Raise letter audit brings sharp divisions


A county government “whodunit,” loaded with intrigue, accusations, multi-tiered storylines and an aura of cover-up, is apparently over — for now.

How important the “whodunit” is, whether its context is significant and what the long-term effects will be, no one seems to know.

If anything, the episode reveals a monumental divide between the executive branch, headed by County Executive Bob Culver, and the legislative branch, headed by John Cannon.

The chasm was abundantly evident in the recent budget process and it has made even more complicated the perplexing matter of a pay raise letter found in an employee file.

Since the morning of Thursday, June 29, when the County Council routinely published its Briefing Book for an upcoming July 5 meeting, government watchers and county employees have been wagging their tongues with speculation, gossip and assorted theories.

Was fraud committed, or was it all merely administrative sloppiness? Were there work-revenge motives, or merely co-workers miscommunicating? Was political opportunism employed, or were people just carrying out their sworn duty?

And, as is routine in today’s political environment, the words “fake news” and “witch hunt” have been used to characterize the affair.

For now at least, county citizens have been left with the following statements, the first from the County Council and the second from the County Executive:

“Due, however, to (hired auditor’s) inability to proceed further, council has no other options but to terminate the investigation and issue this summary to advise the public of this unfortunate series of events,” the County Council said in a joint statement.

“I strenuously objected to the County Council’s retention of an outside auditor regarding this matter for two reasons — (1) it is a complete waste of taxpayer dollars because there is no evidence of fraud (in fact, the evidence is to the contrary) and (2) the tactics utilized in performing the investigation were inappropriate and harassing,” Culver said in his own statement.

Briefing Book

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The online Briefing Book that Thursday contained a heavily redacted report from a forensic auditor, who the council hired to investigate questions passed along to the council’s auditor by the county’s highly respected outside accounting and auditing firm, Pigg, Krahl, Stern & Associates of Salisbury.

PKS auditors, in an October “payroll test” that included a random review of employee files, found a letter outlining a raise for Michele Campbell Ennis, the county’s Human Resources Director.

 

To the accountants, the Nov. 19, 2015, letter — purportedly written by then-county Finance Director Leslie Martin Lewis — looked suspicious, was potentially fraudulent and was worthy of further review.

The strange letter

Addressed simply to “Mr. Culver,” the letter was on a plain sheet of paper, and not official letterhead.

Michele Ennis

The accountants immediately had problems with the document: its lack of a letterhead, the typed names of Lewis and a lower-level county employee (who hasn’t been publicly named), and their repeated typed names in an italic font to suggest a signature.

The letter stated that a business community review of salaries for Human Resources Directors in large operations showed a raise could be in order for Ennis.

Ennis’ annual salary of $77,800 is cited in the letter, as is her male predecessor’s salary of $88,409, and the salaries of Salisbury University’s HR Director ($90,000) and the county school board’s HR boss ($111,000).

Though the number is redacted, Culver has since said a 12 percent raise was recommended in the document, which he adjusted in a notation to 8 percent.

Indeed, Culver’s handwriting is on the letter obtained by the auditors, with an alteration clearly noted, though those numbers are also redacted.

An 8 percent increase would amount to a $84,204 annual salary for Ennis.

There is no specific requirement that any raise letter be produced. As the county’s top leader, Culver has full authority to issue raises for any amount at any time. No sign-off from any underlings is either expected or required.

For there to be a fraud, under the definition there would have to be evidence of an attempt to deceive. Clearly, when asked later, Culver was forthright when asked about the raise.

But because of the redactions, as well as the auditors’ intense comments, there has been widespread speculation that Ennis wrote the letter. She did not.

Evidence points to either the unnamed, lower ranking county employee, or Lewis herself.

The interviews

During the first week of November, PKS personnel first visited Culver with questions about the letter. The auditors were concerned the written signature under the adjustments didn’t look like Culver’s normal handwriting. The County Executive, however, said the notations and signatures were indeed his.

Leslie Martin Lewis

The auditors then visited and showed the letter to Lewis, who said she did not write the letter. She added that while she had been involved in discussions concerning Ennis’ pay, she had never researched HR Director salary information.

Later, on Nov. 4, Lewis dispatched a letter to the PKS staff, placing in writing what she had told them, stating herself to be “extremely concerned as to what other documents have been written and signed representing the Wicomico County Director of Finance without (my) knowledge.”

Lewis concluded the letter with: “This is a very serious matter that needs to be addressed immediately.”

Business-wise, when someone at a finance director’s level essentially takes a matter outside their work building, auditors become even more alarmed — and act.

County Council steps in

Meantime, PKS alerted the council’s Internal Auditor, Steve Roser, about the letter, and Roser took the matter to the seven council members.

Steve Roser

Unlike the overwhelming majority of county employees, Roser works for and reports to the County Council, not the County Executive.

A position outlined in the County Charter, Roser’s office provides independent and objective audit services. The intent is to ensure transparency, while also providing a checks and balance of the executive branch, and see to it that public funds are spent within the parameters of the adopted budgets.

Upon hearing the news, council members — six are Republicans, one a Democrat — were at first gravely concerned, but gradually concluded there was no easy way to gauge the gravity of the issue.

The tone of all the auditors was, however, serious and encouraged further investigation.

Earmarking money from the council’s own legal fund, they approved the hiring of Gross, Mendelsohn & Associates of Baltimore, who assigned James J. Kern, a Certified Fraud Examiner, to the case.

Kern and an auditor from PKS arrived unannounced at the Government Office Building on Feb. 16. Because the information has been redacted, it is unclear which office Kern initially entered and began questioning a county employee about the letter.

Given that auditors already had a statement from Lewis via her Nov. 4 letter, it would appear Kern went met with the underling whose name was alongside Lewis’ on the letter.

According to Kern’s report, he introduced himself to the employee and explained he was assisting in an investigation of a payroll issue and termed the matter “serious.” He said he stated that he wasn’t there to accuse anyone, but was seeking facts.

James Kern

Kern said the employee “promptly stated” that she typed the letter, based on instructions from Lewis.

The employee then told Kern that she couldn’t answer questions without her supervisor in attendance.

Soon, the supervisor and Culver arrived together. Kern’s report suggests that a tense encounter followed, with Culver asking what Kern’s purpose was and “where this was going.”

When Kern explained, Culver declared that no further questions would be answered, that an attorney should be present for any further questioning.

Kern and the PKS auditor left to question Lewis, but found she was on vacation. He said when Lewis returned to work on Nov. 20, she telephoned him and, under questioning, said she remembered casual and formal conversations occurring about a pay raise for Ennis.

Lewis told Kern there was discussion among staff members that a Personal Action Notification entry should be created to initiate the Ennis raise, but there was no discusion about a letter.

She repeated that it wasn’t her who called to solicit salary information.

County attorney enters

Blocked from talking to county employees, Kern said he scheduled a March 10 meeting with County Attorney Paul Wilber, but Wilber later canceled. Kern said Wilber didn’t respond to requests for a meeting on an alternate date.

Finally on April 7, top executive office officials gathered in Wilber’s office, with Kern calling in by speakerphone.

Kern identified a list of county employees he wanted to interview, including Culver.

Wilber, Kern said, agreed to the interviews, provided that Wilber was present, recordings were made, the interviews were conducted in Wilber’s office and the employees had the right to have legal representation on hand. Kern said he provided three dates for the interviews.

Then, on April 19, Kern received a letter from Wilber, stating that the County Executive had directed county employees not to participate in any interviews.

Kern said he received a letter from Culver on April 21, explaining his decision.

Culver wrote: “I authorized the raise at issue and it is beyond dispute that I had the authority to authorize the raise. I am also well aware of the fact that at the time Leslie Lewis was supportive of receiving a raise. Under the circumstances, it is inconceivable that there was a misappropriation of monies.”

Culver added: “If you can demonstrate why staff should be subjected to an interview, I will reconsider my position.”

Kern said Culver also criticized Kern’s Feb. 16 interview attempt, saying Kern had mistreated the first employee he questioned and should have provided advance notice of his arrival.

Kern responded in writing, telling Culver again that he believed “potential fraudulent acts … may have been committed by a county employee” and that interviews were needed to complete the investigation.

Kern said Culver replied with another letter on April 28, pointing out that the original PKS auditors had ruled the matter “as a personnel issue and not fraud” and had only advised the “suspicious” letter be brought to the attention of Steve Roser, the the county’s Internal Auditor.

The situation certainly became even more convoluted when Culver terminated Finance Director Lewis on May 18.

Citing personnel restrictions at the time and since, Culver declined to name a specific cause for Lewis’ ouster, except to say he had “lost confidence” in Lewis’ performance and had asked her to quit.

“I asked for her resignation and when she refused, I fired her,” Culver said at the time. “I was very sorry to have to do that.”

Auditor’s conclusion

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Kern, who has 35 years of experience as a fraud investigator, formally presented his report to the council last Wednesday night.

Citing personnel protections and what he deemed to be errors in facts, attorney Wilber had urged the matter be reviewed  in a closed session. Councilman John Hall made a motion to do just that, but it died for lack of a second motion.

The forensic auditor revealed no names in his presentation, and received only one question from the council.

Councilman Joe Holloway asked Kern if he often faced a lack of cooperation in his investigations. “Is this something that happens a lot?” Holloway asked.

“In my experience, no,” Kern replied.

Kern’s conclusion was that the raise letter was created to appear as if it had been written by Lewis, when it wasn’t.

Lacking any further cooperation from the administration, he said, he couldn’t say for certain how or why things happened as they did.

The council unanimously accepted Kern’s report in the form of a resolution. Following the meeting, the council members released a joint statement:

“Based upon the unusual nature of the Nov. 19, 2015, letter and related aspects, council believes it would be in the public’s interest to continue with this investigation as to the authenticity of this letter and/or any similar documents which might exist.

“Above all else, the lack of full disclosure and transparency in this matter is disconcerting Due, however, to Mr. Kern’s inability to proceed further, council has no other options but to terminate the investigation and issue this summary to advise the public of this unfortunate series of events.”

Council President Cannon said the council paid $7,900 for the audit.

Culver responds

The following day, Thursday, Culver responded — with both barrels.

Bob Culver

Visibly angry and clearly frustrated, Culver held a news conference, where he read a statement that took all of 1 minute.

“Council’s conduct has been legally reckless and financially irresponsible as they pursued a fruitless witch hunt and defamed innocent employees in a political hit job against me. Their actions are appalling and dishonorable, considering their positions in government.”

Culver said he would not comment on any details, because “this is and always has been a personnel issue. … This is a personnel issue and we’re going to treat it as such.”

Culver then released a written statement that blasted Kern for “threatening county employees with accusations of criminal behavior.”

The statement criticized the County Council, calling the retention of an outside auditor “a complete waste of taxpayer dollars because there is no evidence of fraud.

He also took a swing at the council and Kern together, saying the “the tactics utilized in performing the investigation were inappropriate and harassing.”

Then, without naming her, he slammed Lewis.

“Stripped to its bare essentials, the only issue to be investigated was an allegation that an employee allegedly did not authorize another employee to type her name on a letter. This same employee claims she did not know about the letter; however, the facts clearly indicate otherwise.”

The e-mail string

PRESS RELEASE Fraud Report Back-Up Documentation

As part of the statement, Culver released a progression of e-mail conversations from the Nov. 19, 2016, date, which he said were found on Lewis’ computer after her ouster. Also redacted in places, the emails suggest Lewis knew of the raise and had electronic access to the suspicious letter.

Said Culver: “It is equally clear that the employee’s (Lewis’) allegation of alleged fraud has no merit. The employee’s e-mail account has been searched. The letter of recommendation at issue and supporting data are in the employee’s e-mail account and the employee acknowledged receipt of the letter at issue. The employee clearly had knowledge about the recommendation because she specifically acknowledged receipt of the letter.”

When asked later about the emails, Cannon said the messages — to him — are mostly nonsensical.

“I am really shocked that he handed out that bizarre string of e-mails,” Cannon told a reporter.

John Cannon

Included among the emails was another copy of the letter in question, but it was a different version — unredacted and containing only Lewis’ name.

The letter singled out by auditors also included the name of the underling.

Regarding the e-mails, Culver took another swipe at the auditor, Kern.

“Inexplicably, the County Council’s investigator apparently didn’t undertake such a basic review to determine whether the employee making the allegation had received the letter.”

He also criticized the council, again, in detail:

“I reiterate, I’m extremely disappointed with the County Council for wasting taxpayer dollars on an issue where there was no evidence whatsoever that substantiated it.  This entire matter could have been resolved through a simple review of the employee’s email who claimed she had no knowledge of the letter.  

“Instead, it would appear that there are some members on the council who are willing to waste your hard earned dollars in order to advance their own political agenda. That is not in keeping with the best interests of the citizens of Wicomico County.”

Culver also said that while the council cited the audit cost at $7,900, the actual cost was far higher because of expenses incurred by Wilber — who works at an hourly rate — and the several county employees who spent time reacting to the auditors.

“Unfortunately, the true cost to you, the taxpayers, is significantly higher than the figure quoted by the County Council President,” Culver said.

‘They went to an auditor’

Later, in the Government Office Building’s top-floor hallway, Culver addressed the mysterious raise letter with news reporters, and commented on they way it was formatted. “This happens all the time,” he said.

Culver also told reporters that he had answered every question put to him by all of the auditors, but stopped the inquiry when it seemed an employee might be charged with fraud.

“The question came out whether the letter was legal, did I sign it, did I give the raise. Yes — I answered that to all of them. I had complete authority to give the raise the way I did.”

And then he challenged Lewis’ comments to the auditors, and called her by name.

“Miss Lewis at the time knew about the letter, she knew about the raise, she actually suggested that it (the letter) come from someone else other than the person who received the raise,” he said.

During the just completed budget process when the council made errors in adjusting the final plan, Culver remarked several times that the problems would have been avoided if the council had reached out to him.

That same theme was evident Thursday.

“I don’t understand why we had to go this far. All they had to do is ask me,” Culver said. “The council never sat down and asked me to please explain this to them. They went to an auditor.”

 

Greg Bassett is editor and general manager of Salisbury Independent. Reach him at gbassett@newszap.com

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