Burrage finds problems in Maud audit

CapitolBeatOK Staff Report

Published: 04-Oct-2010

A special audit released Monday shows a trio of Maud officials helped themselves to city funds through several schemes, bilking the town for thousands of dollars.

“Maud had three employees, a mother, a son, and a daughter-in-law, running amok, writing themselves checks, and destroying public records,” said State Auditor Steve Burrage. “When you look at what was going on for several years, you have to ask yourself who was minding the store. No oversight. There was absolutely no oversight of the city clerk or deputy city clerk and no reconciliation by bank records by someone other than the person who made deposits and wrote checks.”

The three individuals at the center of the controversy were the deputy city clerk Natalie Meadows, her daughter-in-law Heather Bowers-Horton, and Meadows son, Justin Horton.  Meadows had worked for the city for 22 years. Bowers was employed in April 2007 as city clerk-treasurer and married Horton in August 2008, who was employed by the Maud Municipal Authority in April 2009.

“The search for records in this case was complicated by a reported theft of a utility billing computer, court docket records and various receipt books,” Burrage said. “Our auditors were able to reconstruct some of the activities from available bank records. Overall, it looks like as much as $2500 a month was disappearing from cash accounts. Meanwhile, the three in question were writing payroll advances without authorization and without the knowledge of the governing boards.  We recently learned that the computer had been found in a nearby lake.”

The audit report details multiple payroll checks issued as advances to Meadows, Bowers-Horton, and Horton between April 2007 and November 2009. Horton told investigators he’d wait for his mother to go to lunch, send his wife on an errand, and sneak in the backdoor to city hall to write himself an advance using a rubber stamp to approve the expenditure. Bowers-Horton also stated she wrote payroll advances for all three.

Investigators also found multiple payments to vendors without supporting documentation. There were blank purchase orders that had been executed; there were payment records that did not match purchase orders. The city’s funds and the Authority’s funds had been intermingled which resulted in a general failure to ensure payments were made from the appropriate accounts.

“The 40-page report details instances of Meadows using court fund payments to cover mysterious shortages in utility fund payments,” Burrage said. “It looks like sales tax money was inappropriately deposited into a trust account and Bowers-Horton failed to transfer the funds to two city accounts. Gambling at area casinos appears to have played a roll, as well. Maud officials have a real mess on their hands because of a lack of internal controls and no segregation of duties.

“I’ve been holding meetings across the state over the last two years with governmental entities and individuals serving on their boards,” Burrage continued. “I’ve been stressing the importance of internal controls and segregating certain functions in the management of funds. As a result, I do believe boards and citizens are starting to ask more questions and demand answers. That is what has led us, and prosecutors, to cases like this one and will continue to help us identify and detect fraud early on to prevent these devastating losses you continue to read about.”

The special audit was requested by Pottawatomie County District Attorney Richard Smotherman. A copy of the audit report has been provided to Smotherman’s office for its consideration. The report is available online at www.sai.ok.gov.