“….a hundred thousand dollars does sound like a lot of money to a lot of people . . .”
by Rick Boettger.......
County Commissioner Heather Carruthers had the grossest amount of financial misreporting, at $7,427,421, and an additional 138 errors of form between 2012—2015. But before we get into the continuing grim recitation of the details of our county commissioners' 700+ form errors plus over $15 million dollars in misreported financials, something was brought to my attention that offers a rare splash of humor.
Commissioner David Rice explained away his $6,000 ethics fine like this: “I made a mistake....I'm not perfect.”
Hold on a minute, partner! You made hundreds of reporting errors amounting to over four million dollars. A “mistake” would be forgetting a few addresses. This goes way beyond “a mistake.” And the excuse or reason for this mega-“mistake” is nowhere in the same universe as “I'm not perfect.” “Perfect” is not in the top 50,000 words used to describe your financial work product.
A multiple-choice test question for the reason you filed such “egregious” (ethics court description of your violations) financial reports would look like this:
I, David Rice, filed reports containing 228 errors of form plus a total of $4,581,558 in financial misreporting because:
a) I always get real drunk to ease the pain of thinking about big numbers.
b) Okay, my GED and college degrees are all phony, I bought them on the Interwebs.
c) When I let my wife help me, I didn't know she wanted me thrown in jail.
d) I wanted Monroe taxpayers to see I don't waste any more brainpower on my own financial affairs than I do on theirs, as that wouldn't be fair to them.
e) I was honoring a long tradition on the County Commission of doing slipshod work and scorning the ethics laws.
Okay, that was fun. Now back to hard labor.
The quote from Carruthers about the $100k in the subtitle refers to the main reason the 19 Ethics violations against all our county commissioners matter. I have asked them repeatedly, how can we trust them with our money when they are so slipshod and incompetent with their own sworn, easy financial reports? Carruthers on the “a lot” of OUR MONEY says it all.
The context is a discussion among our commissioners and attorneys in closed session about settling the SUFA case. They had frozen SUFA's $257,000 accounts, in a “setup to give the contract to someone else,” in the words of our County Attorney (when instructing the commissioners on SUFA’s defense). SUFA had appealed the freezing of their funds. While awaiting the Appellate decision, the commissioners had admitted that if they lost, it was “game over” in their suit against SUFA.
However, after losing, they somehow talked themselves into continuing that ever-losing battle at our expense. They knew they would lose. They did in fact lose. But Carruthers led the way in deciding to fight on with our money, arguing thus:
“The odds might not be great that we'll get money back, but that doesn't mean we won't get something back, that we won't get satisfaction. And honestly, I mean, you know, a hundred thousand dollars does sound like a lot of money to a lot of people, but we make decisions all the time about things that I think might be even less justifiable spending that kind of money.”
Now THAT clears up the “How can we trust you?” question. Clearly, we can trust them to be as cavalier with our money as they are with their own. Apparently, they throw away hundreds of thousands of dollars “all the time” on even worse ventures as a matter of course. And what can be worse than throwing away $100k on an action you said you would lose, admit you will lose, and in fact do end up losing? It boggles the mind.
Carruthers’ worst error, not reporting any of the income related to the sale of her guesthouse “Pearl's,” helps us understand why $100k is just loose change for her. In February when I wrote I was submitting the Ethics Complaints, I had speculated that the sale must have resulted in at least a million-dollar gain for her share (I noted it was jointly owned). She sent me the following email:
“And here I thought you were some kind of financial expert. Do you really believe I saw a gain of over $4 million from the sale of my guesthouse? What about paying off notes, paying my partner's estate, paying charities, paying bonuses to staff, capital gains taxes? And yes, I did have an IRS liability which I paid off. My financial report accurately represents all my assets and liabilities. I have nothing to hide and have never done anything unethical. I do not know what you intend to gain from attempting to smear my reputation, but what you have done is eliminated any respect I had for you.”
Well, the Ethics Commissioners told me in open session that they appreciated, ahem, my expert guidance on the commissioners' misreporting. In 2013, Heather on her own sworn financial disclosure form said that she had a single source of income: her salary as a commissioner, at a precise $44,174.04. After I filed my complaint, and the Ethics Commission investigated her, her amended report contained the following true income figures:
Pearls Properties: $135,644
Pearls, LLC: $39,808
United St. Trust, LLC: $40,104
United St. Partners $2,421,536
Getting the salary wrong by $4,020 dollars could be called a “mistake.” But what do you call her not reporting a total of $2,637,092 in other income? It was real income—she bought a bigger home and a $185,500 power boat, so it was hard cash in hand. But she did not report over 98% of it—the salary, which was all she reported until she was investigated, amounted to only 1.74% of her actual income in 2013.
The excuse she and the County give for her error is that filling out the form is a “convoluted and unclear process,” and the sale of her property was SO “complicated” that she “ultimately engaged the services of a CPA to determine how [she] should report her interest in the property on her annual disclosures.”
Three facts: She must have already reported income from the sale to the IRS, as she had six-figure obligations for her taxes. The Ethics rules allowed her to simply submit her tax return for 2013, which would have as a bonus allowed her to show off those charitable donations she bragged about in her nasty email to me. Second, it is not as though she reported inaccurate figures, she did not report any income at all. Third, while she says she ultimately paid a CPA, the County has used the excuse of this single complicated calculation to hire at our taxpayer expense a $300/hour outside attorney to help out the commissioners on these otherwise trivial forms.
She also admitted to a couple of million dollars in misreporting the value of her home, the value of her brokerage accounts, and the very existence of the fore-mentioned power boat, as well as reporting, even in the amendment, suspiciously round numbers for the value of what clearly is an amortized note, which doesn't yield round numbers.
But that is of much less interest than what she said in closed sessions about the value of accurate financial reporting, and the need to crucify anyone who is even slightly in error, regarding the SUFA case. For her $7+ million and 138 errors of form, she paid a fine of $5,000. SUFA in the end made around $1,000 in utility bill errors in seven years of accounting. The witch-hunt “audit” made dozens of other claims, all of which were wrong: billing practices which were common to all shelters and had passed many years of county audit, money earmarked in donations to send big dogs to Michigan, cash deposits into her personal account that were indeed private rent payments, and on and on. But Linda lost her business and reputation, and we the taxpayers lost over a million dollars.
Carruthers’ response to this “audit” was to declare, “I'm flabbergasted by that audit report.” (Hence the headline above.) What word can we then apply to Carruthers’ Form 6 reports? When Linda Gottwald emailed her to try to discuss the audit, Linda says Carruthers refused, saying, as she did with me, that she “had lost all respect for [Linda].” Note that Carruthers had a chance to defend herself to the Ethics Investigator with her lawyer present. Linda was never allowed to even discuss the audit with anyone in the county with her own lawyer present.
Carruthers worried about being accused of “persecuting” Linda, “looking like the bad guy,” and “being perceived as bullies.” Carruthers said she “want[s] people to know that [Linda] hid the money,” and, even in a losing settlement, “I [Heather Carruthers] don't ever want us not to be able to tell the truth about what she did.” First, Linda never hid any money. That's why the County was able to seize it from her accounts. Second, Carruthers has had years since the case was settled to “tell the truth about what she did,” but she hasn't said a word. Is it because they indeed were bad guys persecuting Linda like bullies? And they lost, lost, lost?
Carruthers also supported the malicious litigation of the county lawsuit against Linda's kindly Board of Directors (except, of course, Commissioner George Neugent’s old friend Lynn Mapes), just to put pressure on Linda. This is just, in my opinion, not only against state and federal law, but plain evil. And stupid. It didn't work. It just adds to the persecuting-bullies-being-bad-guys vibe she said they didn't want. I went to meet with Carruthers in her office once to try to talk her out of that most heinous aspect of the county's misdeeds, but she wouldn't hear of dropping it.
I also showed up at a commission meeting to advise the Commissioners not to waste more of my tax money on a forensic accountant, but they all ignored that as well. More thousands of dollars down the rat-hole, with his finding nothing because there was nothing to find.
Carruthers too voiced no objection to my estimate of their costing us the taxpayers over a million dollars, and counting, through their setting Linda up so they could award the animal contract to George's friends, who ran it into the ground while costing us $100k/year more money for less work. (I am confident the new SPCA contractor, while more expensive, is doing fine work.)
I have highly supported FIRM in its efforts to get us fair windstorm rates. I even offered to be their treasurer, as long as I didn't have to attend meetings (they graciously rejected me). I now wonder if, given the actual lack of substantive results these last 11 years, whether the same incompetence evident in these financial reports has been used in FIRM. I went to their website, and they offer no history of their accomplishments. So the SUFA disaster winds even further into other directions of investigation . . .
So far, I have received no answers to any of the questions I have sent any of the commissioners (Carrtuhers’ are HERE.) So instead of a Blue Paper dialogue about her finances and the SUFA aftermath, she is forcing me to find other venues to open a discussion. We have had an unusual reader response to this series in that I have not received a SINGLE comment defending any of the commissioners, or criticizing any aspect of my coverage. BP readers are themselves a smartly critical lot, so it seems you commissioners are off on a lonely island.
For the benefit of readers who read the BP early and thus do not get to peruse our intelligent readership's later contributions, I am appending below the comments we have received so far on this series. When I am done with the individual commissioners, I will write a wrap-up column including my responses to my readers' comments, questions, and suggestions. I am including Sloan Bashinky's long comments in a bloc at the end. Even if you don't like his conversations with his angels, remember he has run for numerous offices, and knows a great deal about local politics, so I suggest you give him a read here.
Again, readers, thank you for your encouragement, insight, and support. To Commissioner Carruthers, a final question: Given how you persecuted Linda for years for trivial errors, how should you be punished for your own?
READER COMMENTS BELOW: