NORMANDY - Calling it the "poster child" for poorly run government, state auditor Susan Montee said Tuesday the Northeast fire district is "the worst" of more than 300 agencies her office has audited.
"The accounting records are poor, we don't know what's going on, they were uncooperative, we had to sue them," she told an animated crowd of more than 130 people gathered Tuesday night at the University of Missouri-St. Louis to hear results of the long-awaited audit of the Northeast Ambulance and Fire Protection District.
Montee, the state auditor since 2006, said her staff has met with the St. Louis County prosecuting attorney's office regarding the findings and has forwarded a copy of the audit to that office. She told the crowd that the audit wasn't complete due to the district's failure to turn over records, but that her office would follow up its report once records are obtained.
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Montee's comments outlining the findings brought praise, applause, questions about what's to come and demands for criminal prosecution from the standing-room-only crowd.
"How can we continue to let these guys steal week after week?" asked Tim Britt, a regular at the fire board's weekly meetings.
Montee responded that there were "a lot of players involved" and that she believed action would be taken by authorities.
Among the district's most serious problems was that its bookkeeping was "in shambles," Montee said.
She said that Northeast staff improperly recorded transactions, resulting in a discrepancy of $3,578,500 among district funds, which include operating, pension, dispatch and ambulance funds.
"It means all of the funds had wrong balances," she told the Post-Dispatch. "Their financial statements are so bad that you have no idea how much money is in the funds."
The audit was begun in December but came to a standstill of sorts in June, when the auditor's office said the district refused to turn over records. The auditor and attorney general sued, but the audit report said it was hampered by lack of access to information.
The audit was requested by former Gov. Matt Blunt after north St. Louis County legislators took residents' concerns to him. Chief among them was the district's spending on legal fees.
The Post-Dispatch reported in November 2007 that Northeast board attorney Elbert Walton Jr. had billed the district for $76,671 in legal fees in his first six months as the district's attorney. That figure was about six times what his predecessor had billed in a full year.
The audit was particularly critical how legal fees were handled. The district's two lawyers, Walton and Bernard Edwards Jr., were paid $348,000 from July 2007 through February 2009, the audit report said. That "does not appear reasonable," the report said. And the attorneys' contract with the district appears to be illegal, Montee said.
The contract - the contents of which were disclosed by the Post-Dispatch in June - says the district must pay the balance of the contract if the two are fired before April 30, 2011, as well as $10,000 in severance for Walton and $5,000 for Edwards.
The audit report said the contract should be ended.
As Montee explained that fire districts have the right to discharge legal counsel, the gathering applauded and a crowd member shouted, "How about tomorrow?"
The board's two attorneys showed up at UMSL and took copies of the audit, but left before Montee began speaking.
Board President Robert Edwards did not attend. Secretary-treasurer Rhea Willis stood and thanked the auditor.
The report also said that Northeast paid some invoices billed to Walton, including $2,000 for fliers and $1,350 to replenish Walton's postage permit. The U.S. Postal Service verified that the meter was used to send out "political campaign mailings," according to the report.
Montee said the district appears to have improperly used public funds to support ballot measures and candidates, including fees for the postage permit and the use of district employees campaigning at the polls and going door to door to hand out literature.
Among other findings in the report:
- As of May 30, the district's general operating fund owed the pension fund about $478,500 - tax dollars intended solely for the firefighters' pension plan. The Post-Dispatch reported in September that the pension accounts hadn't received contributions since December 2007.
- Credit card usage appeared unregulated. The report said, for instance, that detailed invoices could not be found for most of $17,422 in charges on eight credit card payments.
- Several hotel bills and airline tickets were charged to district credit cards, but the district would not provide auditors with further information on those charges, the report said.
- District directors and officers have been using district cell phones for personal use. In January 2008, the fire chief at the time tallied $1,027 in cell phone charges, and $1,055 in such charges in March 2008, according to the audit.
- The district did not solicit bids and ultimately paid too much for website design and maintenance, the report said. The same website specialist was then hired as a "special project consultant," again without soliciting bids. While the report did not identify him, that consultant is Anthony Weaver. The auditor's office was unsuccessful in obtaining invoices regarding thousands of dollars paid by the district to Weaver.
- The cost of running the district's office leaped from $15,600 in the year ending June 30, 2007, to $43,040 the next year, and $85,520 this year, ending in June. The costs exclude overtime. Before the current board took over, the district's office staff consisted of a part-time employee. The district now has two full-time office employees.
- An audit the district paid for that examined financial statements for all of 2006 and the first half of 2007 resulted in numerous suggestions by that auditor. However, according to the state report, "there is little evidence the district has attempted to implement prior audit recommendations."
- The state audit criticizes the board for a range of Sunshine Law violations, perhaps most notably an ordinance it passed to fine and ban individuals from public meetings. The ordinance doesn't appear to be legal, the report says. The board has attempted to ban three district residents from meetings for a year each.
- The board lacks a conflict of interest policy. The report noted that Walton's wife, former state Rep. Juanita Head Walton, was the real estate agent involved in the district's purchase of its administration building in Beverly Hills for more than $500,000. Walton and his wife are in the process of getting divorced. The audit also says the building was purchased with ambulance fund money, when ambulance fees are required to be used for ambulance service fees.
- In June 2007, the board passed a resolution stating the firefighters' union contract was not binding and would no longer be honored.
- The state found several issues of potential concern to the Internal Revenue Service, among them the district didn't report prepare proper IRS forms regarding attorneys', consultants', security guards' and other fees.
The fire district, which serves 15 North County communities, has been the target of county, state and federal investigations. The county prosecuting attorney's office is seeking to remove board president Robert Edwards over allegations that he conducted board business without a quorum.
And the district's accounts were frozen Oct. 20 by a county judge in response to a suit questioning district spending. On Thursday, a judge is scheduled to name a third, tie-breaking member to the board.
