(The Center Square) – A year after Democrat auditor Nicole Galloway’s audit revealed an employee stole $316,887 from the city of Center in northeast Missouri, a follow-up report found only slight progress toward proper oversight.
Galloway issued a follow-up report on Wednesday to review implementation of recommendations after a 2020 audit revealed City Clerk Tracy Ray misdirected money during a four-year period. The follow-up report found one of 11 recommendations was implemented, six were partially implemented, two were in the process of being implemented and two hadn’t been implemented for the town of 500.
The taxpayer funds were stolen between January 2015 and July 2019, according to the 2020 audit triggered by a whistleblower hotline report. It discovered Ray, 48, used $206,343 in city money to pay personal credit card bills and she obtained $1,997 in credit card rewards points related to the transactions. The audit led to federal criminal charges as Center received federal grants in excess of $10,000 during the period.
The U.S. attorney’s office in the eastern district of Missouri said credit card purchases included personal retail vendor charges, entertainment, lodging and travel, hair salons, restaurants and grocery store items. Charges stated Ray issued checks on 49 occasions for about $35,547 to pay for purchases of personal items and services at retailers, such as Kohl’s, Lowe’s, Walmart and Hobby Lobby.
Charges state she wrote 39 checks for $62,538 to pay premiums on a family health insurance policy and life and disability policies for herself and family members.
She made improper payroll disbursements to herself of $3,580 and failed to deposit at least $7,407 in cash receipts. The audit found another 247 disbursements of $87,692 were made with no supporting documentation.
The audit found Ray falsified financial reports and lists of bills prepared for review at city board of aldermen meetings. The mayor and some board members stated Ray provided various financial records for review at public meetings, but the information was inconsistent.
In June, Ray pleaded guilty to one count of wire fraud and one count of federal program theft in U.S. District Court. She is scheduled to be sentenced on Oct. 7 by Judge Rodney W. Sippel.
“When our audits uncover corruption, they often lead to criminal charges and convictions,” Galloway said in a statement. “But they also should compel government officials to make the changes needed to ensure taxpayer dollars are not misused again. We’ve seen some progress in Center, and I urge the board of aldermen to follow through with all of the audit recommendations.”
Galloway’s follow-up report found the board of aldermen hasn’t published semiannual financial statements as required by law. The board also hasn’t prepared an annual budget with information required by state law and hasn’t approved the budget prior to the beginning of the fiscal year.
The follow-up report found the board only partially implemented segregated accounting duties or proper independent oversight. Other partially implemented procedures include ensuring all money collected is properly receipted, reviewing monthly bank reconciliations and improving payroll controls and procedures. Annual audits of the sewerage system and submission of annual financial reports to the state auditor’s office, required by law, aren’t fully implemented.
The follow-up report found the board of aldermen worked with law enforcement regarding criminal prosecution. The board also is ensuring all disbursements are necessary and appropriate uses of city money, including reviewing supporting documentation, monthly check register reviews and the mayor or a specific alderman’s signature on checks.
A phone message to Center Mayor Dennis McMillen wasn’t returned.