Stonecrest mayor moved $235K from city account, returned it the next day

Credit: Ben Gray

Credit: Ben Gray

Incident raises questions about city oversight of finances during ongoing investigations into misspent funds

The embattled mayor of Stonecrest transferred nearly $235,000 from a city bank account before returning it the next day, raising questions about the city’s financial oversight amid several financial malfeasance investigations.

Mayor Jason Lary, who is currently on medical leave, obtained cashier’s checks worth $234,900 on May 13 from the Stonecrest Housing Authority’s bank account, according to records obtained by The Atlanta Journal-Constitution. The next day, the checks were all refunded to the account.

Stonecrest officials said this week they are unable to explain why Lary wrote the checks or why the money was so quickly refunded.

The incident raises questions about the Stonecrest City Council’s ability to get a handle on its finances after the city’s spending of $6.2 million in federal pandemic relief funds has come under fire as a potential kickback scheme. Several city employees have been fired and replaced.

ExplorePandemic relief meant for Stonecrest businesses lost in city hall turmoil

A Housing Authority spokesman and the city manager said they were unaware Lary had written any checks on the account until a clerk called it to their attention the next day.

“We’re still looking into it to sort of figure out what’s going on,” Acting City Manager Janice Allen Jackson said Tuesday. “At this point, we’re still gathering facts.”

Lary didn’t responded to requests to comment for this article. His attorney, Dwight Thomas, told the AJC in an email, “The mayor did not do anything improper but took executive steps to protect the integrity of the funds at issue.” The attorney would not answer any further questions.

Jackson, who was recently hired as Stonecrest’s acting city manager, said the city’s charter gives the mayor authority to write checks from any city account. However, the City Council unanimously approved a resolution Monday that requires two signatures on checks worth $5,000 or more.

“I’ve never had this happen before in my professional career, and I’ve been doing this for 30 years,” said Jackson, who has worked in Albany and Augusta among other local governments. “I’ve never been in a situation where an elected official actually has signing authority on any city account.”

No member of the Stonecrest City Council responded to the AJC’s requests for comment.

Lary has repeatedly denied any wrongdoing and refused to resign. His attorney added, “Mayor Lary has at all times conducted himself appropriately and has not violated any penal laws.”

$100,000 for marketing

The Stonecrest Housing Authority was established in late 2018. The board typically works with developers to finance affordable housing projects through bond deals.

The authority held its most recent meeting on May 12, a day before Lary transferred the funds from its account. Lary, the only elected official on the Housing Authority’s board, did not attend the meeting.

Bill Bruckner, the authority’s chairman, said he alerted the rest of the board when he found out about the transactions. No member of the Housing Authority knew in advance about the mayor’s transactions or their intended purpose, he said.

“I certainly don’t want to speculate as to the mayor’s motives,” he said in a text.

Jackson and Mayor Pro Tem George Turner are the only other people who have access to that bank account, Jackson said.

Copies of the four checks Lary signed were provided to the AJC and confirmed by multiple city officials.

ExploreAmid scandal, Stonecrest makes changes to bolster financial oversight

The largest of the four checks Lary signed, worth $131,200, was written to the Stonecrest Housing Authority for the purpose of a “transfer,” but it’s unclear what account it was going to before it was returned.

Another check, for $100,000, was made out to MRPC Inc., a Las Vegas-based company founded two months ago. The check’s description said it was for a “2021 Marketing program.”

It’s unclear what MRPC Inc. does as an organization or whether it has any connection to Municipal Resource Partners Corporation, a Georgia nonprofit founded in May 2020 that oversaw Stonecrest’s troubled CARES Act program. Aside from sharing the same initials, Nevada and Georgia business records do not show a direct connection.

A third check, worth $3,500 was made out to TWS Holdings for an unknown “June rent” payment. The fourth check, for $200, was to an individual for lawn care.

Cutting checks
Here is the information listed on the $234,900 worth of cashier's checks that were written by Mayor Jason Lary on May 13.

Jackson said she “cannot speak” to why the money was suddenly returned, adding that Lary “may be the only person who can explain that.”

Bank approval

Because the mayor is a signee on the bank account, Jackson said he was able to get the large checks approved.

“The bank process is designed to protect your accounts from outsiders. It’s not designed to protect your accounts from insiders,” she said.

The Housing Authority’s account is with Citizens Trust Bank, which did not respond to multiple requests for comment.

The authority’s bank account is under the city of Stonecrest’s name, which Jackson said is improper.

“It’s not a department of the city,” she said. “It is a separate entity from the city, which means to me that they should have their own separate bank account.”

City Council members agreed this week that any future checks issued from a city account worth $5,000 or more will now need two signatures from among a handful of Stonecrest officials: the mayor, mayor pro tem, city manager and finance director.

When Lary announced his medical leave in April, which was just days after the details of the CARES Act investigation were made public, he complained that the state Legislature recently lessened his powers as mayor. He also said he didn’t want to continue writing checks for the city, but Jackson said that would require a charter change.

“Since I’m a ceremonial mayor only now, they still have consummate duties with regards to what they want me to do at city hall. Signing checks, being on the bank account, signing contracts — no thank you,” he said April 15. “Because at this point, I’m going to request for council or for state representatives that that duty befalls someone else.”

‘A lot of holes to plug’

Earlier this month, a third-party audit into how city officials used purchasing cards found widespread misuse and accounting errors. The results were released about a month after the city attorney released his initial findings on the city’s CARES Act program.

Only two of the 10 people who held purchasing cards, also known as p-cards, were authorized to have them. Everyone except for Lary returned their card to the city.

On Monday, the council revoked p-card privileges for all elected officials, including Lary. Now, the city manager, chief financial officer and accounting manager are the only city employees allowed to have them. Jackson said no one, including herself, currently has an active p-card.

According to the audit, Lary spent about $32,500 across 201 transactions on his purchasing card. Of those purchases, 69% did not have a receipt, 74% did not have a clearly stated purpose and all of them lacked city manager approval.

ExploreAudit finds widespread purchase card misuse with no oversight in Stonecrest

Stonecrest will implement new training for p-card holders that clearly states abuse of the cards could lead to termination or criminal charges. The city council also voted to send the findings of the p-card audit to the DeKalb County District Attorney’s Office for further investigation. Purchasing card abuse is a felony in Georgia, which carries up to three years in prison and up to a $5,000 fine.

“I don’t think that you get a pass for ‘not understanding the rules’ for using the card,” Councilwoman Jazzmin Cobble said during the meeting. “... Any adult person who accepts a purchasing card accepts the rules and regulations around it.”

City Attorney Winston Denmark, who recommended the p-card policy changes and conducted the CARES Act investigation, said “there’s a lot of holes to plug” in Stonecrest regarding financial oversight. In addition to the two-person verification on large checks, he said the council should consider applying a similar protocol for cash withdrawals.

“This doesn’t cure everything, but it helps to make it a whole lot better than it used to be,” Mayor Pro Tem George Turner said during the meeting.


OUR REPORTING

In early 2021, The Atlanta Journal-Constitution documented the dysfunction between Stonecrest city leaders, including action by the state Legislature that changed the city’s charter and power structure. When city council members raised finance questions about pandemic relief funds and city-issued purchasing cards, the AJC took notice and began filing open records requests.

The AJC worked to obtain documentation, conducted interviews with people involved and tracked how those monies were spent. This week, our reporters were the first to obtain information about the activity on the Housing Authority’s account.

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