June 21, 2024

Naylor-Neelyville ambulance district audit reveals $249K in misappropriated funds

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The former director of the Naylor-Neelyville Ambulance District claims he deserved the nearly quarter of a million dollars in unsupported payments he authorized using district funds. However, a new report released today by Missouri State Auditor Scott Fitzpatrick finds that the payments were undeserved and warrant criminal prosecution. The audit of the ambulance district, located in Butler and Ripley Counties, gives the district a rating of “poor.” It also details how the former director may have falsified board meeting minutes in an effort to mislead auditors and cover his tracks.

“The people of Butler and Ripley Counties who gave their hard-earned tax dollars to the Naylor-Neelyville Ambulance District should be outraged by the lack of oversight that allowed one person unfettered access to hundreds of thousands of dollars, which he used for his own personal gain and to line the pockets of his family members,” said Auditor Fitzpatrick. “This was an appalling abuse of authority that needs to be prosecuted to the fullest extent possible. It’s also a cautionary tale to remind all political subdivisions that they need appropriate oversight and effective checks and balances in place to protect our tax dollars from misuse. I urge the current board of the ambulance district to implement our recommendations as quickly as possible to ensure a breach of public trust of this magnitude cannot happen again.”

The audit covers the period from January 1, 2017, to June 15, 2023, during which time at least $249,247 was misappropriated from the district. During this period, Brad Davis served as the district director. For several of those years, his wife served as the billing clerk and his mother served as the board secretary. From 2017 to 2020, Davis improperly paid his wife $55,010 and authorized improper payments to his mother totaling $20,950. From 2017 to 2023, Davis improperly paid himself $173,287. In total, Davis issued 290 payments to himself, his wife, and his mother.

All payments made by Davis were not allowed under a contract the district entered into in October 2016, when it opted to outsource ambulance services. In an interview with the State Auditor’s Office, Davis was asked if he would be willing to repay any of the unsupported payments to the district. He responded, “Unsupported doesn’t mean undeserved.”

The improper payments authorized by Davis included severance, duplicate, advance, and bonus payments, as well as payments for unnecessary election services when no elections were held, and COVID-19 response payments when no response activities took place. Other improper payments were for expense reimbursements that were unsupported and questionable. For example, Davis issued himself a $1,750 reimbursement check on March 23, 2017, for “computer purchases/supplies/software.” In response to a subpoena, he turned over the district’s computer, which could not have been purchased in 2017 because it was manufactured in 2005 and contained district files dating back to 2006.

The report details how the various improper payments were deposited into the personal bank accounts of the director, billing clerk, and board secretary. A review of these personal bank accounts indicated each individual disbursed money from the accounts after the deposit of district checks and may have personally benefited from the improper payments.

The audit also uncovered board meeting minutes that may have been falsified by Davis in an attempt to cover up the improper payments he authorized. Meeting minutes from July 18, 2016, seem to indicate the board approved a weekly salary of $650 for Davis, reimbursement for expenses, and severance packages of no more than $10,000 for the director (Davis), billing clerk (his wife), and board secretary (his mother). However, the meeting minutes include the signature of a former board president, Faye Meyer, who didn’t begin her service in that position until 2018. Additionally, Meyer confirmed she did not sign the 2016 meeting minutes, and she, along with two other board members, indicated they never approved the director, billing clerk, or board secretary to receive compensation after outsourcing ambulance services.

When looking at how Davis was able to misappropriate nearly $250,000, the audit found the board did not provide adequate oversight and failed to establish segregation of duties for the district’s various financial accounting functions. The board failed to meet regularly to discuss or review the district’s finances, and the director was able to issue and sign checks from the district’s bank account without board oversight. The only control in place for the disbursements was the second signature required from the board secretary, who was the director’s mother and indicated she often signed blank checks in advance and could not verify some of the check signatures were hers.

The report also outlines how the district did not prepare budgets or file financial statements for at least five years from 2018 to 2022. Because it failed to file financial statements, the district currently owes $903,000 in fines. The board also failed to obtain annual audits of its district as required by state law.

The complete audit of the Naylor-Neelyville Ambulance District can be found here

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