Demorest Mayor Rick Austin says a special FBI prosecutor may be assigned to handle the case of the missing money in Demorest. More than $600,000 in city funds disappeared between 2009-2013. Austin says investigators continue to look into the possibility even more money is missing after the discovery of a previously unknown cash drawer at City Hall. “During the length of time that the investigator was interviewing, no one ever mentioned an additional cash drawer that was unlocked and available for money to missing in and we do have evidence that money is missing.” He says that discovery, plus the unavailablity of several people to be interviewed, have held up the investigation. “We expect that availability to not be an issue anymore and, hopefully, we can move forward.”
Austin assured Demorest residents that the case will be prosecuted once the investigation is complete. “A month ago I had a conversation with the Federal Bureau of Investigation. A week ago I got a phone call back from the FBI and they have indicated that if the GBI does not prosecute this case when the investigation is done that the FBI, as cleared through the U.S. Attorney General’s office, is going to prosecute this case.” He says he expects the investigation to be completed within the next two weeks.
Austin made the announcement during a called City Council meeting Tuesday night in Demorest.
The city released a scathing 54-page investigative report during the meeting that outlines gross financial mismanagement practices and alleged illegal activity by city officials. Former Demorest City Manager Juanita Crumley and former city bookkeeper Altea Muller are both named in the report.
The report states, among other things, that financial ledgers were changed in order to balance the books and SPLOST funds were intermingled with other funds. The report also states that the City of Demorest bounced 370 checks between 2011 and 2014, accruing $13,650 in insufficient fund fees.
The council formally accepted Crumley’s resignation Tuesday night. She had been with the City of Demorest for 39 years. Crumley served as City Manager, Treasurer and Clerk most of that time. She was removed as manager and treasurer in December but retained the city clerk’s job until last night. She will receive her retirement benefits.
Crumley was not at last night’s meeting but many of her family and supporters were. They left the meeting hall quietly after Council voted to accept her resignation.
Tensions have been running high in Demorest ever since Crumley was demoted in December. Four police officers and deputies stood guard inside the meeting hall throughout Tuesday’s proceedings. They escorted Mayor Austin and his wife to their car after the meeting ended.
Following the money trail
It’s been two years since money was first discovered missing in Demorest. It began as an inquiry into the disappearance of $5,000 from a cash drawer in city hall and ballooned into a major investigation that revealed $601,867.70 somehow disappeared, most of it from the city’s water department fund. The money went missing over four and a half years. The exact amounts are as follows:
2009 – $64,103.84
2010 – $87,027.78
2011 – $174,521.50
2012 – $222,553.37
2013 – $53,661.21
According to Mayor Rick Austin, all city water revenue has been accounted for since May 17, 2013.
There have been two forensic audits and two separate investigations, one by the GBI. While the investigation results have determined the money did not disappear due to human or computer error – that a person, or persons, took it – no suspects have been named and no arrests have been made.
Where’s the money?
That’s the question people have been asking since the discovery was first made.
It’s been a long, arduous climb for those trying to determine where the money went and for residents of Demorest who are now embroiled in speculation and tense disagreement over who’s to blame and what action should be taken.
While there is still much that remains unknown, here’s what has been revealed publicly so far.
Timeline of events
Jan. 25-Feb. 12, 2013
Approximately $5,000 in cash disappears from the city’s utility payments. The missing money is reported by a city employee. Demorest Chief of Police Greg Ellingson is put in charge of the investigation.
July 11, 2013:
The city of Demorest issues a press release about the missing money, more than five months after it was first reported.
Inmate work crews from Lee Arrendale State Prison are, at one point, accused of stealing the $5,000 from a cash drawer. Nothing ever came of that allegation.
July 29, 2013:
Then Demorest Councilwoman Florence Wikle demands the city conduct a forensic audit into the missing funds. The Alpharetta-based accounting firm of Frazier and Deeter is hired to conduct the audit.
November 2013
Initial audit results are released, indicating some $212,000 is missing from the City of Demorest.
March 2014
The Demorest City Council ratifies the findings of the forensic audit by Frazier and Deeter which revealed $222,000 missing.
September 23, 2014
Demorest reveals more money is missing. The total reaches $275,000. With no GBI report forthcoming, the Demorest City Council launches its own internal investigation. Council passes a resolution stating:
“…the City of Demorest has concluded that the loss of city money in the years 2012 and 2013 is not due to computer or human error…the City of Demorest has evidence that fraudulent activity by one or more persons is the only explanation of the missing city money.”
September 24, 2014
The City of Demorest fires its bookkeeper Altea Muller less than 24 hours after launching an internal probe into the disappearance of more than $275,000 in city funds.
Muller, owner of the Duluth-based accounting firm, Muller & Partners, CPA, is terminated effective immediately. Demorest Mayor, Rick Austin, issues a press release saying, “The termination is immediate and is based upon the learning that the accounting/bookkeeping services provided to the City of Demorest did not meet accepted standards and delayed the City’s discovery of fraud.”
October 7, 2014
Demorest hires Eason Investigative Services of Cumming, GA, to spearhead the city’s internal investigation.
November 4, 2014
Audit results from Duncan and Kitchens reveal over $598,000 is missing in Demorest.
November 21, 2014
Eason Investigative Services releases a report outlining a series of discoveries and concerns about the financial management of the city including:
- The handling of funds received in the front office of City Hall was loosely controlled and lacked a basic check and balance system.
- No daily collection report was generated or used to determine the amount of funds collected eaach business day.
- The funds were stored in a file drawer with little security and a key was maintained in a common location accessible to anyone in the office 24/7.
- There was no deposit schedule used for transferring funds from City hall to the bank to ensure the safety of the city funds and secure any accruable interest on the account.
- Deposits were made by Mrs. Crumley, however occasionally city employees were asked to carry deposits to the bank for her. These included Mr. Charles E. Stockton, Mr. Brian Popham and various Police officers.
- Handling of the funds when removed from the drawer to compile deposit was done in a open area of the office most of the time with large piles of cash and checks stacked on a desk in view of the office staff, city employees and the public entering City Hall to transact business.
- Deposits that were not completed at the end of the business day were placed in an unsecured desk drawer overnight by Mrs. Crumley.
- Employees were allowed to cash checks in the cash batches on a regular basis.
- The batches of water payments placed in the drawer were not logged or inventoried to ensure that all were accounted for in order to prepare the deposit.
- Sometimes the number of batches in the drawer exceeded the capacity of the drawer.
December 17, 2014
Long time Demorest City Manager, Clerk and Treasurer Juanita Crumley is demoted to City Clerk. The Council removes her from her duties as manager and treasurer.
December 29, 2014
Crumley supporters continue to question the reason for her demotion and why auditors who missed past accounting mistakes are not being held accountable.
Those questions are addressed by Demorest Mayor Rick Austin during a work session on Dec. 29, 2014. He points out that auditors did not pick up on the mistakes prior to the investigative audits because they did not have access to complete figures.
“There was a billing computer and a general ledger computer. For years the billing computer was not communicating with the general ledger,” Austin explained. “The money that came in the billing computer went into a filing cabinet drawer and then went to a different location to be logged in manually into a green bar and then was put into the billing system. We fixed all of this,” he said. Austin said the two computer systems now communicate and all city water revenue has been accounted for since May 17, 2013.
January 27, 2015
Crumley resigns and accepts a negotiated retirement package. The Demorest City Council releases a 54-page investigative report. Mayor Austin reveals the discovery of a previously unknown cash drawer in Demorest City Hall. He says more money is missing from it. The investigation into the missing money continues. Austin says he expects the investigation to be completed by early February 2015. The total amount of the missing money in Demorest currently stands at $601,867.70.
