Date: June 27, 2003
>The full text of the city of Culver's official investigation into alleged credit card misuse
Re: Allegations of Credit Card Fraud - Culver City Employees
City of Culver Attorney:
Paul F. Sumner
Attorney at Law
P.O. Box 16
Madras, OR 97741
City of Culver Chief of Police:
Culver, OR, 97734
Investigator: Jim Smith, Smith Investigations, Inc.
REPORT OF INTERVIEW
This investigation was commenced at the request of Lee Farrister, Chief of Police, Culver, Oregon. Chief Farrister indicated that a complaint had been brought to his attention involving the misuse of the Culver City Credit Card by various City employees. The complaint named Jeri Jones and Eugene Smith as allegedly having charged personal items to the City of Culver credit card.
A copy of all Culver City credit card statements were obtained to determine line items.
Interviews were conducted with the following persons:
Jeralyn ("Jeri") Jones is a Caucasian female, born in the State of Oregon on March 25, 1956. She is married to Jack Jones, Jefferson County Sheriff, and they have two children. The Joneses reside in Culver, Oregon.
Jeri Jones is the City of Culver Recorder and has been so employed since February, 1994. Prior to Jeri's employment as Culver City Recorder, she was employed in Phoenix, Oregon, as City Recorder.
In addition to City Recorder responsibilities, Jeri is also Secretary to the City Council, Budget Officer, Treasurer, and Collection Officer.
Jeri's duties as City of Culver employee, include purchasing all office supplies, police supplies, and any other items needed by the City of Culver on a monthly basis. Jeri has various lines of credit and uses a VISA credit card issued by the U.S. Bank to purchase these items. Jeri showed me the card and it was noted that the name "Jeri Jones" is listed above the name "City of Culver" on said credit card.
To obtain the City of Culver credit card, Jeri was required to fill out a credit card application on which it was necessary to place her personal Social Security Number, and a list of references. A credit report was then obtained prior to approval.
When using the card to order by telephone, Jeri is required to give her name and the name of City of Culver as listed on the credit card, her Social Security Number, the identification number, and the last four numbers of the card.
Jeri stated that she doesn't normally carry her personal credit card with her, but she has the City of Culver credit card and her driver's license in a small folder with her at all times. She said that there were times she used the City of Culver credit card to buy personal items when she did not have her personal card with her.
When the City of Culver credit card statements were received, Jeri reviewed them and if there were any outstanding personal charges, she would pay them to the City of Culver by check or by having the amount deducted from her paycheck. When asked if she had any outstanding personal debts on the card, Jeri answered, "No." This was confirmed by this investigator's review of the credit card statements for the last two months.
Jeri said she never used the card to get a discount on any items to which the City might be entitled.
Jeri stated that Eugene Smith also has a credit card with his name and the City of Culver listed on it. Jeri and Eugene are the only ones who had credit cards which were used on a continuous basis.
Jeri said that the Culver City Council members would use their City credit cards when on official business and pay back the debts for any items purchased that would not come under the category of "City business," such as movies, meals for spouses, etc.
Jeri said that her current annual salary is $32,000. The Jones' combined household income is in excess of $90,000. Their family has accrued normal bills and were meeting their monthly debts with no problems.
A check with OJIN revealed no criminal or civil action taken against Jeri Jones. A credit report was obtained which revealed no outstanding credit problems. Jeri's credit rating is in mid-range showing no outstanding liens or judgments. Also, no small claims actions have been filed against her according to OJIN and the credit report.
A check of the credit card report revealed that the credit card issued by U.S. Bank to Jeri Jones and the City of Culver, had no delinquent or late payments. The limit on the card is $5,000. No late payment activity was indicated against this card.
All bills and transaction records go to Jeri. Purchases for a large amount must be approved by the City Council. The Council has a good idea of what is being spent, but they do not get involved in the day to day business of running the City of Culver. The Council has the right to access any and all accounts that involve the City. They would have knowledge of any outstanding debts on the credit cards. The Council has never brought up the issue of the credit cards and how they were being used.
During the interview, Jeri was asked about Eugenia Alire, the complaining party. Jeri stated that Eugenia made $1,690 per month as a secretary/receptionist for the City of Culver. She was reliable up until approximately one year ago. She became angry when she requested time off and wanted to back up comp time. Eugenia has complained to the City Council on several occasions and made a formal complaint to the City about Jeri not allowing the comp time. Eugenia has made numerous other complaints about other City employees, directly and indirectly to the Culver City Council. Jeri said that Eugenia couldn't understand her duties and did not understand her role as a City employee. This caused dissension with other City employees.
Jeri said that Eugenia Alire used the City of Culver credit card on several occasions. She went to Jeri and asked to use the card to purchase things because she was short on cash. Some of her purchases included clothes, gifts and other personal items. This information was verified by the line items on the credit card statements that this investigator reviewed.
Jeri stated that Eugenia would pay her personal debts back either by check or by deduction of the amount from her paycheck. Jeri indicated that although Eugenia did a good job of paying the City pack, she needed to spread out the payments on occasion.
Jeri indicated that Eugenia knew that Jeri used the City card, but did not know the payments arrangements that were made. Therefore, Eugenia did not know how or when Jeri would pay off her personal credit debts.
Lee Farrister stated that he has been the Culver City Chief of Police for approximately two years. Prior to that he was employed as a domestic abuse investigator with the Jefferson County Sheriff's Department.
Lee, and his wife, Fawn, reside in the City of Culver and they have one child. Fawn is employed with the Jefferson County court system.
Lee said he was made aware of the Culver credit card issue and decided not to undertake the investigation because he was concerned that someone might feel that he would be biased because of his long term working relationship with Jeri Jones. He therefore turned the investigation over to an outside party.
Lee stated that he has never had a City credit card. If the City of Culver Police Department needed supplies or miscellaneous items, he would request that Jeri order the items for the department.
Lee stated that he knew of the practices of using the credit card for personal items but never heard mention that this practice had been abused by any of the Culver City employees. The use by City employees of their own City credit cards, for personal purchases has been an acknowledged practice, with the only condition that the charges be repaid within 30 days of billing (unless other approval was obtained). The charges would either be paid directly by the employee or taken out of the employee's paycheck. Lee said he had heard that some of the City Council members would use the credit card while traveling and would then repay the City of Culver for any personal charges to the City credit card.
Lee said that he has known Jeri Jones for many years and he considers her to be an extremely honest person. He feels that the allegations of credit card abuse are wrong. Lee has never heard of Jeri Jones not paying off her personal debts on the credit card. Lee also said that in his opinion, Jeri would never use or abuse her position for personal gain.
Eugene Smith, who is also known as "EV", has been employed with the City of Culver as the Public Works Director for 10 years. Prior to that he was employed with the Culver School District. EV's date of birth is March 28, 1950. He is married and has two children. He and his family reside in Culver, Oregon.
EV stated that he has known Jeri Jones since 1994, when she began working for the City of Culver. She is a good friend. EV stated that he considers Jeri to be honest and forthright and he trusts her judgment.
EV said that he has never heard or known of anything that Jeri has done which would be considered harmful to the City of Culver. Jeri has donated thousands of hours of her time to promote and facilitate Culver City programs. EV said that when you work for the City, it is like being part of a family and there are times disagreements arise.
EV said that he has submitted billings to Jeri and the bills have always been paid in a timely manner. No one has ever talked to him regarding problems with the City credit card.
EV stated that he uses his City credit card for emergency purchases of items for the City. He then showed this investigator the card and it was verified that the card was the same as the card shown to me by Jeri Jones, a VISA credit card issued through the U.S. Bank. However, said card had the name "Eugene Smith" listed above the "City of Culver".
EV said that he has to be extremely careful not to confuse the City of Culver credit card with his own personal VISA card because they look exactly alike. EV said that he heard of instances when individuals mistakenly charged items to a business credit card they had in their possession, having thought it was their personal credit card.
EV said that he has not and will not allow anyone to use his City of Culver credit card. However, he said there was one instance when he was purchasing a vacuum cleaner that Jeri and Brenda each purchased the same vacuum cleaner because of the sale price. He got approval by the City Council prior to the purchase of the vacuum cleaners. The City received a $10.00 discount on its purchase because of the other two purchases. EV said he knew that Jeri and Brenda, another City of Culver employee, paid for their vacuum cleaners as soon as the money was due and that to the best of his knowledge, they did not receive discounts on the vacuum cleaners they purchased.
EV said he knew of an instance when Brenda needed medication and could not wait for her paycheck in order to pay for it, so the Mayor approved the purchase of said medication using the City of Culver credit card. The amount of the purchase was deducted from Brenda's paycheck. EV said that he knows Brenda has used the City credit card to purchase other items, but she gets a receipt and gives it to Jeri for payment.
EV stated that Eugenia never had reason to consider that anyone was being dishonest and does not know where she got the idea. Beyond that, EV said that he has no personal knowledge of the circumstances regarding the allegations made by Eugenia Alire and does not want to know anything about them.
Kelly Lucas is the Branch Manager of the U.S. Bank in Madras, Oregon. She revealed the following information pertaining to the City of Culver credit card.
Kelly confirmed that the City of Culver has credit card account with the U.S. Bank. The records of the account show no delinquent payments. The account has always been kept current with no late or unpaid charges. She stated that the cards are issued in the name of the department heads, personally, as well as the City of Culver.
Kelly Lucas stated that the reason the department heads' individual names are on the credit card in addition to the City of Culver is to assure that if the City of Culver does not pay the amount owing on the account, an individual who has a good credit rating is then responsible for payment.
A credit check was run on these individuals and approval was based on their rating prior to issuance of the card. The bank will not issue cards solely to the City of Culver.
Candace ("Candy") Frank is a certified public accountant with Harrigan, Price & Frock, LLP, in Bend, Oregon. Candy was interviewed by this investigator and relayed the following information.
The Harrigan, Price & Frock firm has been the auditor for the City of Culver for the past 10 years. During this period of time, Candace has been responsible for the account. She has known Jeri Jones for at least eight years.
Due to Jeri's position with the City of Culver, she has been the individual Candy has worked with on the audits. Candy said that during the audit, Jeri is present to answer any questions regarding items purchased by the City. The audit is conducted at the City of Culver and usually takes a week to complete. Jeri is not privy to the auditor's actions and she has no idea what the auditor may have found or recommended.
The auditors randomly check expenses and the way in which items are purchased. The random checks give the auditors opportunity to see whether money is being spent wisely. The auditors then check as to whether the purchases with the budget. As far as the auditors are concerned, there is no outstanding credit card balance. All of the items checked were approved by the City and fit into the budget. The end of the year balance showed no outstanding debts.
If there was any discrepancy, Candy stated that the auditors would have immediately notified the Mayor and City Council. When asked whether Jeri could prolong or hide payments to the credit card, Candy stated that the auditors would have immediately found this and a deficit would have been indicated. An accounting would have then been requested. Also, the Mayor and the City Council would have been reviewing invoices. Therefore, since the Mayor would have written checks for payment on the credit card account, he would have noticed any large discrepancies.
Candy, having known Jeri for years, stated that she would be surprised if Jeri would have conducted any wrong doing. She stated that Jeri has always been cooperative, and has never interfered or attempted to delay the focus of an audit. Candy indicated that Jeri has always been honest about the books and invoices and she produced any documents the auditors requested.
Candy also stated that no one could anticipate random audits. The audit is sent to the Oregon Secretary of State. The State then has the responsibility of auditing the auditors of any city or municipality in the State of Oregon.
Candy stated in closing that the audits conducted by the State of Oregon and by her firm are then re-audited by another accounting firm, Wall & Wall, in Bend, Oregon. They complete a final account and final audit to determine whether the State of Oregon and Candy's firm have randomly audited and executed a responsible audit.
Candy said that if Wall & Wall or the State of Oregon had come up with any questionable items they would have notified the proper investigators to conduct a full investigation of those things in question with the City of Culver. Candy said that the City of Culver has never been the subject of any type of investigation or further audit.
Peter Deuel is the District Attorney for the County of Jefferson, Oregon. This investigator met with Mr. Deuel to discuss the credit card allegation and to reveal to Mr. Deuel the summary of the investigation, to date.
A review of ORS 165.055, Credit Fraud, and ORS 165.002, Credit Card Definitions, were made and it was determined that there appeared to be no felony or misdemeanor violations regarding fraud or misappropriation of funds by Culver City employees.
Mr. Deuel stated that based upon the information given, at this time his office would not consider prosecution for the above ORS violations.
This investigator reviewed the City of Culver Employee Handbook which was implemented on March 21, 1994, and found that it did no indicate any rule or regulation regarding credit cards. Due to the credit card allegations, Jeri Jones brought this problem to the attention of the City Council and the Mayor and an adoption to the hand book was made on May 19, 2003, addressing the use of credit cards.
A friendly audit conducted by this investigator at the U.S. Bank for the months of May and June, 2003, revealed no outstanding debts.
During this investigation, the credit card receipts were also audited by this investigator. There were 11 charges for personal items by employees during this time, totaling $1,289.00. Three employees used Jeri's credit card to purchase items. All of the items were paid for and reimbursed to the City of Culver by cash or payroll deductions.
Eugenia Alire was contacted by telephone at her residence. She was advised that she did not have to talk to me pertaining the credit card issue. She said she would contact her attorney for advice. I suggested to her that she could have her attorney contact Paul Sumner, Attorney for the City of Culver. Eugenia advised me that she would get back to me with her decision.
The office of Paul Speck, Attorney at Law, Bend, Oregon, contacted this investigator to sent up a schedule for an interview. Due to my schedule to be out-of-town, two dates were rescheduled. On the third attempt to obtain an interview date, this investigator was advised by Mr. Speck that he had issued a tort claim against the City of Culver and therefore would not allow an interview with his client.
During this investigation, information was obtained that indicated Eugenia Alire may have violated ORS 164.345(3) Criminal Mischief, a Class C Misdemeanor. The violation depends upon her intent at the time. An investigation into Ms. Alire's actions at the time would have to be made prior to charges being brought.
This completes this investigation to date. The undersigned reserves the right to supplement or modify this report as additional information becomes available.
Smith Investigations, Inc.