The muddle in accounting at the Bill and Hillary National Airport that meant no checks could be cut for “quite a length of time,” L. Cotton Thomas & Co. CFO Chad Miller said, were outlined to the full commission this morning by the auditing firm.
The audit says the accounting in airport’s general ledger, which was changed when new software was installed in 2011 and made more problematic with a software upgrade in 2012, “lacks sufficient clarity and detail to readily and clearly identify the transactions of the Airport.” The new software changed accounting codes and an upgrade that was supposed to integrate with the software in a way that would keep classifications separate did not. That meant that coding for transactions were changed twice over the course of a year. Auditors described their work as “cumbersome” because of the problems and said it is difficult to compare the latest numbers with those in 2011. They recommended that the airport examine its books carefully on a month-to-month basis to make sure that changes implemented to fix the problems are working.
The commission approved the report, but not until after Miller fielded questions from commissioners. Bob East noted that there were 40 pages of “account reversals” because items weren’t coded correctly, and both he and Tom Schueck asked whether the software, which the Thomas auditors said was geared toward manufacturing, was right for airport use. Executive Director Ron Mathieu said the software was chosen after presentations by “four or five” companies and that it was in use at other airports. Mathieu said that company that integrated the upgrade into the new software in 2012, causing more problems, has been at the airport “for weeks at a time” fixing problems and training airport staff to use the program. He said the vast majority of problems have been worked out.
Commissioner Wes Clark asked if the new software would allow the airport to reduce the number of employees in the finance department. Mathieu responded that the goal was not to reduce staff but to allow staff to better manage its procurement and find efficiencies that way. Commissioner Jesse Mason sought to cut off discussion, saying the audit already had been discussed in the finance committee of the board, that “there are no missing funds, no wrongdoing” and the board should not make a big deal out of it.
L. Cotton Thomas, the airport’s auditor for three decades, will not seek to win the airport’s business when it contract expires this summer, Mike Schaufele told the finance committee last week.
The board also voted to extend its contract with legal counsel Cross, Gunter, Witherspoon and Galchus for three years with one three-year extension available “at the discretion of the Executive Director,” but not after some debate on the process. Commissioner East questioned whether the board should give Mathieu the power to renew contracts on his own without board approval, and Schueck said he was “not comfortable” with forgoing a bidding process for the business. Mason said he didn't understand the concern over the process, to which Chairman Kay Arnold said the commission is to abide by its rules. She asked Commissioner Virgil Miller to put together a committee to “get clarity” on the process. Schueck’s was the only no vote on the extension.
The firm also got a 2.6 percent raise, retained for $11,000 a month with an hourly rate of $195.
Debbie Rogers, chief deputy state treasurer, said Treasurer Martha Shoffner will not be at work today, but otherwise it was "business as usual" at the treasurer's office. Shoffner was arrested Saturday and charged Monday with taking kickbacks from a securities salesman who handled state bond business.
Rogers said she didn't know about Shoffner's work plans beyond today. She said Shoffner had spoken briefly with her today and said that she'd been advised not to comment and to refer questions to her attorney, Chuck Banks.
There's been a bipartisan call for Shoffner's resignation. Republicans also have begun urging Gov. Mike Beebe to begin proceedings to remove Shoffner from office. The Constitution provides for impeachment by the House and trial in the Senate as one means of removing the state treasurer. Shoffner's term in the $53,000-a-year job runs through 2014. There's also a provision for removal by "address," a hazily written provision that hasn't been used since the Constitution was written in 1874. It might mean that the governor could remove Shoffner on a two-thirds vote of House and Senate.
Shoffner should resign for multiple reasons, beginning with the sworn affidavit that she'd admitted to FBI agents that she'd wrongly accepted money from the bond dealer. She may yet have a legal defense on the charge, but it's politically sufficient evidence that she should no longer be conducting state investment business.
I think Gov. Mike Beebe is right to give the decision a bit more time before putting removal machinery in play. Said his spokesman Matt DeCample about impeachment and address:
Those are always options, but before going to the extent and taxpayer expense of calling in the Legislature, he wants to give the resignation option some time. There is also continuing study of how exactly those proceeding would occur. We haven’t found record of the “by address” provision being used before.
I think the last Arkansas state officeholder to be removed from office was Sen. Guy "Mutt" Jones, expelled after a Senate trial in 1974 after a federal tax conviction.
A North Little Rock woman has died after her fiancee poured gasoline on her and set her on fire.
Cathi Compton has just begun a Facebook page for her race for the seat being vacated by the retiring Judge Collins Kilgore. She's been a member of the attorney general's staff and made a race for circuit judge in 2008.
Yesterday, Little Rock lawyer Mike Reif announced for the seat.
State legislators have an interesting twofer today and tomorrow — a Buffalo River float trip and a visit to a mass hog feeding operation that conservationists fear holds peril for the pristine national river. Hosts will include the Arkansas Farm Bureau and agri-giant Cargill.
A news release follows from the National Parks Conservation Association, one of several groups that have criticized an inadequate permitting process for the C&H Hog Farm at Mount Judea, which will house 6,500 pigs for Cargill. It says, in part:
By forcing a permit through that has tremendous holes with a lack of adequate public input, these agencies have endangered our treasured landscape and the livelihoods of many individuals — including the owners of C & H. The organizations concerned about the impact of C & H are pro-farm, but we are also pro-Buffalo National River, and the threat to the nation’s first national river is real.
Don Nelms, the environmentalist business tycoon/photographer who watches over the Buffalo River from a bluff-top home above Jasper, is urging a demonstration of river advocates at lunch Wednesday in Jasper. Earlier, we posted his photo slideshow on the issue. He sent the artwork above with the following message:
Until Cargill acknowledges that they made a mistake and rectify their mistake, there will continue to be a large hog farm in the Buffalo National River watershed.
Cargill is hosting a luncheon for the Arkansas Senate and House Agriculture Committees at the Ozark Café on Wednesday, May 22, in Jasper. This would be a perfect time for you to send a message to Cargill. If everyone would show up on the square of Jasper by about 10:30 and protest until the legislators leave around 1 o'clock, I think it would have a profound effect on the disposition of this whole issue.
Cargill thinks they're going to just wait this thing out and that the people voicing opposition to their locating this hog farm in Newton County are just a bunch of wacko environmentalists. Let's prove them wrong. Let's show them that the opposition comes from all walks of life.
At the announcement yesterday of the charge against Martha Shoffner, U.S. attorneys announced a public corruption task force for the state.
Do you think maybe an offer of $30,000 in campaign contributions to change a vote on pending legislaton would be worthy of an inquiry?
This post is by Brandi Womack, wife of Republican state Rep. Richard Womack of Arkadelphia, on Womack's Facebook page:
I hinted earlier that evidence was mounting that the securities salesman who provided confidential information to the FBI was Steele Stephens, the broker who began enjoying a huge share of Treasurer Martha Shoffner's bond business in 2010.
Two highly placed sources have told me that they were certain Stephens was the wired informant who delivered cash to Shoffner in a pie at her Newport home Saturday.
Yesterday, he didn't take calls. But his boss at St. Bernard Financial Services in Russellville, Robert Keenan, had told me he'd talked to Stephens, who assured him he was not involved.
After hearing from my two sources, I was heading to work with plans to call Keenan back. I was greeted at my desk by this phone message from Keenan: "I think my rep's been lying to me."
I called Keenan, who gave the following account:
Keenan first looked again at the criminal charge and decided that the time line of Stephens' involvement with Shoffner dealing could fit Stephens after all, if you counted his time with both St. Bernard and an earlier employer.
"I asked him, 'Are you involved?'"
Stephens reportedly responded, "The FBI told me I can't say anything."
Keenan said he then asked when that counsel from the FBI occurred. In January 2012, Stephens reportedly responded. That's when the confidential source began talking with the FBI in the Shoffner case.
"So I said, OK, it's him" Keenan told me.
Stephens never officially confirmed that. But Keenan said "there are so many dots." He said Stephens continues to work at the firm today (he didn't respond to my request for a call), because he didn't want to move rashly. But he said he'd begun notifying all relevant regulatory authorities to "see what they say."
Keenan reiterated that anything Stephens had done was without his knowledge. "I'm crushed. He's a great guy."
He said Stephens is required to sign a lengthy questionaire every year about his business. Among them is whether he'd made any contributions to anyone without the firm's permission. He said he had not. "Obviously that's not true," Keenan said.
"It's like family when you're in a little firm. You believe in your people. It's like if somebody told you your son's got a drug problem. Your first reaction would be to say, 'No, I don't think so.'"
Keenan said, "It's a PR nightmare. We haven't done anything wrong as a firm. My dad taught me you can't do crap like this because it eventually comes out."
Steele Stephens' father, Steve Stephens of Little Rock, also has been employed as a registered securities rep at the firm, but retired this year on his 83rd birthday, Keenan said. (I had Keenan's name at the beginning of the sentence incorrectly in the original post.)
When I went back to Heath Abshure, the state securities commissioner, with my information that Stephens figured in the probe, he responded:
We are working on it. Although the Department’s enforcement actions are civil, the effect on a respondent’s reputation mirrors that of a criminal case. As soon as the Department files its complaint, the damage is done. Therefore, I tell my examiners and attorneys that they are not to file an action until they are absolutely sure they can prove each allegation in the complaint.
With regard to the identity of the confidential source, the Department is reaching out to the likely suspects in an effort to get them to talk to us. Cooperation is something the Department considers in its enforcement matters. Obviously, lack of cooperation is also considered.
U.S. Sen. Tom Coburn of Oklahoma is holding firm. He wants disaster aid for Oklahoma, but he wants it paid for by cuts somewhere else. That's been Cotton's past stance on disaster money. Will he hold firm when it's a red state feeling the pain?
It's simple. The American way is to help the needy without condition, certainly not that somebody else must sacrifice first. Take no storm hostages, certainly not for ideology. There but for the grace of God go all of us.
A morning report as Arkansas watches the stormy skies:
* THE STATE TREASURER WATCH: Can Martha Shoffner really return to work today as state treasurer, overseeing billions in state investments, after admitting to FBI agents that she wrongfully accepted a pie stuffed with a cash kickback from a securities salesman she inordinately favored with state business?
Her first appointment today will be with her attorney, Chuck Banks, who's already indicated he thinks her best choice would be to resign, but the decision is hers. Facts of the case indicate she's broke, which might make her want to hang onto her $53,000-a-year job. She presumably has some Social Security to fall back on. She's accumulated some state pension credits, too. (I've looked but can't immediately find if my memory was correct about legislation being introduced this year to require forfeiture of retirement benefits by public officials convicted of crimes.)
Meanwhile, multiple sources of extremely high credibility assure me speculation on the FBI's confidential informant has not been off base.
It's worth highlighting what federal officials said yesterday. Until Saturday, when the wired informant delivered a hot money pie to Shoffner at her Newport home, they didn't have a case against the treasurer. Some overheated Republican commentators confuse suspicion with evidence. Evidence and probable cause to believe crimes have been committed are customarily necessary to undertake criminal investigations, not partisan innuendo. In this case, that arrived when the securities salesman began talking to federal investigators, long before the legislature got involved. Even then, it took months before they could get the goods on the treasurer.
Ready as I am to presume Shoffner's guilty, it's worth remembering that we have a Constitution. For example, if Shoffner doesn't quit, agitation will grow quickly for a special session to impeach her, an expensive process and also one that would require some period of time to stage, with lots of procedural problems. If she really is planning a criminal defense, she might argue that it would harm her defense by being forced to defend essentially the same charges in a trial for removal. She could do everyone a favor by going quietly, of course.
PS: I am reminded that there's an easier course provided in the Arkansas Constitution. The governor may remove the treasurer by "address," requiring only a two-thirds vote of both houses. That could be quick work. Some, but probably only a few, might be reluctant to essentially declare a guilty verdict without trial for someone protesting their innocence. But it certainly could be done. Again, the better course is for Shoffner to hang it up.
* ARKANSAS: IT COULD BE WORSE: We had a lamentable legislative session if you have a progressive, or even a centrist outlook. But, yes, it could be worse. Get a load of what a Virginia senator and candidate for attorney general wants to do:
If a woman in Virginia has a miscarriage without a doctor present, they must report it within 24 hours to the police or risk going to jail for a full year. At least, that’s what would have happened if a bill introduced by Virginia state Sen. Mark Obenshain (R) had become law
* THE UNIVERSITY OF ARKANSAS BOARD AND HOSPITAL COMBINATIONS: The University of Arkansas Board of Trustees meets tomorrow. The agenda includes an "information" item about a clinical integration agreement. That's not an action item on the discussion of UAMS and St. Vincent merging their operations. The agenda also includes a new affiliation agreement between UAMS and Arkansas Children's Hospital. UAMS pediatric faculty staffs Children's. They've had an agreement since 1982 that has been amended several times. It's not clear what drives the latest amendment, though I note that the divesting of power by the UA Board to the UAMS chancellor on overseeing the arrangement and a joint governing board made up equally of UAMS and Children's representatives is similar to what's been discussed for UAMS-St. Vincent. The Children's deal refers to autonomy of decisions in the respective institutions and the like.
* NICE WORK BY THE LEGISLATURE: You see the report in the Arkansas Democrat-Gazette about the lawsuit filed over Blytheville's decision to exempt itself from the new school choice law, presumably to prevent segregative transfers from a district with a history of court action over segregation? The go-to lawyer for the Billionaire Boys Club and their pro-charter, pro-voucher, anti-conventional public school agenda, Jess Askew, is leading the legal charge naturally. It's an opportunity to frontally combat the theory that all of Arkansas, with its well-documented past of support for segregation, has a duty not to contribute to resegregation and thus can take racial outcomes into account in allowing school choice. But the real wrinkle is a technicality to beat all technicalities. Askew is arguing that the law is without exception, at least this year, because the deadline to ask for an exception for the next school year, as written in the law, occurred April 1 before the law was signed. The state Education Department imposed a new deadline so districts could have a meaningful opportunity to opt out, but the lawsuit argues that's not legal. Nice trick, Johnny Key. Maybe if they have that special session to impeach Shoffner, they could clean up that bad piece of legislative drafting. Unless it was intentional.
Weird day. I've been consumed with Martha Shoffner's favorite pie. Line is open. Finishing up, it's still all Martha all the time:
* MORE QUESTIONS THAN ANSWERS: Will a single federal charge be enough for Martha Shoffner? With conviction, probably, for a 68-year-old woman and a long federal jolt. But what a mess left behind. For example:
1) FREE RENT: FBI recitation said Shoffner lived free in a Little Rock building until 2009 when it was sold (and she went looking for a sugar daddy in the bond business). Lived free? Reported as gift? Gift legal under ethics rule? Who provided the gift? Did they get something in return?
2) CAMPAIGN FINANCE: There's still Shoffner's claim that she spent $900 a month in campaign money on a beatup, aging Ford van rented from a Newport used car lot. Really? Or did it mask a way to tap campaign money?
3) EMPLOYEES: Multiple employees have told me tales today of being dispatched to purchase everything from items for her mother's house to a bacon biscuit for her dog (bacon had to be extra crispy) with office accounts. One employee said she was offered a public pay raise if she'd work outside the office on state time to raise campaign money. Another said she'd told the FBI about campaign contributions missing from reports. Another told me about staff shakedowns to buy gifts for Shoffner, such as a set of golf clubs. Another told of receiving cash payments for doing questionable chores for Shoffner as an employee.
4) THE CANCER: Is Shoffner really believable when she says she shook down ONLY ONE securities dealer for living expenses? Bribery is sort of like eating potato chips, isn't it? Can't live on just one.
5) THE FUTURE: Nobody — nobody — is urging Shoffner to stay and fight. If we can believe the FBI's sworn affidavit, she's admitted taking illegal kickbacks. She'd serve the public, her party and her legal fees by resigning and cutting the best deal possible as quickly as possible and hope her lawyer Chuck Banks can find a way to plead for mercy.
6) IN DEFENSE: Employees — including those sorely disaffected with Shoffner — ascribe some of her problems to mood swings and judgment bordering on delusional. A gambling addiction helped a previous client of Chuck Banks, Lu Hardin, avoid jail time for abuse of public office. Perhaps Shoffner can present a sympathy-inducing defense. Based on early reports, however, she might have a harder time turning out a file folder full of testimonials from friends and co-workers.
7) CO-CONSPIRATOR: Surely we'll know sooner rather than later who wired up to give feds the goods on his/her payments to Shoffner. Surely there'll be consequences for a dishonest securities salesman even if held harmless on federal charges through his immunity deal.
* ELSEWHERE IN THE WORLD: Massive tornado smashed Oklahoma City. A track two miles wide. An elementary school took a direct hit, according to various reports.
* ANOTHER DROPOUT: State Rep. Mary Broadaway of Paragould, who had been considering a race for attorney general, said today that she'd seek re-election instead. "not the time."
Roby Brock will moderate the Google+Hangout on how Arkansas's faring in the Internet economy. The video conference starts streaming at 3:30 p.m. It's part of the Internet Association’s Internet on Main Street tour.
In addition to Boozman and Pryor, participants include...
· Michael Beckerman, President and CEO, The Internet Association
· Susie Marks, Sr. Vice President, Arkansas State Chamber of Commerce
· Mike Abbiatti, Executive Director, Arkansas Research and Education Optical Network
· Lee Renniger, Owner, Rock Appliances and Services
· Jeffrey Hall, Associate Director of National Affairs, Arkansas Farm Bureau
· Matt Price, Founder, Bourbon and Boots
· Ellie Keffler, Vice President of the Associated Student Government, University of Arkansas
David Koon reports from the news conference this afternoon by U.S. Attorney Chris Thyer of the Eastern District of Arkansas, who brought the charge against state Treasurer Martha Shoffner, and Western District U.S. Attorney Conner Eldridge, who buttressed the message that the feds are looking for corruption statewide.
Thyer said that the decision to extend immunity to the informant referred to as Confidential Human Source 1 (CHS1) in the criminal complaint against Shoffner was not an easy one, but it was made "out of necessity," due to how limited the alleged conspiracy between Shoffner and CHS1, an unnamed bond broker, was. "If both of those two people remain silent," he said, "we wouldn't be here today."
Asked by a reporter if CHS1 was Steele Stephens, Thyer said "no comment." He later cited Justice Department regulations that require him to only release information contained in public filings, but said the identities of those named in the criminal complaint will eventually come out incourt. He said the immunity extended to CHS1 will keep the informant from being prosecuted "by my office," but he added the immunity doesn't cover potential prosecution on state charges.
Thyer said that the timing of Shoffner's arrest on Saturday had to do with the fact that the Saturday meeting between CHS1 and Shoffner was the first time they had met to make a cash handoff since CHS1 was offered immunity. According to the criminal complaint, the meetings between Shoffner and CHS1 happened at intervals of up to six months. Shoffner wasn't indicted, he said, because a grand jury wasn't available Saturday to hear the evidence. Thyer said they decided to move forward without an indictment because a delay would have meant "we would have left $6,000 in government funds in her possession until the grand jury met." He said the case will be presented to a grand jury as soon as possible.
Asked whether Shoffner should resign, Thyer said he has a personal opinion on it, but declined to share it, saying it is "none of my business," and should be left up to Shoffner and the Arkansas legislature. She can be impeached at a special legislative session if she does not resign. A resignation would leave it to Gov. Mike Beebe to make an appointment.
Beebe called today for Shoffner to resign. He said he hadn't talked to her since she made a snarky remark about the governor being driven around by a "manservant" at a time when attention was focusing on use of state vehicles by statewide officeholders such as Shoffner. By law, the State Police provdes the governor with a security detail.
Shoffner's attorney, Chuck Banks, said he'd "probably" recommend that Shoffner should resign, given the interference with her work if she decides to proceed to trial. But he said that was her decision. He'll be meeting further with Shoffner tomorrow.
In addition to commenting about Shoffner, Thyer and officials from the FBI Little Rock field office, Pulaski County Sheriff's Department, Arkansas State Police, Little Rock Police Department and the U.S. Attorney for the Western District used the occasion of the press conference to announce the formation of the new ArkTrust Public Corruption Task Force. The multi-agency task force will accept and investigate confidential tips on public corruption at any level — local, state or federal — by any elected or appointed official in Arkansas. Tips can be submitted to the ArkTrust hotline at (501)221-8200 or visit tips.fbi.gov.
David Ramsey reports on the Mike Beebe news conference at which he said he had no immediate ideas about a replacement if she does leave office:
There'll be lots more of these, but this one came in first and it's for a local judgeship:
Mike Reif said he's running for 13th division circuit court, a seat from which Judge Collins Kilgore is expected to retire. Reif has practiced 29 years with the Little Rock firm of Dover, Dixon, Horne.
Chuck Banks, who represented her in federal court today, answered my question on when he begin representing her:
When her family contacted me Saturday night and I visited with her yesterday morning. I didn't enter my appearance or file anything until this morning. I notified Jana Sunday afternoon, then I filed a motion this morning and entered my appearance at the hearing.
By then, the damage had been done, including taped outreach to a government informant for more financial help and alleged admission of wrongdoing to arresting agents.
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