State investigation: $1.67 million in ‘questionable payments’ paid to utility district manager, his businesses | Local News

BRISTOL – A state investigation revealed “suspicious payments” of more than $1.67 million to the manager of a Bristol-area utility district and businesses he owns or owns , according to a report released Thursday by Tennessee Treasury Comptroller Jason Mumpower.

Sullivan County Mayor Richard Venable released a statement on Friday urging members of the South Fork Utility District Board of Directors and the district manager to resign immediately.

South Fork Utility District, formed in 2020 by the merger of Holston Utility District and South Bristol-Weaver Pike Utility District, provides water service to approximately 3,400 customers in Sullivan County.

The investigation covers the period from May 14, 2018 to June 30, 2021 and included the review of records from HUD, SBWPUD and SFUD.

Details of the investigation released on Thursday:

HUD and SBWPUD hired a former HUD commissioner, who operated his own construction companies, as a contract district manager in 2018. In September of that year, the two utility districts moved into the same building of offices, owned by the District Manager, hired and shared employees, and used the District Manager’s construction companies for most repair and maintenance services.

in April 2020, the District Manager was hired as a full-time employee.

According to state law, “It is unlawful for any officer, committee member, director, or other person whose duty it is to vote for, abandon, ignore, or in any way supervise any work or contract in which any municipal corporation, county, state, development district, utility district, human resources agency, or other political subdivision created by law shall or may be interested, to be directly interested in a such contract.

The results of the survey expose, over 10 pages, multiple findings.

The first summarizes that between May 14, 2018 and June 30, 2021, the district manager or the companies in which he had an interest received at least $1,672,875.47.

Subscribe to Kingsport Daily Digest!

The best stories, delivered straight to your inbox.

This figure includes: $982,981.75 to a construction company; $318,742.59 to a second construction company; real estate lease, $51,554.20; gas station, $24,770.28; district manager salary, $159,000; consultant fees to the district manager, $62,450; reimbursements to District Manager, $56,226.65; and payments of $17,150 directly to the district manager for “district projects.”

While the comptroller’s office told the Times News that no funds were missing, details from the report indicate that documents are missing for at least part of the $1.67 million and what it funded.

For example, of the money paid to the first construction company (owned by the District Manager), “investigators found no supporting documentation for $247,911 of these payments and insufficient details of the work performed on most invoices provided.

Another example: investigators could not determine if reimbursements totaling at least $77,674.76 to the district manager and the second construction company were “appropriate” because invoices and receipts were not available. “Many of these reimbursements were originally paid by the district manager or his company by credit cards, and credit card statements were used as the medium for payment instead of invoices or receipts,” notes The report.

Other discoveries:

• HUD paid electricity bills for the District Manager’s restaurant totaling nearly $10,000.

• The districts did not bid for the purchase of new meters. State law requires that such purchases be tendered if the expense exceeds $25,000. Districts purchased 2,300 new meters without auctioning the purchase. “The lack of sealed bids for projects and procurement increases the risk of fraud, waste and abuse,” the report said.

The Comptroller’s Office provided the results of the investigation to the office of 2nd Judicial District Attorney General Barry Staubus.

The full report is available online on the state’s website.

Daniel E. Murphy