WHITE: Municipal water departments “hothouses for fraud”

Submitted by Shad White

“Now is the time to work together to make sure water and utility bills are not being skimmed by employees,” Auditor White writes.

Since I’ve been State Auditor, my office has identified hundreds of thousands of dollars of stolen utility and water payments. That means a great deal of money paid by hardworking Mississippians for their water and electricity bills is going missing. That money could have prevented rate hikes or funded maintenance and improvements to local utility and water systems.

In June, for example, my office arrested Shoral Bounds, a long-time employee of Clarksdale Utilities. Bounds was allegedly able to embezzle nearly $114,000. She is accused of turning in falsified balance sheets for years, and it was not until after she stopped working at the public utilities that the embezzlement was uncovered.

In April, my office arrested a former town clerk in Hickory Flat who was allegedly skimming money from bills being paid. Since no one was looking over her shoulder to check her work, she was able to embezzle $104,256 over three years.

Last year, Amanda Lewis, the former Roxie Town Clerk, was found guilty of manipulating accounting software to skim money meant to pay local water bills. She embezzled over $80,000 as local residents paid their water bills.

We also arrested Juanyana Holloway, a former deputy municipal clerk for Sumrall, for embezzlement of water bill payments. Earlier this month, she pleaded guilty to embezzling over $13,000 from the city. She has now been convicted of a felony offense and will never be able to handle taxpayer money again.

As you can tell, this kind of theft is a problem in Mississippi. The money stolen tends to be anywhere from tens to hundreds of thousands of dollars.

People who are willing to steal from taxpayers need to know this: someone is out there looking for this kind of crime, and you will eventually be caught. That “someone” is the 135 men and women of the State Auditor’s office. I’ve told my team to be relentless when pursuing stolen taxpayer money.

This relentless pursuit is actually one of the best ways to prevent fraud and embezzlement. Research from the Association of Certified Fraud Examiners shows people are much less likely to commit these crimes if they believe they will be caught. It’s called a deterrent, and we are dedicated to creating one.

Another good way to prevent fraud and embezzlement is by implementing what accountants call “internal controls.” One of the simplest and most effective internal controls is segregation of duties. “Segregation of duties” means breaking up the work for each financial task in an office. That can ensure not just one person is able to manipulate an entire accounting system.

An example of segregating duties is having one employee check the mail for water payments while a different employee, number two, completes deposit slips. It is much harder for fraud to occur when a system of checks and balances has been implemented.

My office has compiled a list of internal controls for government offices. Visit www.osa.ms.gov and click on “Resources” to find more tools for your office to prevent fraud. Every water and utility office in the state should be reviewing these.

Some cities are struggling to find enough money for water system repairs these days, like the City of Jackson. We know water departments are hothouses for fraud based on our cases. Now is the time to work together to make sure water and utility bills are not being skimmed by employees.

The 135 men and women of the State Auditor’s office are committed each and every day to combating the theft of your money. I am committed to making sure that whenever there is theft of taxpayers’ dollars, we are there to investigate. As more stimulus money for water improvements flows around the state, now is the time to make sure fraud is stopped and hardworking Mississippians see improvements in the system. We are committed to punishing fraudsters who would stand in the way of that happening.

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Submitted by Shad White. He is the 42nd State Auditor of Mississippi.