10/17/2023 - Jefferson City, MO
A new report issued today by State Auditor Scott
Fitzpatrick reveals how a husband and wife duo violated the Missouri
Constitution and mismanaged the Dunklin County Sewer District for years,
resulting in at least $62,579
in missing or misappropriated funds, additional missing money estimated to be at
least $98,096, and the district being placed in receivership. The
audit, which was requested by the City of Malden, gives the sewer district a
rating of "poor" and recommends the city continue to work with law
enforcement officials regarding criminal prosecution of the missing and
misappropriated money and services.
"This is a clear and egregious violation of the
public's trust as taxpayer dollars were mismanaged by the individuals who were
entrusted with the responsibility of overseeing the operation of the sewer
district. My office will continue to work with law enforcement to ensure
justice is served," said Auditor Fitzpatrick. "I want to thank the
City of Malden for allowing us to conduct the audit and for working to restore
public trust in the district by taking the recommended steps to ensure proper
oversight and protection of taxpayer dollars."
The audit covers a period of time during which Korey
Adams served as Board President and his wife, Jennifer Adams, was employed as
the district's Bookkeeper. Auditors found money and sewer services totaling at
least $62,579 were missing and/or misappropriated from the district from
January 1, 2017, through March 5, 2021 and estimated an additional $98,096 was
not deposited during this time and is also likely missing. Payroll overpayments
totaling $54,049 were made to the Bookkeeper; unsupported payments totaling
$4,567 were made to the Board President and the Bookkeeper; sewer services
totaling $3,063 were not paid by the Board President and Bookkeeper; sewer
security deposits totaling $900 and an additional estimated $98,096 in sewer security
deposits and sewer receipts were not deposited by the Bookkeeper. During the
same period of time, a review of the personal bank accounts of Adams and his
wife found cash deposits totaling $29,146.
The report also notes that by hiring and paying his
wife to serve as the Bookkeeper, Board President Adams violated the Missouri
Constitution nepotism prohibition. Additionally, the Board, which allowed two
vacant positions to go unfilled for more than four years, did not establish
adequate oversight over district operations, did not obtain annual audits as
required by state law, and did not obtain bond coverage for district officials
responsible for receipts and disbursements. Another finding in the report
identifies the failure of the Bookkeeper to ensure payroll tax forms were filed
and payroll taxes were remitted to the IRS in a timely fashion. As a result the
sewer district was assessed $756 in penalties, $287 in interest, and $1,881 in
additional taxes. As of July 8, 2022, at least $10,252 was still due to the IRS
and significant interest and penalties were still accruing.
The Dunklin County Reorganized Common Sewer District #1
was reorganized in 2012 to be governed by a 5-member Board of Trustees.
However, from January 1, 2017, to November 2020, two Board vacancies were not
filled and the three remaining members of the Board acted as the decision
making body for the district's operations. Two of the Board members resigned in
November 2020 and left the district under the control of Board President Adams
and his wife, the Bookkeeper. The district was ordered into receivership in
2021, which transferred all responsibilities, functions, duties, powers, and
authority of the district to the City of Malden. The Malden City Council then
passed a resolution requesting the state audit.
A complete copy of the audit is available here.