State Audit of Selected City Records Reveals Findings

The Smithville City Council, last July, voted to ask the state comptroller to conduct an independent audit after Aldermen Steve White raised concerns about something he had seen in the budget, which he did not elaborate on at the time.

"I think that due to some of the issues that we found looking in the budget we need to call for an all out audit from the state comptroller's office", said White. "That way it would be an independent audit. It will cost us a little bit of money but I think it would be profitable for the city in the long run for us to do that.", he said.

Last week, Dennis F. Dycus, CPA, CFE, Director of the Division of Municipal Audit for the state, issued a letter on a report on his findings of "selected records of the City of Smithville", and that letter has been sent to the Mayor and Aldermen.

Mayor Taft Hendrixson acknowledged Monday morning that he and the aldermen have been notified of the audit findings but that there has been no action taken as a result of it.

While the audit report refers to actions taken by City Secretary- Treasurer Hunter Hendrixson, it does not accuse him of a crime or misuse of funds for personal gain.

The report states as follows:

"We have concluded our investigative audit of selected records of the City of Smithville. The purpose of the investigative audit was to address specific allegations primarily related to the city's golf course and swimming pool operations. This investigative audit focused on the period July 1, 2009, through June 30, 2010. However, when warranted, this scope was expanded."

"In August 2008, the City of Smithville entered into a five-year agreement with a private company, Smithville Golf Management, LLC [SGM], to operate the Smithville Municipal Golf and Swim Club [golf course and swimming pool]. The duties and responsibilities for both the city and SGM were detailed in a written contract. However, our investigative audit established that the city had improperly assumed some of the financial burdens that, according to the written
contract, were the responsibility of SGM."

City payment for SGM obligations:

"Our investigative audit identified four city checks, totaling $4,871, issued to pay for city swimming pool operation costs that were apparently obligations of SGM."

"Two city checks, each in the amount of $680, dated April 17, 2009, and April 17, 2010, respectfully, were issued to the Tennessee Department of Health for swimming pool licensing fees. Although both checks had signatures for the mayor and city treasurer, the mayor advised state auditors that he had not signed the April 2010 check. The city treasurer (Hunter Hendrixson) acknowledged to state auditors that, without permission, he had signed the mayor's name to the April 2010 check."

"A city check in the amount of $2,511 dated June 14, 2010, bearing only the signature of the city treasurer was issued to an insurance company for a liability policy related to the city swimming pool."

"A city check in the amount of $1,000 dated June 17, 2010, bearing only the signature of the city treasurer was issued directly to Smithville Golf Management for swimming pool start-up expenses."

The city treasurer told state auditors that the $1,000 payment to SGM was to cover beginning inventory for the concession stand, lifeguard pay, and other expenses related to opening the swimming pool at the start of the summer season. He stated that he issued the checks
to Smithville Golf Management and to the insurance company because SGM was having
financial difficulties and would not have opened the swimming pool for the summer season
without financial assistance."

SGM water usage not metered:

"Our investigative audit also determined that the water account for the city swimming pool was classified as inactive from September 2008 through July 2010. As a result, the water meter was not read and SGM was not billed for any water usage during that period. When asked about the failure to bill SGM for almost two years, the treasurer told state auditors that he was responsible for that decision. On or about July 29, 2010, the city billed SGM $2,702, the city's
calculation for previously unbilled and unpaid water usage related to the use of the swimming pool."

The contract between the City of Smithville and Smithville Golf Management LLC, states: "The Tenant [Smithville Golf Management] herein agrees to pay all utilities for said facility, except the Landlord [City of Smithville] will maintain the tennis courts, the nets and fence, as well as pay the electric bill for the tennis court lights. The Tenant shall be responsible for providing all water to the facility, except the landlord agrees to fill the swimming pool once a year and provide the necessary chemicals for start up each year. The Tenant will be responsible for all fees and charges associated with the operation of the facility, including but not limited to any fees to the Tennessee Department of Health….The Tenant herein shall provide at his sole expense public liability insurance….

"The Tenant shall be responsible for the Smithville Swimming Pool, same to include the hiring of certified lifeguards during all hours of operation….

"We noted that in August 2010, the Smithville Golf Management gave 60-day notice to
city officials that it would terminate its agreement with the city."

On Monday morning, January 17th, City Secretary-Treasurer Hendrixson issued the following prepared statement in response in the state audit findings:

"A week or so before the opening of the pool season I was informed by the lessee, Smithville Golf Management, that their insurance policy on the pool had been dropped and they would not have one in time to open the pool. I took it upon myself to locate a policy but it was more than they could afford so I allocated the money through the City's Golf Course/Swimming Pool checking account which at the time had around $75,000 in it and I also gave them another $1,000 for start up expenses such as lifeguard salaries and any other maintenance repairs needed to open the pool on time. We don't have much to offer our youth recreationally so there was no way I was going to allow the pool to not open, however, I should have gotten the blessing of the Board before taking matters into my own hands", said Hendrixson.

"As far as the issue of the water meter for the pool, the 2008 contract with the lessee states that the City pays for the ‘initial' or first fill up of the pool. The Smithville Golf Mgmt could have used their well reservoir with their chlorinator after the initial fill up but apparently were under the impression that the City would provide all pool water costs. This was an oversight on both the City and Smithville Golf Mgmt's part.", Hendrixson added.

Sheriff's Department Finds Three Meth Labs-Makes Five Arrests

The DeKalb County Sheriff's Department has found three meth labs since last Wednesday, January 12th resulting in the arrest of five people.

In one of the cases, 24 year old Ricky Wilbert Hendrixson of Cooper Street, Smithville is charged with manufacture and unlawful possession of a schedule II controlled substance (methamphetamine). His bond totals $51,500 and he will be in court on January 27th.

Sheriff Patrick Ray said that on Wednesday, January 12th, a deputy received information that someone may be cooking methamphetamine at a specific address and he went to the home to investigate. The officer received consent to search and when he went through the residence he found components used to manufacture meth, including seven glass jars, twenty coffee filters, turkey basters, funnels, ph test solution, draino, heet, coleman fuel, bi-layer liquids, tri-layer liquids, plastic hoses, scales, and several plastic liter bottles of liquid. The officer also found in Hendrixson's room a plastic jar containing some methamphetamine. Hendrixson allegedly admitted that these items belonged to him.

Meanwhile, 52 year old Harold L. Hutchings of Sparta Highway, Smithville and 27 year old Charles James Davis of North Main Street, Sparta are each charged with manufacture and unlawful possession of a schedule II controlled substance (methamphetamine). Bond for each totals $51,500 and they will be in court on January 27th.

According to Sheriff Ray, deputies went to check out a report of a possible meth lab at the Lake Motel on Sparta Highway on Wednesday, January 12th. The officers received consent from Hutchings to search the room he was renting. Davis, who was also in the room, told the deputies that he had been staying there with Hutchings. Found in the room were components used to make meth, including bi-layer liquids, tri-layer liquids, lithium batteries, ph strips, cold packs, and hypodermic needles. In a glass bowl, officers discovered a powdery substance, which tested positive for methamphetamine. Hutchings allegedly admitted to having cooked methamphetamine in the room. Both men were placed under arrest.

24 year old Charlie Chad Barnes and 22 year old Terry Ray Barnes both of Red Road, McMinnville are each charged with manufacture of a schedule II controlled substance (methamphetamine). Bond for each is $50,000. They will appear in court on January 27th.

Sheriff Ray said that on Sunday, January 16th, a deputy went to Big Hurricane Road to investigate a possible meth lab. The officer spoke with Chad Barnes who answered the door. The deputy told him why he was there. Barnes gave consent to search. Terry Barnes was also there. Found in the room were components used in the manufacture of methamphetamine, including a two liter bottle containing a clear liquid with lithium strips boiling, batteries, cut up batteries, lye, draino, cold packs, eight foot long plastic tubing, and other items consistent with the manufacture of methamphetamine. The officer reported that when he approached the front of the residence, he noticed a chemical smell coming from inside the home.

38 year old Candida F. Davidson- Driver of Cill Street, Smithville is charged with violation of probation and resisting arrest. Her bond is $1,500 on the resisting arrest charge but she is being held without bond for the violation of probation. She will appear in court on January 27th. Davidson-Driver was also issued two citations for simple possession of a schedule II controlled substance, one for morphine and the other for dilaudid. She was further issued a citation for simple possession of a schedule IV drug (diazepam).

Sheriff Ray reports that on Saturday, January 15th officers went to a residence on E.H. Haas Road to serve a warrant on Davidson-Driver for violation of probation. While the officers were cuffing her, she began to resist arrest, fighting, kicking, and trying to pull away. She was finally taken down and cuffed. The deputies told her several times to stop resisting but she refused. Officers also found five medicine vials on a bed in the residence along with her keys. Davidson-Driver allegedly admitted that the vials belonged to her. The vials contained a half of a pill believed to be dilaudid, one and a half pills thought to be morphine, and eight blue pills suspected to be diazepam.