HOBART – Embezzlement charges were filed last week against two former employees of the Town of Lone Wolf in the wake of an eye-opening state audit.
Margrett Mae Horton, the former office manager at Lone Wolf’s Town Hall, is accused of embezzling $17,524 from municipal coffers by placing her two dependent children on the town’s health insurance program between July 1, 2015, and Dec. 3, 2017.
The town’s code of ordinances did not provide for paid health insurance for family members of employees. Additionally, minutes of Board of Trustees and Public Works Authority meetings over a 10-year period, from January 2008 through December 2017, did not reflect approval of dependent health insurance coverage.
Horton “admitted that she purchased the insurance for her children” without obtaining approval from the town trustees, State Auditor and Inspector Cindy Byrd wrote last year in her report on the audit of Lone Wolf’s municipal government.
Horton and former Lone Wolf Clerk/Treasurer Bonnie Charlene Keesee are charged jointly in misdemeanor and felony counts accusing them of embezzling $2,300 from the sale of fireworks purchased for the town’s annual Independence Day celebration: $1,500 in 2015 and $800 in 2016.
The state audit revealed that Horton, Keesee and another former town employee, Rick Harris, operated a fireworks stand, bought fireworks from a wholesaler “and sold them to the Town” for the July 4th celebration.
Horton paid a fireworks wholesaler $7,662.84 from her personal bank account on July 6, 2015, ledgers reflect. The next day $4,500 “was transferred directly from the town bank account to Horton’s personal bank account,” the state audit found.
“According to Horton, the $4,500 was payment for the Town’s fireworks.” However, the fireworks wholesaler said the town’s fireworks cost $3,000. “As such, Horton – and presumably Harris and Keesee – profited … $1,500 from the Town,” the audit reports.
A year later, on July 6, 2016, Horton paid $7,910.12 from her personal bank account to the fireworks wholesaler, records show. “The next day she withdrew $3,800 from the town bank account,” the state audit relates.
According to the fireworks wholesaler, fireworks for the town cost $3,000, like the year before. Consequently, “Horton – and presumably Harris and Keesee – profited a total of $800 from the Town,” Ms. Byrd wrote.
Harris, who was a town maintenance employee, has since died.
The state auditor pointed to Article 10, Section 11, of the Oklahoma Constitution, which states that an “officer receiving interest, profit or perquisites … arising from the use or loan of public funds in his hands” constitutes a felony crime.
District Attorney David Thomas said the two women probably will make their initial appearance in Kiowa County District Court this week.
2 audits raise red flags
The criminal charges resulted from a probe conducted by the Oklahoma State Bureau of Investigation that was triggered by an investigative audit performed by the State Auditor’s staff in response to a request from the Lone Wolf Town Board of Trustees.
The catalyst for the trustees’ request was an audit performed by Furrh & Associates of Lawton, which examined the town’s records for fiscal year 2015, 2016 and 2017 and identified “questionable financial activity,” Byrd wrote.
“I have great respect for Cindy Byrd, and our office and the OSBI worked with her office on this investigation,” said Thomas, who is district attorney for Greer, Harmon, Jackson, Kiowa and Tillman counties.
The state audit indicated “there was a lot more” town money that was unaccounted for, “but we couldn’t find anything else that we could charge criminally,” Thomas said.
For example, a renewal-rate record from Blue Cross Blue Shield showed “the Town paid for the Horton children’s insurance since at least 2010,” but municipal records dating back to 2010 were not available, the state auditor reported. “It is estimated that the Town would have paid an additional $47,526 on such unauthorized coverage between 2011 and 2015,” Byrd wrote.
“Questionable” expenditures
During the two-and-a-half-year period covered by the state audit, no evidence could be found that the Lone Wolf Board of Trustees “reviewed receipts or supporting documents” which resulted in at least $23,813 of “questionable expenditures.”
Those included purchases of fuel ($10,650.88), supplies ($8,053.41), food ($3,480.67) and petty cash reimbursements ($1,628.01).
The town had no receipts or supporting documents for the fuel purchases, “and there was no evidence that town employees kept odometer readings or logs to account for fuel usage.” Also, five fuel purchases occurred in a 1-hour-and-16-minute period on the Friday evening before the 2015 Labor Day holiday weekend, Byrd noted.
$22K in credit card
purchases not OK’d
by town trustees
In addition to the “questionable expenditures,” $22,743 in town funds were spent from January 2012 through December 2017 with a town debit card, “with no evidence that the transactions were ever presented to or approved by” the Public Works Authority or the Board of Trustees.
Those included purchases at International House of Pancakes, Sonic, McDonald’s and Arby’s, as well as expenditures at CJ’s Corner, Walmart, Staples, Dollar Tree, PayPal and Cellular Outfit.
Horton told auditors she kept the card in her desk drawer “and there was no log used to track the control of the card or the purchases made.” Horton “claimed that Harris and trustees also made debit-card purchases.”
In the absence of a log, receipts or purchase orders “it could not be determined who was responsible for these questionable expenditures,” Byrd wrote.
Payroll, bonuses
Neither the Town of Lone Wolf nor CPA+, a firm that donated payroll tax services to the town, “had records of town employees’ wages, salaries, timesheets, or W2 tax forms,” Byrd wrote. Paychecks often were issued before the end of pay periods. Employee salaries and pay hikes “typically were not documented in meeting minutes.”
Records of vacation leave and sick leave “did not exist or were not provided” to the auditors.
Christmas bonuses were issued in excess of amounts approved by, or without any approval at all from, the Board of Trustees.
In 2012, 2013 and 2015 bonuses were paid to town employees in gross amounts that were greater than the bonuses approved by the trustees. For example, in 2012 the board approved $500 Christmas bonuses; instead, their gross pay was $530, which netted a bonus of $500.05. Similarly in 2015 the bonus approved by the trustees was $350; however, the employees’ gross pay was $380, resulting in a net bonus of $350.93.
2 versions of minutes
The town’s trustees, who also double as the Public Works Authority, are required by state law to post advance public notices of their meetings that specify the subject matter to be considered during those meetings.
They also are required to maintain written minutes that summarize the proceedings of those meetings, the state auditor noted.
“These minutes should be an official summary of the proceedings showing clearly all matters considered by the public body and all actions taken…”
However, minutes of the trustees’ meetings and PWA meetings “failed to reflect what was discussed at meeting and, instead, reflected only that a discussion and action occurred, resulting in a narrow representation” of the actions taken.
What’s worse, minutes of the board’s December 19, 2016, meeting were “fabricated to reflect action taken by the Board that apparently did not occur,” auditors discovered. The minutes related that the board voted 5-0 to give Margie Horton “permission to sign the check Free Pay contract.”
“The minutes and the agenda on file at Town Hall did not include any reference to the contract or permission for Horton to sign for the Board,” Byrd wrote.
Falsifying a public record and submitting fraudulent claims by a town employee or official are felony crimes that can be punished with prison sentences, state law provides.
Lack of oversight
Horton “was allowed to conduct the majority of the Town’s day-to-day business without oversight from either the Town Clerk/Treasurer or the Board,” the state audit found. Keesee “said that she signed purchase orders and checks once per month and allowed Horton to manage the day-to-day operations of Town Hall,” the state audit says.
The audit revealed that Keesee sometimes signed blank checks, and trustees sometimes signed purchase orders without dollar amounts, “allowing anyone with access to these documents to issue them with no oversight.”
Also, purchase orders “often did not include information reflecting what was purchased, and receipts and itemized invoices were routinely not attached.”
Then-trustee, now mayor, Renae Vitale “complained that Horton presented purchase orders to the Board after purchases were made and simply had two trustees sign them without full board approval.”
State law allows the Board of Trustees to designate employees who have the authority to encumber funds for purchases, “but neither the Town Code nor the minutes of the Board or the PWA reflected any such designations,” the state auditor wrote.