PASCAGOULA, Miss. (WLOX) – The state auditor’s office on Wednesday issued demand letters to two former City of Pascagoula employees, including the man who ran the city’s day-to-day operations, former city manager Joe Huffman.

According to State Auditor Shad White, Huffman and former city comptroller Robert Parker received the demand letters for exercising improper financial management of bond proceeds. The total amount of both demands is $54,215.17 and includes all investigative costs and accrued interest.

In December 2014 and again in June 2017, the City of Pascagoula entered bond agreements totaling over $27 million. The bond proceeds should have been deposited into a bank account separate from the general fund account to ensure adherence to bond terms, which mandated the bond revenue be spent on infrastructure and other specific projects in the city.

After receiving a complaint, audit investigators determined Parker and Huffman knowingly and improperly transferred bond proceeds into the city’s general fund account. This practice caused the city to forego over $31,500 in interest revenue, which would have accrued in the appropriate account. It also created the illusion of a budget surplus.

“The taxpayers of Pascagoula should know that $14 million is not missing from their bank account, but millions in bond money was spent on general operations in 2014 and 2017,” White said. “These laws about bond money exist for an important reason. They exist to make sure policymakers don’t tell the public they are taking on a bond debt for one purpose but then actually spend the money on something else. They exist to avoid confusion about how much a city or county actually has to spend on general expenditures, like salaries and administration. The law about spending bond money was not followed in this case, creating a lot of turmoil in Pascagoula.”

The demand letter issued to Parker is worth $47,395.91, and the letter issued to Huffman is worth $6,819.26. Each amount corresponds to the amount of foregone interest revenue during the tenure of each man at the City of Pascagoula, respectively.

“The State Auditor’s Office conducted a thorough investigation into the City of Pascagoula’s finances, as a result of concerns brought to them and my office by Mayor (Dane) Maxwell,” said District Attorney for the 19th District Angel Myers McIlrath. “The grand jury, after having heard the details and outcome of the investigation, determined that there was no criminal wrongdoing, and I am confident in their decision. The fact that the grand jury did not find any criminal conduct does not preclude the state auditor from pursuing civil remedies based on their investigation.”

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“On behalf of the city council and administration I want to thank State Auditor Shad White, District Attorney Angel Myers McIlrath, the FBI and other associated legal authorities and their staffs for conducting a thorough investigation into the financial crisis this administration discovered and promptly reported in July 2018 when a formal complaint was filed by city officials.

“I also want to thank the Jackson County Grand Jury for their consideration and diligent work on this mater, giving the facts and circumstances a fair hearing.

“As stated by the state auditor, the mismanagement of funds gave this administration the illusion of a budge surplus when in fact a budget deficit existed.

“I would be remiss if I did not thank my colleagues on the city council for their integrity and ethical approach to this matter, as well as the city staff for their honesty and work in the face of trying times.

“Make no mistake – challenges remain as the city recovered from this unfortunate episode in our history, but this city council and administration are committed to staying the course and righting this ship. We have taken the steps necessary to ensure our city will be financially and legally healthier as a result of our efforts, and we are happy to say that Pascagoula will be better than we found it as a result of this administration’s diligence and commitment.

If either man fails to pay the full amount of the demand within 30 days of delivery, the case will be referred to the Mississippi Attorney General to be litigated.

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