Investigator’s Report Finds Numerous Red Flags for Flatonia, Brunner
Details of a just-released investigation shed new light on the problems within Flatonia city government, which led to the “early retirement” and taxpayer-funded payout for former Flatonia City Secretary Melissa Brunner.
Last week Flatonia City Attorney Angela Beck finally released the report prepared by an independent financial crimes investigator, Ron Oliver of BCR Investigations and Consulting Solutions.
In his report, Oliver stated he met with Flatonia City Manager Sarah Novo and Chief of Police Lee Dick on June 9 to discuss irregularities in the City’s finances. Both Dick and Novo were fairly new on the job. Novo took the City Manager job just months before, in March 2020. The City hired Dick in September 2019.
Oliver said the two approached him after Novo dis covered Brunner had sole access to the City’s bank accounts and full control over accounting.
It’s unclear how long Brunner had such unchecked control over City finances. The Record has repeatedly tried to contact Flatonia Mayor Bryan Milson, whose tenure in City government coincides with the 20-plus years Brunner worked for the City, but he has not returned our calls.
Oliver’s report said Novo asked Brunner to train other city employees in handling the City’s finances. Oliver said Brunner delayed training other employees and responded that she didn’t need to train others because she didn’t have time and never takes vacation. Oliver said emails show that Novo scheduled a training day on May 22, 2020, and that all employees responded they could attend except Brunner. The training eventually took place on May 27, 2020, but Brunner initially refused to grant Novo access to bank records. The City contacted Oliver on June 1 of last year.
Oliver identified several “red flags” concerning the City Secretary during his initial discussions with Novo, which he listed in his report:
• The employee has full control of all transactions and access to all accounting records.
• The employee has sole access to all financial data and bank accounts.
• The employee handles accounting for all financial transactions.
• The employee balked at the need for other employee(s) to assist with financials.
• The employee never takes vacation time.
• The employee stated cross training would have to wait until time permitted.
• The employee’s delaying of cross training other employees on several occasions.
• The employee’s statement that the City Manager could not have access to bank accounts per their auditor (Oliver’s report said the City’s auditor did not instruct Brunner to withhold access to the City Manager).
• The employee provided City Manager access to City of Flatonia bank records only after (a) cc’d email to (the) Mayor and Chief of Police.
Oliver also wrote in his report about a discrepancy in the amount of a credit the City should have received from its wholesale power provider, the Lower Colorado River Authority (LCRA), as reported by Brunner. The amount of the discrepancy was redacted from the report, however.
Ultimately, Oliver did not find evidence of fraud involving collusion with vendors whom the City conducts business with. However, he uncovered numerous mistakes by the City Secretary, including failure to pay for employee insurance policies. He discovered missing receipts, expensive travel costs by the City Secretary and failure to transfer funds as directed by the City Council. Oliver listed in his report numerous questionable purchases from Amazon.com, including self-improvement books with titles such as “The Loudest Duck,” “Making the Most of Change,” “The Courage to Meet Reality” and “The Leader’s Guide to Emotional Intelligence.”
In addition, Oliver found records showing the City purchased an HP laptop computer, wireless printer and mouse from BestBuy.com for $519.23 on Jan. 16, 2019. In a footnote, Oliver noted that as of October 8, 2020, “attempts to locate these property items have not been successful.”
As reported previously in the Record, the investigation revealed tens of thousands of dollars in losses suffered by the City as a result of these failures, mistakes and questionable purchases.
Financial Oversight Woes Date Back Years
But Oliver’s investigation only looked at two years of bank records with an emphasis on the period between October 2019 and May 2020.
A 2008 lawsuit involving the City indicates financial problems at City Hall stretching back much farther. That 2008 lawsuit between the City and former City Manager Robert Wood revealed a major “accounting error” during that time.
The lawsuit went all the way to the Texas Supreme Court. Wood initially filed the lawsuit over a disagreement about how he would pay back $22,750 in overpayments he received from the City for a vehicle allowance. The overpayments were discovered soon before Wood decided to resign from the City to take another job.
According to court documents from that case, the City of Flatonia paid Wood a vehicle allowance of $650 per month plus reimbursement for mileage.
“In October 2006, Wood learned of an accounting error that had resulted in his receiving twice the car allowance to which he was entitled for nearly three years,” court documents state. “It is undisputed that Wood was overpaid a total of $22,750.”
Wood argued that he and then-Mayor Bob Bizzell agreed that Wood could repay the City by working as a part-time consultant after he resigned. However, the agreement that the City Council signed to resolve the overpayment issue included a blank space where an important term should have been printed. Wood sued the City, but the trial court ruled that Wood was “entitled to an offset of $5,537.44 and, therefore, owed the City $17,212.56.” The Texas Supreme Court upheld that ruling.
The court documents do not, however, explain how the overpayment arose in the first place, only describing it as an “accounting error.” The court documents state that Brunner was the City Secretary at that time. Angela Beck was one of the attorneys representing the City of Flatonia in that case. Mayor Milson was a councilmember then, and he testified in the trial.