A forensic audit of Konawa city records – a compilation of three in-depth examinations requested in two and a half years – revealed multiple instances of mismanagement of municipal funds.
The audit examined allegations of fraud involving six former city officials over a sixyear period: two city managers, two city treasurers, and two city clerks.
The office of State Auditor and Inspector Cindy Byrd began her investigation when first contacted on Aug. 27, 2020, by the Konawa City Council about “questionable financial activity” of a former city clerk who was fired three weeks earlier.
Before that audit was finished, the District Attorney’s Office on June 28, 2021, requested a separate investigation based on additional findings reported by the Seminole County Sheriff’s Office, Byrd related.
As those two investigations neared completion, the D.A.’s office sought another audit on March 30, 2023. That request was prompted by concerns raised by the Konawa police chief “regarding a potential misappropriation of funds and deposit discrepancies linked to another former employee,” Byrd reported.
The three issues were subsequently consolidated into a single investigation.
Findings of the SA&I audits included:
• Between July 8, 2016, and July 31, 2020, former City Clerk Shauna Farmer received unauthorized payments totaling $53,298. “When confronted by city officials in August 2020, Farmer admitted she misappropriated funds and resigned,” the audit states.
Farmer was hired Aug. 12, 2014, “and at various times” served as the city clerk, deputy city clerk, utility director, emergency management director, fire department secretary, court clerk, human resources officer, and deputy city manager, “while also maintaining near-total control” over the city’s financial processes.
Over a six-year span, Farmer “worked under at least three different city managers,” auditors learned. “This constant leadership change led to inconsistent administrative practices and weakened the City’s ability to maintain effective oversight.”
• Former City Manager Tim Cully received $7,016 in compensation that “was not properly authorized or documented” between July 2020 through January 2023. Criminal proceedings were filed against Cully in 2023 concerning his personal use of the city’s fuel card; he received a 90-day deferred sentence and was ordered to pay the city $2,852 in restitution.
• Former City Treasurer Stephanie Clanton “overpaid herself” $1,800 in 2022. She had repaid $900 at the time of her resignation on April 13, 2023.
• The city distributed gift cards totaling $6,420.65 to employees as Christmas bonuses “without properly reporting the amounts as taxable income.”
• Clanton received a $200 gift card as a Christmas bonus at a time when she was providing services as a vendor and was not a City of Konawa employee.
• Payroll taxes were withheld from employee wages but were either not remitted, or not remitted in a timely fashion, to the Internal Revenue Service, the Oklahoma Tax Commission, and the Oklahoma Employment Security Commission.
• Former City Manager Brett Wade received $313 reimbursement from the city for heating and air conditioning supplies he purchased June 12, 2021, with a personal credit card.
A purchase order dated June 14 was signed by Wade’s wife, then-City Treasurer Tamara Wade, and was approved by Wade himself, authorizing the reimbursement.
A handwritten note on the invoice stated the supplies were used by a vendor to repair the camera at the back entrance of City Hall. However, the vendor later said he did not request the supplies and they were not usable for the camera repair.
Wade subsequently wrote a check that reimbursed the city for the $313 purchases, state auditors reported.
• The Wades used the city’s credit card to make unauthorized personal expenditures that totaled $350.37. She resigned on June 24, 2021, and he was terminated on Aug. 13, 2021.
• In November 2021, the City Council appointed Timothy Cully as city manager, even though at that time he was “in the process of repaying salary overpayments from his previous position as a police officer,” auditors learned. “This situation continued to raise concerns regarding the City’s hiring practices and due diligence procedures,” Byrd wrote.
• The city failed to properly bid the renovation of the Emergency Management Service living quarters and violated conflict-of-interest statutes when it hired and paid a second contractor who was the spouse of then-Deputy City Clerk Jennifer Sanders.
• The city failed to retain essential records, such as utility receipts, bill stubs, or other documentation needed to “substantiate utility payments posted to customer accounts.”
• Between May 2019 and November 2020, the City of Konawa issued $37,981 in adjustments to customer utility accounts. Those corrections “lacked supporting documentation or justification,” state auditors reported.
• In November 2022, utility payments totaling $1,226 in cash were collected but not deposited.
• Compounding those issues, city officials failed to obtain annual financial audits in the timely manner required by law, the council did not comply with the state’s Open Meetings Act, and city officials failed to retain records in accordance with state law.
Concerns ignored “As concerns emerged and were brought to the City Council’s attention, corrective actions were not taken,” Byrd noted. “Instead, the Council continued to employ individuals who were allowed to maintain unilateral control over City operations which exposed the City to financial risks.”
For example, besides Farmer, the council appointed Brett Wade in January 2021 to serve as interim city manager. Shortly afterward, his wife, Tamara Wade, was hired to be the city treasurer.
“Together they exercised substantial control over financial operations without sufficient independent oversight,” Byrd wrote. Activities that occurred during the Wades’ tenure prompted the second audit request from the District Attorney’s office.
“While day-to-day operations are delegated to the city manager … the Council maintains ultimate oversight authority, including the hiring of the city manager and the appointment of the city treasurer,” Byrd wrote.
The state auditors’ findings “exposed a troubling pattern of negligence and lack of accountability,” Byrd concluded. “In instances where individuals were found to have misappropriated city resources, the consequences were surprisingly lenient, often limited to light disciplinary measures and favorable restitution arrangements rather than immediate termination.”
During the audit period, the City of Konawa experienced “frequent turnover in key leadership positions, contributing to administrative instability and weakened internal controls.”
Although managing a smaller municipality “does come with challenges,” the limitations “demand greater vigilance, not less,” Byrd wrote.
The town council “must become part of the internal control process by providing increased oversight in order to protect city assets.” The council “ultimately bears responsibility for the financial welfare of the city.”