BY KEN LITTLE
An audit of the 3rd Judicial District Drug Task Force by the state Comptroller's Office has brought to light a number of "weaknesses" and "difficulties" that include accounting and financial deficiencies, how seized property is managed, documentation to support confidential expenditures and other areas.
The findings of the annual report from state Comptroller of the Treasury Justin P. Wilson led to the resignation of the task force director, said C. Berkeley Bell, district attorney general for the 3rd Judicial District.
The 3rd Judicial District includes Greene, Hamblen, Hancock and Hawkins counties.
"We appreciate them coming in to begin with to do the audit and finding these deficiencies," Bell said Friday.
CORRECTIVE ACTIONS TAKEN
Bell said he and the drug task force board of directors, consisting of sheriffs and chiefs of police of law enforcement agencies in the Third Judicial District, took corrective actions including "removing the director and replacing the director."
Scott Castle, who served as drug task force director for 13 years, has returned to the Hawkins County Sheriff's Department, where he worked prior to heading up the drug task force.
"He was effectively transferred to his home county, effective [July] 31," Bell said.
Bell declined to identify the new task force director. He said it's important to protect the identities of those involved in undercover drug enforcement work. The new director is a member of the Greeneville Police Department.
Castle "underwent some personal difficulties and this caused him to divert his attention away from his employment responsibilities and led to a lack of oversight of the operation," Bell said.
Other problems identified by the comptroller's office "have been corrected or are being corrected," he said.
"There's no money missing. It's just administrative deficiencies," Bell said of the audit, which looks at all funds administered by all 31 judicial district drug task forces in the state. Results were released Tuesday.
The auditors had findings in five judicial districts, including the 3rd.
"Difficulties" were encountered by the state comptroller's office in obtaining records and documentation needed to complete the review, extending review procedures to include operations of the 3rd Judicial District Drug Task Force (DTF) through March 12 of this year. Most other districts were audited for a period covering the fiscal year ending June 30, 2011.
Audit findings for the DTF include the following findings:
ACCOUNTING, FINANCIAL DEFICIENCIES
Accounting and financial deficiencies existed in the (DTF), the review of funds said.
"These deficiencies appear to have been the result of a lack of oversight by management of the DTF," the audit said.
Deficiencies included a fund deficit of $10,810 that existed in the Drug Task Force as of June 30, 2011 and a cash deficit of $22,804 that existed in the DTF as of Feb. 29.
"The cash deficit resulted from disbursements in excess of available funds on deposit with the Greene County trustee. Also, contributing to this deficit was the DTF director's failure to remit the cash from various seizures awarded to the Greene County Trustee in a timely manner," the audit said.
PAST DUE BILLS
Other findings include a bank overdraft of $469 in the confidential funds bank account on Nov. 30, 2010.
"This overdraft resulted from checks being issued in excess of available funds," the audit said.
Also included in the $27,598 liability reflected on June 30, 2011, was $4,418 in past-due telephone bills and $418 in late charges. The liabilities related to two service providers who had not been paid since March 10, 2011, the audit said.
The comptroller's office recommended that management should "liquidate any fund deficit and cash deficits."
"Steps should be taken to ensure that monies are not committed or disbursed unless sufficient funds are available," the audit continued.
RECORDING, MANAGEMENT OF SEIZED PROPERTY
The audit showed that inventory logs for cash seized by DTF personnel reflected a balance of $66,916 as of June 30, 2011.
A review of a report of seized property obtained from the Tennessee Department of Safety (TDOS) noted that as of June 30, 2011, $12,099 of the $66,916 in seized cash had been awarded to the DTF by the TDOS prior to June 30, 2011, but the money had not been deposited with the Greene County trustee.
"Of the $12,099 seized cash awarded, $5,622 was deposited with the Greene County trustee on August 3, 2011, and $6,477 was deposited March 13, 2012," the report said.
"Our extended procedures disclosed that as of March 5, 2012, inventory logs for cash seized by the DTF reflected a balance of $55,029. A report of seized property obtained from the TDOS noted that $37,298 of the $55,029 cash seizures had been awarded to the DTF but had not been deposited with the Greene County trustee. The DTF director deposited $21,824 of these seized and awarded funds with the Greene County trustee on March 13, 2012," the audit said.
An inventory log of vehicles seized by the DTF was maintained by the DTF director.
"However, we noted there were six additional vehicles that had been seized but not recorded in the inventory log," the audit said. "We noted at least 19 vehicles were reflected on the report of seized property obtained from the TDOS that had been awarded to the DTF but had not been properly recorded as assets of the DTF and had not been disposed of as of March 5, 2012."
PROPERTY NOT IN THE EVIDENCE LOG
The audit "noted instances where personal property that had been seized was not listed in the evidence log."
"We were informed that since the evidence room was full, some property was being stored in multiple locations. Based on our review of the evidence room and discussions with various agents, it appears that this property has not been disposed of in a number of years," the audit said.
The comptroller's office recommended that inventory logs for seizures of cash, vehicles, and personal property "should be properly maintained."
"To improve cash flow, seized cash and funds received from the disposal of seized vehicles that have been awarded to the DTF should be deposited with the Greene County trustee in a timely manner. DTF personnel should perform a detailed examination of the evidence room to ensure the inventory log is accurate. For any evidence that is not required for further prosecution, DTF personnel should either return the property to the owner or solicit an award order and properly disburse the proceeds," the audit said.
Deficiencies were found in documentation maintained to support DTF confidential expenditures, the audit found.
"In some instances, the DTF director did not provide us with the Tennessee Bureau of Investigation's (TBI) lab reports. These lab reports are used to support the disbursement of confidential funds for undercover drug purchases. The director did not provide these lab reports in 17 of the 27 disbursements selected for testing," the audit said.
Payments to confidential informants were recorded on the agent's activity logs and supported with documentation.
"However, the documentation did not always include a witness signature. In addition, certain payments were not always properly posted to the confidential informants' payment history log," the audit said.
One payment history log could not be located, two instances were noted where the payment was not posted to the payment history log, and one payment amount recorded on the history log differed with the agent's activity log by $40, according to the audit.
Agents are required to submit their cash and activity log to the DTF director twice a month for the director to count the cash and reconcile the cash with amounts reflected on the agents' activity logs and to sign and date the logs, the report said.
"There was no signature or date on the agents' activity logs for the period July 1, 2011, through January 31, 2012, which indicates that the director had not reviewed and approved the activity logs as required by DTF policy," the audit said.
A bank account is maintained by the DTF director to account for certain confidential transactions, according to the audit.
"Based on our review, there was no indication that the bank statements were reconciled with the accounting records. Additionally, certain bank statements were not on file or provided to us by the director, even after several requests were made," the audit said.
"Ultimately, we were able to obtain the needed statements through other sources," it said.
Recommendations by the comptroller s office include regular maintenance of TBI lab reports "to substantiate the disbursement of funds for all undercover drug purchases."
"All payments to confidential informants should be supported with a witness signature. Confidential informants' payment history logs should be properly maintained and periodically reconciled with the individual agents' activity logs," the recommendation continued.
RECEIPTING AND DEPOSITING OF FUNDS
The DTF director issued receipts for cash settlements and withdrawals from the Judicial District Drug Fund.
Cash settlements were deposited with the Greene County trustee, and funds withdrawn from the Judicial District Drug Fund were deposited to a confidential funds bank account maintained by the DTF director. The following deficiencies were noted:
In two instances, cash was obtained at the time checks from the Judicial District Drug Fund were deposited into the confidential funds bank account in-lieu-of depositing all of the checks then issuing an official check to obtain the cash, the audit found.
"A withdrawal was not recorded by the bank, and only the net amount of the deposit was recognized on the bank statement. The remaining cash was recorded in the director's custodial log," it said.
Five instances were noted where receipts were deposited as long as 20 days after the receipt date. State law requires all public funds be deposited within three days of collection, the audit said.
Recommendations include that all deposits to the confidential funds bank account "should be recognized for the full amount of the checks, and an official check should be issued to obtain cash.
Receipts should be deposited intact and within three days of collection as required by state statute. Receipts should be issued at the time of collection. Procedures should be developed to ensure that mail is opened timely."
PURCHASES NOT IN ACCORDANCE
Nonconfidential purchases were made from the Judicial District Drug Fund maintained by the Greene County Office of Accounts and Budgets.
"However, certain purchases were not made in accordance with the county's purchasing procedures," the audit noted.
In some instances, purchase orders were not issued, it said.
"Purchase orders are necessary to control who has purchasing authority and to document purchasing commitments," the audit said.
Some purchase orders were issued after the purchases were made, the audit found.
"This practice defeats the purpose of the purchase order and makes it an approval of payment rather than approval of the purchase," the audit said.
One instance was noted where the description of the items on the purchase order differed from the items listed on the receipt.
After June 30, 2011, "we noted four instances where 46 inkjet printer cartridges were purchased, totaling $2,786, including shipping and handling costs of $402. Purchase orders were not obtained for these purchases. In addition, a total of $100 in Subway Restaurant gift cards were received as promotional items. As of March 9, 2012, the gift cards had not been accounted for," the audit said.
Comptroller's office recommendations include making nonconfidential purchases in accordance with Greene County's purchasing procedures.
RECORDS, REPORTS MENTIONED
Equipment inventory records were not properly maintained, according to the audit.
Recommendations include strengthening internal controls over equipment.
On March 24, 2011, the State of Tennessee, Department of Finance and Administration, Resource Development and Support, Office of Criminal Justice Programs released its monitoring report for the 3rd Judicial District Drug Task Force. The results of that monitoring "disclosed that reports were not submitted in a timely manner," the audit said.
Bell issued a response to the state comptroller's office on June 30. He thanked the office "for your thorough audit" of the DTF.
"I have reviewed your findings of our current deficiencies, and I am in complete agreement with them. Each recommendation has been or is in the process of being implemented as expeditiously as possible," Bell wrote.
"The entire process will be facilitated by the imminent selection of a new director of the drug task force. The former director has been reassigned to a position with the Hawkins County Sheriff's Department."