An investigation into record-keeping practices and regulatory compliance has found significant problems that may have cost Lawrenceville taxpayers hundreds of thousands of dollars when Rex Millsaps was mayor.
The 10-page report uncovered unapproved expenditures, an absence of written controls concerning transactions, assets and compliance, and general disorganization within Lawrenceville City Hall from September 2006 to December 2010.
“This is the most important city operational event in the last 30 years,” said City Councilman Tony Powell, who called for the report done by the Atlanta-based accounting firm Moore Stephens Tiller. “It goes to the heart of protecting the city’s interest.”
Moore Stephens Tiller did not issue an opinion with the report, noting that it wasn’t an audit.
The city paid the firm $20,000 for the review.
Millsaps, who owns a local accounting firm, was not mentioned by name in the report. But he acknowledged there were accounting problems during his tenure but contended that they existed long before he took office. He said Powell, who stepped down as city attorney shortly after Millsaps’ election in 2006, was trying to smear him because of an old grudge.
City Council members and officials asked the firm to review nine areas of concern, including construction of the city’s $10 million police station, $582,000 in paving and curb improvements in a local subdivision, and internal control of construction materials, supplies and equipment.
Most notably, the city asked Moore Stephens Tiller to investigate problems in the city’s Gas Department.
In January, Lawrence-ville faced more than $2.5 million in penalties for safety code violations in the department. The fines were suspended once the city had paid $65,000 of the $2.5 million and agreed to remain in compliance with safety requirements for the next two years. According to the report, the mayor and City Council were not informed of the city’s safety code violations “until the problems with the [Georgia Public Service Commission] had escalated to a point that inflated the penalties.”
The report also said that Terry Farmer, the former supervisor of the Gas Department, attempted to pay an earlier fine of $4,500 out of budgeted funds without approval or knowledge of the mayor, “thus covering up the violations.”
“It appears that there was no oversight over an employee with the responsibility of reporting incidents to the PSC,” the report said. “There also appears to have been no accountability of the gas department head to the mayor and city council.”
Farmer is no longer working for the city. He couldn’t be reached for comment.
The report also found that there was no inventory on the city’s general ledger, no record of inventory activity and no log of equipment use for projects. Specifically, the firm pointed out that several pieces of equipment in the Gas Department had been temporarily misplaced.
City Manager Bob Baroni disputed that part of the report, saying the misplaced equipment was actually a pair of jackhammers that had been briefly moved under a workbench.
“There wasn’t any equipment lost,” Baroni said. “[The firm] made it look like nobody knows what’s going on over there.”
The report also found:
● City officials didn’t notify council members and may have improperly paid for $184,000 in repairs to private property following the September 2009 floods.
● The city failed to maintain a database of supporting documents for construction of the police station, noting that the files were “disorganized and difficult to locate.”
● Change orders totaling about $379,000 for street paving and curb improvements in the Forest Hills subdivision in 2008 were rubber-stamped without approval of the council.
Current council members, including those who served with Millsaps, said they were unaware of the scope of the problems under Millsaps’ administration until reading the report, which wasn’t released publicly until mid-November.
Other than Powell, all were reluctant to criticize the former mayor and quick to point out that the report showed no evidence of malfeasance.
“There was no mismanagement of money,” Councilwoman Marie Beiser said. “There just needs to be more checks and balances. There’s going to be better accounting in the future.”
David Jones, a longtime resident and neighborhood activist, said he was “shocked” at the lack of internal oversight but remained hopeful current Mayor Judy Jordan Johnson and council members were going to make the necessary improvements.
“Quite frankly, I think we were fortunate that there was nobody on the take,” Jones said.
Several city officials and residents noted that Lawrenceville has already made some promising moves to address the problems.
They include crafting a consulting agreement with Moore Stephens Tiller to draft internal controls over compliance with local ordinances and state regulations, and creating the city manager position, making someone responsible for oversight of all city departments and provide continuity at City Hall.