Today State Auditor Shad White announced his office has issued demand letters to two former City of Pascagoula employees this week. Robert Parker, former city comptroller, and Joseph Huffman, former city manager, received demand letters for exercising improper financial management of bond proceeds. The total amount of both demands is $54,215.17 and includes all investigative costs and accrued interest.
In December 2014 and again in June 2017, the City of Pascagoula entered bond agreements totaling over $27 million. The bond proceeds should have been deposited into a bank account separate from the general fund account to ensure adherence to bond terms, which mandated the bond revenue be spent on infrastructure and other specific projects in the city.
After receiving a complaint, audit investigators determined Parker and Huffman knowingly and improperly transferred bond proceeds into the City’s general fund account. This practice caused the city to forego over $31,500 in interest revenue which would have accrued in the appropriate account. It also created the illusion of a budget surplus. While payments for bond debt were made in a timely fashion, and no money was stolen from the City of Pascagoula, mixing bond money into the general fund account is improper.
“The taxpayers of Pascagoula should know that $14 million is not missing from their bank account, but millions in bond money was spent on general operations in 2014 and 2017,” said White.
“These laws about bond money exist for an important reason. They exist to make sure policymakers don’t tell the public they are taking on a bond debt for one purpose but then actually spend the money on something else. They exist to avoid confusion about how much a city or county actually has to spend on general expenditures, like salaries and administration. The law about spending bond money was not followed in this case, creating a lot of turmoil in Pascagoula.”
District Attorney for the 19th District Angel Myers McIlrath said, “The State Auditor’s Office conducted a thorough investigation into the City of Pascagoula’s finances, as a result of concerns brought to them and my office by Mayor Maxwell. The Grand Jury, after having heard the details and outcome of the investigation, determined that there was no criminal wrongdoing and I am confident in their decision. The fact that the Grand Jury did not find any criminal conduct does not preclude the State Auditor from pursuing civil remedies based on their investigation.”
The demand letter issued to Parker is worth $47,395.91, and the letter issued to Huffman is worth $6,819.26. Each amount corresponds to the amount of foregone interest revenue during the tenure of each man at the City of Pascagoula, respectively.
The employment of Parker and Huffman was covered by a $50,000 and $162,000 surety bond, respectively. Surety bonds are similar to insurance designed to protect taxpayers from corruption.
If either man fails to pay the full amount of the demand within 30 days of delivery, the case will be referred to the Mississippi Attorney General to be litigated.
State Auditor Shad White Press Release