Forensic accountant David Sawyer reported findings of questionable spending, possible preferential treatment and inadequate financial documentations concerning the Nelson Heights Community Center to the Newton County Board of Commissioners (BOC).
These findings, which were shown to the commissioners for the first time during a special called meeting Wednesday at the Newton County Historic Courthouse, is the first phase of a process that will look at the county’s areas of financial risks, Sawyer said, and bring up questions “that need to be asked to shed light on the finances of the county.”
The BCO hired the firm of Frazier and Deeter CPAs and Advisors of Atlanta earlier this year to identify areas of financial risk. After interviews with commissioners, Sawyer said there were seven areas of risk:
• Community centers
• Recycling, or convenience,
• The Recreation Department
• Special-Purpose Local Option Sales Tax (SPLOST), impact fees
• Roads and public works
Commissioner Lanier Sims said later the board will decide on which areas the auditors will look into next.
Comparing community centers
Sawyer told the board he began his research with the county’s community centers and looked at both the Washington Street Community Center and the Nelson Heights Community Center. Both receive $40,000 in funds a year from the county and both work with children in their respective communities.
Both centers are also separate 501(c)3, but Sawyer said “the similarities more or less end there.”
The Washington Street Community Center is run by a non-county officer, he said. It operates under a full budget of $200,000 a year, receives additional funding from outside sources, performs its own administrative and accounting tasks, and conducts multiple field trips and programs.
Nelson Heights, he said, is organized and run by a county official, does not seek outside funding sources, has the county perform administrative and accounting tasks, conducts minimal field trips and programs, and still spends more than the county-funded $40,000 a year.
In conducting his research, Sawyer said he spoke with the current director of Nelson Heights Community Center, two previous directors and four commissioners. He said he could not reach J.C. Henderson, District 4 Commissioner, and officer and founder of Nelson Heights Community Center, for two months. Henderson said he has been tending to a son who was hospitalized after an accident last month.
Sawyer broke his findings down in a trend analysis featuring data from fiscal years 2014, 15 and 16. In his report, Sawyer noted that the Nelson Heights Community Center spent $51,056 in fiscal year 2014, $43,123 in fiscal year 2015 and $45,743 in fiscal year 2016.
The total expenses over three years were $163,678, of which, Sawyer said, line documentation of $58,589 in expenses was missing.
The audit will be looked at by Newton County District Attorney Layla Zon, who said her office is awaiting a copy from county attorney Jarard and Davis.
“If anyone misappropriated funds they will be charged, and sent to a grand jury,” Zon said.
Sawyer's report disputed
Henderson felt that funds weren’t misappropriated and the numbers didn’t add up. Upon hearing the amount spent by Nelson Heights Community Center, Henderson said, “No way. No way.”
Newton County Finance Director, Michelle Kelly said that the report painted the finance department in a negative light.
In a statement sent out Friday, Kelly said she replied to an inquiry Sawyer made by email on May 5, four days later, asking for clarification on the information he was requesting. She said she never received an email, and saw his report made to the board Wednesday "without further consideration of the fact that my department has a heavy load with budtet, day to day financial operatins and the current large number of Open Records Requests."
Kelly said a deadline was never given by Sawyer, in which he needed information.
Kelly reported in her statment that all documentation requested in spreadsheets sent to her by Saywer "is present and accounted for."
"I would have appreciated the professional courtesy of being allowed to present said missing documentation before this was presented to the board," Kelly said.
Trend analysis findings
Among the items Sawyer presented was a trend analysis of the Nelson Heights Community Center. The findings of Sawyer’s trend analysis of Nelson Heights Community Center reported that that contract labor, legal fees and cleaning services were the highest expenditures. Contract labor cost $19,730 in fiscal year 2014; $13,078 in fiscal year 2015, and $9,584 in fiscal year 2016. That amounts to $42,392 on contract labor throughout three years, or 35 percent of the income given by the county.
Under legal fees, Sawyer reported, $17,511 over three years was spent on legal fees, 14.5 percent of the income given by the county. In fiscal years 2014, 2015 and 2016, legal fees were $4,632, $7,314 and $5,565, respectively.
“Legal fees are definitely a large component of the expenses we see being charged to Nelson Heights,” Sawyer said. “My question is, why in the world would a community center have this amount of legal expenses, especially in comparison with a $40,000 annual budget and appropriation? My other question with such inadequate documentation provided to us, why were the invoices paid and how did we know what we were paying for by the county?”
Another area of concern, Sawyer said, was cleaning, repairs and maintenance account. Specific questions were raised about $100 on Sept. 10, 2013, for services; $150 on Sept. 13, 2013, to J. C. Henderson; $100 on Sept. 13, 2013, to J.C. Henderson for “food server;” $400 in September 2013 for advertising, with no explanation for the purpose or provision of samples of the advertising purchased; $30 on Sept. 17, 2013, for banner installation; $209.28 on Aug. 30, 2014, for “P-card;” $350 n Aug. 13, 2015 to A. M. Henderson; and $600 on Jan. 13, 2016 to A. Henderson.
Sawyer also asked if 1099-MISC statements had been provided to contractors the center hired for cleaning, repairs and maintenance. The IRS 1099-MISC is provided to independent contractors stating the amount of income earned from an organization or company.
Henderson seemed to take offense to some of the report’s findings, and asked Sawyer where the budget sheet came from, again saying he never spoke with the auditor. Henderson said his fellow commissioners using it for election purposes and made accusations of racism. District 3 Commissioner Nancy Schulz is up for reelection and District 5 Commissioner Levie Maddox is running for chair during this election cycle.
“This board has been against District 4 and its children and its community ever since I have opposed changing the charter of this county,” said Henderson, referring to a recent change in the county’s legislation that he voted against. “They went out and hired folks like you to do their dirty work for you.
“They have someone make them look good at election time so people vote for them,” he said.
Sawyer rebutted that his work is “pretty clean” and he was “approaching this from an honest, objective, scientific approach.”
Sawyer and Henderson continued to go back and forth, when Sawyer asked how the high legal expenses could be explained.
At that point former county attorney, Tommy Craig, who was removed from his post in November after 39 years in the role, spoke up from the audience. Craig said the reason for the legal fees were land acquisition associated with Nelson Heights Community Center and work done on trying to attain a Bright from the Start grant.
Craig also said there was documentation regarding the fees, and agreed with Henderson’s assessment of Sawyer.
“I agree with Commissioner Henderson that you were brought in here 13 days before the election to do a tap dance on Commissioner Henderson, who has been treated as a second-class citizen,” Craig said to Sawyer. “You don’t understand the context here. But, you do fit in real well with these folks (looking at the board), because you are a self-righteous person.”
Land transfers and rental income
The land acquisition associated with Nelson Heights Community Center was also brought up in Sawyer’s report. It reported that a .63 acre tract of land that was transferred from Nelson Heights to Rising Son Christian Church and then sold to Newton County.
Sawyer said he found no documents identifying the purchase price, acquisition contract or other transactional details, and that county staff were unable to locate such records. Henderson is a founder and officer of both Nelson Heights and Rising Son Christian Church.
The report also detailed that $1,750 in rent is due from Rising Son Church to Nelson Heights Community Center.
“Why is Newton County forgoing rent revenue from Rising Son Christian Church?” Sawyer asked. “Are transactions between Newton County and Nelson heights or Rising Son conducted at an arms-length basis?”
Sawyer also noted the cost of a van at a purchase price of $4,500, despite Kelly Blue Book listing for that model of $2,700.
Sawyer said that there aren’t any logs for travel in the van, that no waver liability forms had been signed, that directors were not allowed to use the van and that there was no indication of use to transport children to and from the center.
At the end of his report to the board, Sawyer recommended that the monthly payment of $3,333.33 be managed by Nelson Height’s 501(c)3; audits be performed for all of 501(c)3’s receiving county funding; legal, accounting and administrative tasks not to be performed by the county for 501(c)3’s; a sitting commissioner should not be a director of an entity receiving county funds; and a sitting commissioner should not have key access to the facility.
Sawyer’s final question to the board was “does the current condition constitute preferential treatment, or a ‘gratuity’ to Rising Son Church or Nelson Heights Community Services, Inc.?”
Following the audit report, the BOC entered an executive session for personnel matters, which lasted about an hour. The board immediately adjourned the meeting following the executive session.
Before the commissioners left for the evening, Henderson spoke to the audience.
“I don’t know why they want to pick on me and save the rest,” Henderson said. “Folks really are stealing in the county. They’re stealing and they keep their names behind closed doors. There’s a whole lot of them stealing, and hey, they’re not black folks.”