The trial court addressed this motion on the day it was filed and took the matter under advisement during voir dire, noting that it would revisit the issue if needed depending on the potential jurors'
responses to questions. After the jury was seated, the trial court denied the motion to sequester the jury.
Defendant filed several motions regarding jury instructions. In the motion filed on August 23, 2013, he requested that the jury be instructed on the statutory duties of the municipal clerk as stated in La. R.S. 33:421. In the motion filed on August 26, 2013, he requested instructions regarding the defense of justification as stated in La. R.S. 14:18. On August 26, 2013, the trial court noted that a conference would be held on the jury instructions and deferred its ruling until after the proposed instructions were discussed.
Voir Dire, Batson Challenge, Motion to Change Venue
Jury selection began on the afternoon of August 26, 2013. Defendant objected to the state's use of a PowerPoint slide displaying a photograph of Osama Bin Laden with the caption " Where's Obama" and argued that it was prejudicial because Bin Laden " is considered as one of the most hated people in the United States after 911 especially." The state responded that this slide is one in a series of slides used to demonstrate how the news media [49,483-KA La.App. 2 Cir. 11] often makes mistakes. The trial court directed the prosecutor to move on to another slide. The state then showed slides of additional news stories that include erroneous information, e.g., a map that labeled Tripoli as a city in the Middle East when it is, in fact, located in Northern Africa, and explained to the potential jurors that they should disclose if they had heard something in the news media about the case at issue but should not state what they had heard because the information may be incorrect. Throughout voir dire both parties asked questions about the issue of race, whether a defendant or witness's race should be a factor and what the potential jurors thought about the issue of race regarding the case of George Zimmerman and Trayvon Martin.
Of the 12 potential jurors on the first panel, 7 were dismissed by the trial court on challenges for cause. Of those 5 remaining potential jurors, the defense released one by using one of its peremptory challenges. Of the 12 potential jurors on the second panel, 5 were challenged for cause, and the trial court granted four of the challenges. The state used a peremptory challenge on the one potential juror for whom the trial court did not grant the challenge for cause. The defense objected to the state's use of this peremptory challenge and raised a Batson challenge, alleging that the state dismissed the juror because the he/she is African-American. The defense noted that all African-American potential jurors had been eliminated from the jury pool by challenges for cause and the one peremptory challenge exercised by the state. Defendant contended that it was nearly impossible [49,483-KA La.App. 2 Cir. 12] for him as an African-American to be represented by a jury of his peers because the African-Americans in the community knew Defendant and, therefore, would be challenged for cause. The defense also argued that the state had not used any peremptory challenges on Caucasian jurors who knew Defendant, but the state and the trial court noted that none of the other potential jurors said they were friends with Defendant. The state argued that the defense had not made a prima facie showing of a race-based challenge based on the state's use of one peremptory challenge.
The trial court stated that, while the challenged juror's long-term relationship with Defendant was not by itself enough to support a challenge for cause, the juror had also said that he wanted to hear both sides of the case, even though Defendant was not required to put on a defense, and made comments that he had personally suffered prejudice due to his race. The trial court denied Defendant's motion, finding that the state's use of one peremptory challenge was not enough to demonstrate that the peremptory challenge was specifically directed at a member of a cognizable group. It noted that both parties had remaining peremptory challenges and stated that, if the remaining potential jurors on the panel were not selected, another panel of potential jurors would be brought in for questioning, which might make the issue moot.
After the argument on the Batson challenge, Defendant used two of his peremptory challenges to strike back a juror from the first panel and a juror from the second panel. Neither party used all of its peremptory challenges, and a jury was able to be chosen from the first two panels--a third panel of potential jurors was not needed. A jury of six persons and one [49,483-KA La.App. 2 Cir. 13] alternate was seated on August 28, 2013.
On August 28, 2013, Defendant objected to Investigator Horton, the chief investigating officer and case agent, serving as a bailiff in the courtroom during the trial. The state noted that it did not intend to call Investigator Horton as a witness and agreed that he should not serve as a bailiff in this case.
On August 29, 2013, Defendant filed a motion to change venue, arguing undue influence in the community because of media and pretrial publicity preventing him from receiving a fair and impartial trial in Jackson Parish. The trial court denied this motion because it was raised after a jury had been selected.
Trial on the Merits
Testimony began on August 29, 2013. Andy Brown, Sheriff of Jackson Parish, testified that, in October 2012, he was contacted by the Town's fiscal administrator about concerns that benefits, including Blue Cross Blue Shield (" BCBS" ) health insurance and Municipal Employee Retirement System (" MERS" ) retirement benefits, were being paid by the Town to employees who were not eligible for those benefits. He stated that he also investigated information provided by the LLA and looked into citizen complaints about undeposited funds and property being sold for less than the approved price. Sheriff Brown stated that, based on the information gathered during the investigation, his office contacted the district attorney's office, which then issued a warrant for Defendant's arrest for three counts of malfeasance in office.
[49,483-KA La.App. 2 Cir. 14] Daryl Purpera, the Louisiana Legislative Auditor, testified that all government bodies are required to report their financial conditions annually. He stated that entities that have more than $500,000 in annual revenues are required to hire an independent certified public accountant (" CPA" ) to conduct auditing procedures and prepare an audit report. He noted that the Town is such an entity that requires an annual audit. Mr. Purpera testified that the CPAs hired to conduct audits for the fiscal years ending on June 30, 2008, 2009, 2010, 2011 and 2012, were unable to form opinions on the Town's financial situation and, therefore, issued disclaimers for those five consecutive years. Mr. Purpera stated that his office also conducted a compliance audit dated June 1, 2011, and an investigative audit dated
March 13, 2013, on the Town. He explained that compliance/investigative audits are performed when the LLA receives an allegation of a misappropriation or illegal violation, and his office responds by sending auditors to act as fact finders to prove or disprove the alleged violations.
2008 Independent Auditor's Report
Kenneth Folden, CPA, testified that he works at a local accounting firm and conducted audits for the Town from 1987 to 2008. He noted that the audit for the year before Defendant assumed office had no disclaimer. He described differences between audits conducted for the previous mayoral administration, noting that the staff had years of experience, was familiar with the computer accounting system, kept thorough and well-organized records and that the clerk had " every level of training." Mr. Folden further [49,483-KA La.App. 2 Cir. 15] stated that, after Defendant took office, the bank account was out of balance; documents, e.g., bank reconciliations, invoices and disbursements, could not be found; and checks were not properly documented.
Mr. Folden also testified about the Independent Auditor's Report for 2008 that he prepared. He explained that he gave a disclaimer of opinion in the report, which stated:
We were unable to obtain written representations from the Town's management or a legal representation letter from the Town's counsel as required by generally accepted auditing standards.
The Town did not maintain adequate records of disbursements, properly reconcile bank accounts or accounts receivables or payable, nor were all transactions entered into the accounting records. The Town's records do not permit the application of adequate auditing procedures.
Because of the limitations described above we are unable to express, and do not express, an opinion on the Town's financial statements as listed in the table of contents.
Mr. Folden noted that over $1,000,000 of transactions had not been entered into the accounting records; that water and sewer funds were not reconciled; that accounts payable were not reconciled; that the fire department was not properly billed for services of a firefighter; and that bills were not timely paid, which resulted in the Town being charged penalties and in services being discontinued. He explained that original invoices were not available and that unauthorized parties signed invoices.
Mr. Folden also stated that he spoke with Defendant on at least a weekly basis about the problems he was encountering with the audit. He [49,483-KA La.App. 2 Cir. 16] testified that Defendant submitted a letter in response to these findings in which he placed blame on having an inexperienced staff and indicated that the Town planned to acquire new software.
2009 Annual Financial Report and 2010 Annual Financial Report
Margie Williamson, CPA, testified that she attempted to complete audits for the Town for the fiscal years ending June 30, 2009, and June 30, 2010. She stated that there was a disclaimer for the 2009 fiscal year, and the report stated:
The Town did not maintain adequate records of disbursements, properly reconcile bank accounts or accounts receivable or payable, nor were all transactions entered into the accounting
records. The Town's records did not permit the application of adequate auditing procedures.
Because of the scope limitation described above we are unable to express, and do not express, an opinion on the Town's financial statements as listed in the table of contents.
Ms. Williamson testified that bank accounts were not reconciled timely and that there were 300 outstanding checks over one year old; the Town could not provide a listing of grants received; vendor payments were often made late, including payroll deductions; the federal income tax was not paid timely; the Christmas Club deductions were not transferred to employees' accounts; the group health insurance was not paid timely and was cancelled twice for nonpayment; customers' payments for water and sewer were not timely posted to their accounts; there was no control over the ticket books issued to police officers and fines were not timely deposited; the ad valorem tax bills contained information for the incorrect tax year and a second billing had to be mailed to all customers; the tax sale of property for unpaid taxes was not held because the property tax records were unreliable; and the Town [49,483-KA La.App. 2 Cir. 17] could not provide credit card statements and invoices for four or five months.
Ms. Williamson also testified that there was a disclaimer for the 2010 fiscal year, and the report stated:
The Town did not maintain adequate records of receipts and disbursements, properly reconcile bank accounts or accounts receivable or payable, nor were all transactions entered into accounting records. The Town's records did not permit the application of adequate auditing procedures.
Because of the scope limitation described above we are unable to express, and do not express, an opinion on the Town's financial statements as listed in the table of contents.
She noted that checks were not issued in number order and there was no accounting for the sequence of check numbers; numerous checks and deposits were never recorded or were recorded in the wrong account; the reconciliation for the control account included outstanding checks that were written from other accounts; five cash accounts had no activity recorded even though there was activity; police fines, ad valorem receipts and water receipts were deposited late; petty cash transactions were not posted; grant checks were not recorded; time records were not signed by employees and supervisors; and three months of credit card statements could not be found.
Mr. Purpera testified that, in July 2009, his office was alerted to the need for a compliance audit when Mr. Folden submitted a disclaimer of opinion stating that he was unable to complete an audit for the fiscal year ending on June 30, 2008. He stated that, during the years of 2009 to 2012, both the Legislative Auditor Advisory Council and the Fiscal Review Committee worked with the Town to help it become financially accountable [49,483-KA La.App. 2 Cir. 18] and transparent and to make recommendations to correct deficiencies. He further stated that the advisory group and compliance and investigative audit sections of the LLA made multiple trips to the Town
in order to conduct the audit and offer assistance.
Mr. Purpera also testified that, pursuant to state audit laws, audits are due six months after the end of the fiscal year. He stated that the Town requested numerous extensions to file its annual audits. Because of the Town's failure to prepare its audits timely, it was placed on the noncompliance list, the consequence of which was that state funds could not be disbursed to the Town by the state treasurer. Specifically, he stated that the state treasurer could not release funds for the Town's airport project or its community grants that provided citizen services. Mr. Purpera noted that, as of the date of trial, the Town was still in violation of the state audit laws and remained on the noncompliance list.
June 1, 2011 Compliance Audit
Mr. Kelley and Kunta Osberry, auditors with the LLA office, testified about their work on the June 2011 compliance audit and the findings listed in the report. Mr. Kelley stated that the auditors reviewed approximately 435 expenditures, totaling approximately $1,100,000, but were unable to find documentation for 172 of these expenditures, totaling approximately $385,000. Mr. Osberry stated that they gave the Town a list of the undocumented expenses and requested that it supply those documents, but it failed to do so. Mr. Kelley and Mr. Osberry testified that days before trial, [49,483-KA La.App. 2 Cir. 19] the defense provided documents that were allegedly those requested by the LLA. Mr. Kelley noted that the third-party invoices provided by the defense were suspicious because they appeared to be in an identical format and did not include information normally found on invoices, such as business name, address, phone number, email or contact information. Mr. Osberry stated that the invoices were on the same form even though they were from different individuals. He noted that, after receiving these documents, 75 requested documents were still outstanding.
Mr. Kelley noted that the records were generally disorganized and that there were stacks of documents. Mr. Osberry stated that some of the boxes of documents were " fairly organized [by] vendors, month," but others were not. He also testified that one clerk's office had unorganized papers and records scattered on the floor, on the desk and in filing cabinets. He further noted that a formal record retention policy did not appear to be in place.
Mr. Kelley testified that the collections of utility accounts were past due by more than 30 days and amounted to $178,000. He stated that, in 59 instances, property taxes amounting to $2,890 also went uncollected for a year. Mr. Osberry stated that some payments of property taxes were not posted to the accounting system; and, as a result, individuals received delinquency notices even though they had paid. He further stated that, because the Town could not determine who had actually paid their property taxes, it did not hold a property tax sale. He also noted that Defendant was aware of these problems as they had three formal interviews, as well as informal discussions, with him.
Mr. Kelley and Mr. Osberry also testified about a gospel concert [49,483-KA La.App. 2 Cir. 20] organized by the Town. They stated that Defendant, his wife and Town employees collected cash from ticket sales, but did not keep records about who collected funds, how much money was collected, or how many and at what price the tickets were sold. Mr. Osberry added that, because of a lack of documentation, they could not verify that the money deposited was the actual amount collected.
Mr. Kelley and Mr. Osberry further testified about a land transaction that was not
approved by the board of aldermen. They stated that the board had two appraisals conducted on a piece of land and approved one of the appraisals, but a different piece of land was sold at a different price than that approved. Douglas Stokes, attorney for the Town, testified that, after the transaction had taken place, he was notified by an alderman that the transaction was not authorized. He stated that, after negotiations, the Town and the purchaser agreed to nullify the transaction and start anew.
Mr. Kelley and Mr. Osberry also testified about an inauguration ceremony held in honor of Defendant as mayor, the chief of police and the board of aldermen that was paid for with Town funds. Mr. Kelley stated that the Town spent $2,400 on catered meals and $158 to advertise in the newspaper. Mr. Osberry stated that the compliance report references an attorney general opinion which states that public funds should not be used to pay for an inauguration.
Sandra Whitehead, an auditor in the advisory services section of the [49,483-KA La.App. 2 Cir. 21] LLA, testified that advisory services provides training and performs assessments. She stated that one of her duties was to help the Town reconcile its bank account, which had not been reconciled for four years, and noted that she had to make an adjustment of $3.6 million dollars. Ms. Whitehead testified that, for the fiscal years of 2007 through 2010, the Town did not timely file its annual audit reports, resulting in its being ineligible to receive state funds. She also stated that the Local Government Budget Act requires all local government agencies to have their budget in place before the start of the fiscal year, but the Town had not passed a budget. She testified that the Town was not in compliance with the Public Bid Law, which requires competitive bids or quotes for all purchases of materials and supplies exceeding $30,000. She noted that the Town's board of aldermen was not receiving financial statements on a monthly basis. She stated that the Town was transitioning between accounting systems, but noted that the staff was not adequately trained on the new accounting system. Ms. Whitehead noted a lack of financial accounting expertise on the part of the Town staff and stated that the Town did not keep up with its receivables, its payables and the bank reconciliations, which resulted in its first two disclaimers. She stated that accounting records were in disarray and were not complete. She compared the book balance to the bank balance, noting that the book balance was $4,375,699 and the bank balance was $796,116--a difference of $3,579,583. She also discussed the payroll bank account, which showed a difference of $93,361 between the book balance and the bank balance. She noted that there was no clear accounting of dedicated taxes, e.g., property taxes and ad valorem taxes, and that utility [49,483-KA La.App. 2 Cir. 22] accounts were not reconciled. Ms. Whitehead further stated that management did not know the full extent of the Town's unpaid obligations and that bills were not being paid on a timely basis. She had to contact third-party vendors because of missing documentation.
Ms. Whitehead also stated that the auditors gave both written and verbal recommendations to the Town. She testified that the Town's accounting records were the root of its problems, which she described
as incomplete, in disarray, disorganized and " a train wreck."
Defendant submitted a response to the June 2011 compliance audit and stated that a new in-house accountant and an external CPA had been hired to resolve the financial problems, that a new accounting program was being installed and that he addressed the utility accounts problem with the Town's attorney.
Tonya Wade, CPA, testified that she began working for the Town in 2010 to assist with bank reconciliations and to set up schedules for the auditors. She stated that, in April 2011, she signed a contract with the LLA and the Town to serve as chief financial officer and to perform 24 steps to help the Town with its general ledgers, policies and procedures. Those 24 items included entering all current-year transactions into Quickbooks (accounting software), creating a filing system, determining what bills to pay and how to prepare reconciliations in order to print a financial statement. She further stated that she assisted the Town in creating procedures for dedicated taxes; trained the clerks on Quickbooks; taught employees how to enter the bills and checks into the system and how to pay bills and make [49,483-KA La.App. 2 Cir. 23] deposits; helped reconcile the utility accounts and ad valorem tax accounts; and helped create new policies and procedures relating to the accounting and fiscal offices.
Ms. Wade also testified that the number of hours worked per week by employees and their status as full-time or part-time were also issues. She stated that, in response, the Town began to keep track of each employee's weekly hours.
Ms. Wade further stated that, while working on the contract, she met with Defendant to update him on the progress and noted that he was cooperative. She described one clerk's office as messy, but stated other clerks had neat offices. She also noted that she had problems receiving documents she requested from the Town and usually had to ask more than once. She testified that her contract ended at the end of November 2011.
2011 Annual Financial Report and 2012 Annual Financial Report
Jonald Walker, CPA, testified that his firm performed the audits for the Town for the fiscal years ending June 30, 2011, and June 30, 2012. He stated that there was a disclaimer for the 2011 fiscal year, and the report stated:
Because of inadequacies in the Town's accounting records, we were unable to form an opinion regarding the amounts recorded as opening balances for liabilities and fixed assets and the income and expense or expenditure allocation between departments and funds[.]
Because of the scope limitation described above we are unable to express, and do not express an opinion on the Town's financial statements as listed in the table of contents[.]
He noted that the Town had problems with its general accounting; no [49,483-KA La.App. 2 Cir. 24] documentation was provided for some checks; some purchase orders could not be provided and others were postdated; and numerous checks were paid more than 30 days after the invoice date. He also stated that monthly financial statements were not provided to Defendant as mayor or to the Town's board of aldermen for use in financial decisionmaking.
Mr. Walker also discussed the 2012 report and noted that there was a disclaimer that stated:
Because of inadequacies in the Town's accounting records, we were unable to form an opinion regarding the amounts recorded as opening balances. The Town's accounting personnel did not
possess sufficient knowledge and skills in financial reporting resulting in numerous misstatements in the Town's computerized accounting system. We were unable to confirm or verify by alterative means accounts payable and other payables of the Town. As of the date of our audit report, management was still in the process of rectifying issues with its financial reporting and correcting the misstatements. As a result of these matters, we were unable to determine whether any adjustments might have been found necessary in respect of recorded or unrecorded receivables, payables and other liabilities, and the elements making up the statements of revenues, expenditures, and changes in fund balances.
Because of the significance of the matters described in the paragraph above, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion. Accordingly, we do not express an opinion on these financial statements.
He stated that documentation for transactions was not available; transactions between funds were incomplete; the petty cash account was not reconciled; checks were written out of numerical order; traffic tickets were not properly reported, maintained or collected; and water and sewer billings were not properly collected. He also testified that the Town improperly paid retirement contributions, insurance benefits and other employee benefits for ineligible employees. He reviewed payroll records and benefits received by [49,483-KA La.App. 2 Cir. 25] Town employees to determine whether they were entitled to the benefits they received. He stated that he found instances where, under the Town's policy, the Town was paying benefits to employees who did not meet the full-time criteria. Mr. Walker also noted that the Town made payments for health insurance coverage for five terminated employees without collecting reimbursement from the individuals for the coverage.
Appointment of Fiscal Administrator
Mr. Purpera testified that, based on the continuing problems with the Town, i.e., disclaimers of opinion, the inability to audit and the inadequate records, the Fiscal Review Committee unanimously voted to request that the district court appoint William Ryder as fiscal administrator, and Judge Teat ordered the appointment.
Mr. Ryder testified that he served as fiscal administrator from July 25 to October 18, 2012. He stated that, before he arrived in the Town, he received documents regarding its financial situation and found there was no current-year financial statement, there were many negative balances, the general fund was $600,000 short on collections, the budget was overspent by $660,000, there was a shortfall of approximately $1,000,000 in the general fund, bills were paid late and expenditures were inadequately documented.
Mr. Ryder stated that, on his first day in the Town, he met with Defendant, who asked him if he (Mr. Ryder) was going to follow the court order or the law. Mr. Ryder stated that he told Defendant the court order was the law and that it " went downhill from there." He noted that Defendant was uncooperative, was never at Town Hall, would not respond to emails or phone calls, would not show up for meetings and cancelled 12 meetings. [49,483-KA La.App. 2 Cir. 26] Mr. Ryder added that Defendant insisted that all of Mr. Ryder's requests be brought to him first before the staff responded.
Mr. Ryder stated that Defendant wanted to wait two weeks to advertise the positions of Town clerk and accountant. He told Defendant that he could not wait
two weeks and hired Sharetha Houston, the Town's former accountant.
Mr. Ryder testified that he observed that Town employees did not keep a set work schedule and that Melba Holland, a previous Town clerk, had complained to Defendant about employees not working set schedules. He stated that, although employees were required to clock ...