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Report of Investigation

City of Richwood

March 29

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EXECUTIVE SUMMARY

Despite the influx of nearly $3.1 million from FEMA to assist in the City of
Richwood’s recovery from the devastating floods of June 23, 2016, the City’s recovery has
been inhibited by personal greed, incompetence and a complete disregard of fiscal
management. Sadly, the City of Richwood now teeters on the brink of bankruptcy, and
the primary beneficiaries of the monies appear to be only a few public officials and their
family and friends. While certain public officials touted the Richwood recovery as an
example of what a small community can do if they pull together, it may now find itself
serving as an example of greed, dysfunction, and what not to do following a natural
disaster.
What started as an investigation by the West Virginia State Auditor’s Office into
an alleged misuse of a purchasing card grew into an 18-month multi-faceted
examination of the City of Richwood’s finances. The examination revealed conduct that
was both disturbing and sad. The primary culprit is the City’s negligent management of
monies, and intentional re-direction of monies away from intended purposes.
The most glaring example of this improper conduct with FEMA monies related to
the repair of the City’s main water intake for the public water system. Within six months
of the flood, the City sought and obtained nearly $500,000 from FEMA to repair the water
intake. As detailed in this report, rather than use the money to fix the intake, the City
instead made a temporary fix with PVC piping costing an estimated $400, and re-directed
the FEMA monies to pay certain City official’s salaries and other general City debts.
Now, more than 2 years later, the main water intake remains unrepaired and has, on at

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least one occasion, caused an entire shutdown of the City’s water system necessitating
potable water to be brought in for the City residents.
This Report details other conduct that gave us pause and concern. Some of the
more notable remarks and assertions that we encountered during the course of our
investigation included:
 “We are not doing anything that fraudulent”
-Email from consultant to ICS members relating to payment of individuals
for project management and Direct Administrative Costs.
 “A Bargain at the Price”
-Handwritten by Mayor Baber on Jon Cox’s paystub. Mr. Cox was paid over
$185,000 by the City as a member of the ICS team as well as payments made
after ICS was formally dissolved by Council.
 “He was the man that just kind of walked in off the street”
-Mayor Baber explaining who he paid $800 to buy fireworks in Tennessee.
 “I didn't even know that the recorder was the treasurer.”
-Recorder Chris Drennen, who chairs the City’s Finance Committee and has
signature authority on City checks, as to why she didn’t review financial
documents or information.

This Report provides greater clarity to these and other comments and issues
uncovered over the lengthy examination and investigation conducted by our office’s
Public Integrity and Fraud Unit. Ultimately, the Report summarizes our investigation
and examination into three main topic areas:

Part A Mismanagement of City Finance and Abdication of Fiscal


Responsibility by City Council

Part B Mismanagement and Potential Misuse of FEMA Monies


Part C Misuse and Maladministration of the City’s Purchasing Cards

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Under each topic area, the Report identifies findings and sub-findings detailing areas of
concern or important facts. In total, the Report makes thirty-eight (38) findings and sub-
findings, highlights of which include the following:

Part A (City Finances)


 The City of Richwood has potential financial liabilities of nearly $3 million, and
does not appear to have the financial means to payoff the liabilities.
 Mayor Baber unilaterally added employees to the city payroll in the immediacy of
the flood causing the payroll to more than double.
 City Council allowed a recovery team (known as the ICS) led by Jeromy Rose, Jon
Cox and Chris Drennen unfettered discretion to pay themselves and their family
and friends over $468,000.
 City failed to remit payments to the following entities, even though such
remittances were deducted and reflected on employee paystubs and W-2s:
 Federal taxes
 State Taxes
 Consolidated Public Retirement Board
 City obtained a loan in excess of $500,000 and subsequently spent the money on
expenses in contravention of the loan agreement.
 Recorder Drennen paid herself as an employee in excess of $45,000 without
Council approval.
 Mayor Baber paid himself $3,640 for volunteer work for the 4 days between the
flood, and when he was formally sworn in as Mayor.
 Mayor Baber made his former gubernatorial campaign spokeswoman (and Florida
resident) an employee and paid her in excess of $13,500.
 City Clerk Abby McClung improperly paid herself $3,120 for unearned leave.

Part B (FEMA monies)


 City failed to keep an accounting of the FEMA monies and related expenditures.

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 City diverted project specific monies from their intended purpose.
 Numerous questionable FEMA projects warrant investigation and review by the
FEMA Inspector General.
 Paid ICS member Stacy Raffo sought and obtained a donation from a private non-
profit for items FEMA had already paid the City.
 Nearly $500,000 of FEMA money to repair main water intake was diverted for
other purposes.
 City paid over $244,000 for consultants to assist the City with FEMA grants.
 State of West Virginia has failed to properly administer or oversee the FEMA
Public Assistance program.
 As of June 2018, the State had more than 575 projects dating back to disasters in
2012, 2014 and 2105 waiting to be reviewed and closed-out for local governments.

Part C (P-Card)
 City failed to adhere to any oversight or administration of City’s P-Cards
 Mayor Baber gave his assigned P-Card to unauthorized users on at least 19
purchases.
 Police Chief Lloyd Cogar misused his P-Card on multiple occasions in
contravention of law and p-card policy including more than $2,000 in tire
purchases and services from his personal tire store.
In light of these findings, the Report concludes with the following recommendations:

Recommendation #1: The West Virginia Department of Military Affairs and


Public Safety must evaluate the manner in which FEMA monies are received and projects
closed out to ensure timely payments. DMAPS must also review and consider instituting
new and better oversight of sub-recipient counties and municipalities that receive FEMA
monies.

Recommendation #2: Instead of forcing sub-recipient to hire outside consultants,


the State of West Virginia (by and through multiple agencies) should establish a
guidebook and mandate annual training for counties and municipalities relating to the
management of public monies in the aftermath of an emergency.

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Recommendation #3: The City must take immediate steps to set up and make
timely payments to the CPRB, IRS, and state Tax Department, and must begin budgeting
and repaying the Community Disaster Loan.

Recommendation #4: To the extent any individual from the ICS team is still on
the payroll, Council should review whether such individual is necessary, and formally
decide whether to retain such individual as a paid employee.

Recommendation #5: The City of Richwood should institute or utilize a different


accounting software program and/or hire individuals competent to handle the existing
software.

Recommendation #6: Should consider retention of legal counsel to examine


whether any monies paid to ICS team members, vendors, employees and/or consultants
are recoverable by City.

Recommendation #7 An investigation by the FEMA Inspector General should


be undertaken to ascertain whether any regulations or laws were violated in the handling
of the FEMA monies received by the City of Richwood.

Further, a copy of this Report and related evidence has been made to the West
Virginia State Police, the Nicholas County Prosecuting Attorney and the United States
Attorney for the Southern District for consideration of criminal charges relating to
matters raised in this Report.
While the conduct and action of officials within the City of Richwood were largely
self-inflicted, they can serve as teachable moments for the State as a whole. Various
counties and municipalities in this State have faced situations similar to Richwood, and
blindly rely upon promises of outside consultants and public officials. The only way to
combat this is transparency and engagement. The public must have access to accurate
and reliable information in order to combat false or misleading promises, and to hold
their elected officials accountable. Equally, the elected officials must be engaged in their
civic responsibilities and be good stewards of the public’s money. Richwood forgot this
message. Hopefully their mistakes and misdeeds will serve as a reminder to other local
governments.

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TABLE OF CONTENTS

PRESENTATION OF REPORT OF INVESTIGATION


EXECUTIVE SUMMARY ..................................................................................................................

TABLE OF CONTENTS ....................................................................................................................

I. INTRODUCTION ...............................................................................................................1

II. BACKGROUND .................................................................................................................2


A. CITY OF RICHWOOD GOVERNMENT ..........................................................................3
B. FLOOD OF JUNE 23, 2016 ..........................................................................................4
1. DAMAGE AND IMPACT OF FLOODING UPON RICHWOOD ......................................5
2. RECOVERY MANAGEMENT IN INITIAL WEEKS AFTER FLOOD ...............................9
3. ESTABLISHMENT OF ICS TEAM TO OVERSEE RECOVERY ...................................11
C. REMOVAL OF BOB HENRY BABER AS MAYOR ........................................................16
D. OTHER PERSONNEL CHANGES IN CITY GOVERNMENT.............................................21
III. TIMELINE OF EVENTS ....................................................................................................22

IV. FINDINGS ......................................................................................................................25

A. MISMANAGEMENT OF CITY FINANCES AND ABDICATION OF FISCAL


RESPONSIBILITY BY CITY COUNCIL ..........................................................................25

FINDING #1: Systemic failures and individual misconduct over the last several years
have left the City of Richwood in such financial distress that the City may be unable to
financially recover…………………………………………………………………... 25

Part I- Fiscal Management Issues

SUB-FINDING #1.1: The City of Richwood failed to maintain an accurate accounting of


its finances resulting in complete financial disarray following the flood…………… 29

SUB-FINDING #1.2: The Mayor unilaterally added employees to city payroll without
Council approval causing the payroll to more than double in the immediate weeks after
the flood. ......................................................................................................................38

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SUB-FINDING #1.3: The ICS team had unfettered discretion to hire individuals and to
spend City monies without Council approval causing the payroll to nearly triple in the
six months after the flood. ...........................................................................................40

SUB-FINDING #1.4: The City of Richwood failed to remit Federal and State taxes on
multiple occasions, despite recording garnishments on employee paystubs and W-
2s……………………………………………………………………………………..42

SUB-FINDING #1.5: The City of Richwood failed on multiple occasions to remit


payments to the Consolidated Public Retirement Board (“CPRB”) on behalf of the City
employees, despite recording garnishments on employee paystubs………………… 48

SUB-FINDING #1.6: The City obtained a Community Disaster Loan and subsequently
spent the funds on expenses in contravention of the loan agreement. .........................51

SUB-FINDING #1.7: The City failed to properly utilize or acquaint itself with the
contracted accounting software system. ......................................................................53

Part II- Potential Improper Payments to Individuals

SUB-FINDING #1.8: In addition to her Recorder salary, Chris Drennen was paid as an
employee of the city without apparent Council approval. ...........................................54

SUB-FINDING #1.9: Mayor Baber received reimbursements for questionable expenses,


many times without knowledge of City Council .........................................................59

SUB-FINDING #1.10: Payments were made to Baber’s former gubernatorial


spokesperson in contravention of the Council’s directive. ..........................................73

SUB-FINDING #1.11: Payments were made to Baber’s purported step-daughter which


appear to be in contravention of the Council’s directive. ............................................76

SUB-FINDING #1.12: Prior to leaving employment, employee Abby McClung appears


to have paid herself for more vacation days than earned. ............................................78

B. MISMANAGEMENT AND POTENTIAL MISUSE OF FEMA MONIES ..........................82

FINDING #2: The City of Richwood failed to properly manage or maintain an accurate
accounting of monies received for flood recovery. .....................................................84

FINDING #3: The City of Richwood diverted project-specific funds from their intended
purpose. ........................................................................................................................87

FINDING #4: The ICS’s excessive payments to themselves inhibited the City of
Richwood’s recovery from the flood………………………………………………. ..90

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FINDING #5: The City of Richwood paid exorbitant amount of monies to outside
consultants with questionable return. ...........................................................................99

SUB-FINDING #5.1: Although fired by Mayor Baber for disagreeing with the Mayor’s
desired conduct and direction, Consultant Bill Hines was well-intentioned and provided
early guidance, but allowed the ICS to exceed all reasonableness ...........................101

SUB-FINDING #5.2: Simmons Recovery Consultants, LLC, was paid an excessive


amount of money with no clear return on the monies paid by the
City............................................................................................................................ .104

FINDING #6: Despite receiving money from FEMA for specific repairs, the City
appeared to rely upon other entities to do the projects for which they were paid. ....108

FINDING #7: Potential misconduct and questionable action with project worksheets
necessitates review by the FEMA Office of Inspector General and may result in the
City of Richwood having to pay back monies …………………………………….. 113

SUB-FINDING #7.1: The City of Richwood failed to submit performance reports for
Project Worksheets as required by the grant agreement ………………………….. .115

SUB-FINDING #7.2: FEMA money for PW 202 to repair the water intake was diverted
for other uses leaving the water intake still in need of repair ....................................116

SUB-FINDING #7.3: Stacy Raffo sought and obtained duplicative payment from a
private non-profit organization for items FEMA reimbursed in PW470/PW471......121

SUB-FINDING #7.4: Questionable Purchases of Turface in PW470/PW471……….. 126

SUB-FINDING #7.5: The City of Richwood was paid over $200,000 under PW 970
(Rails to Trails) for work that appears to have donated from another source............131

SUB-FINDING #7.6: The City of Richwood is seeking reimbursement for questionable


and unreasonable salaries paid to ICS team members under PW#TAMB001. .........132

SUB-FINDING #7.7: The ICS leadership hired classmates and business associates as
vendors under questionable emergency contracts and paid them in excess of
$500,000.....................................................................................................................137

SUB-FINDING #7.8: The City of Richwood failed to timely repay the City of Hurricane
with FEMA designated funds received as PW578 ....................................................142

FINDING #8: The State failed to properly or effectively oversee or administer the FEMA
Public Assistance Grant program...............................................................................142

C. MISUSE AND MALADMINISTRATION OF THE CITY’S PURCHASING CARDS .........145

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FINDING #9: The City of Richwood failed to adhere to any effective administration or
level of oversight of the City’s use of purchasing cards ............................................150

FINDING #10: Mayor Bob Henry Baber misused the purchasing card on multiple
occasions in contravention of state law and the purchasing card agreement .............155

SUB-FINDING #10.1: Mayor Baber repeatedly gave his card to unauthorized users ..156

SUB-FINDING #10.2: Mayor Baber made multiple questionable/improper purchases


with his purchasing card. ...........................................................................................157

FINDING #11: Police Chief Lloyd Cogar misused the purchasing card in contravention
of state law and the purchasing card agreement ........................................................166

FINDING #12: Employee Jack Massey misused the purchasing card in contravention
of state law and the purchasing card agreement ........................................................170

FINDING #13: Recorder Chris Drennen failed to maintain appropriate records for her p-
card purchases………………………………………………………………………171

FINDING #14: Employee Abby McClung failed to maintain appropriate records or


oversight of p-card purchases ....................................................................................173

V. CONCLUSIONS/RECOMMENDATIONS ...........................................................................174

VI. TABLE OF EXHIBITS ....................................................................................................176

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I.
INTRODUCTION

Located along the Cherry River at the base of the Monongahela National Forest in
Nicholas County, the City of Richwood is home to roughly 2,000 residents that enjoy and
cherish the long, proud history of the community. Originally founded as a timber mill at
the turn of the 20th century, Richwood has grown in size and importance over the past
100 years, and has been a stalwart municipality located in the heart of the state.

As with many of the smaller communities in the state, it too has had its share of
misfortunes and financial strains. While some have been self-inflicted by corrupt
practices and acts of politicians, the majority of the misfortune to have befallen this
community has been from floods and other weather-related events. Yet, despite all the
troubles and turmoil that have hit this City, the resiliency and spirit of this community
has allowed it to flourish after each event.

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The resiliency of this community was tested again in June 2016 when a massive
flash flood of the Cherry River nearly decimated the City. Numerous houses and
buildings were damaged in the high waters of the flood, including roads and city
infrastructure.
Unlike prior events, however, the recovery from this weather-driven tragedy
became inundated with numerous inept and greedy acts that have hindered recovery of
the City. While there is always hope that the resiliency of the City’s people will help to
turn the current circumstances around, the City and its residents must first have a full
understanding of the finances and how monies toward recovery have been spent.
This Report seeks to inform the residents of the City of the financial picture and
recovery without the filter of those who may have contributed to the recovery delay and
problems. As discussed and presented in the ensuing pages, there were numerous
individuals tasked with overseeing the recovery that failed to competently perform their
jobs. There were also others who appeared to have chosen their own financial well-being
over that of the City’s recovery.
In the end, over $3 million of federal monies have been provided to the City of
Richwood to aide in flood recovery. Yet, the City appears to be in more need of financial
recovery than before the flood of June 23, 2016. Even more problematic is that the dire
financial situation potentially could have been avoided, and “The City Merry on the Bank
of the Cherry” could have been well on its way today towards fiscal stability and recovery
from the flood.

II.
BACKGROUND

This Report details numerous actions and conduct by individuals associated with
the City of Richwood following the June 23, 2016 flood. In order to better understand the
findings and timeline of activity, some background information is warranted.

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A. City of Richwood Government

A Class III city of slightly more than 2,000 residents, the City of Richwood is
governed by an elected City Council comprised of 8 individuals representing 4
designated wards. The City additionally elects a Mayor, who oversees the day to day
operations of the City, and a Recorder, who oversees the finances and the records of the
city. The Council members, Mayor, and Recorder are elected to staggered four year terms
during the City’s municipal election in June, with officials officially taking office on July
1. While there remains some debate as to the formal government structure, it appears as
if the City of Richwood is a Strong Council/Weak Mayor form of government. 1 Under
this structure, the City Council has ultimate authority over the finances as well as hiring
and firing of City workers. The Mayor has only the authority granted him/her by the
Council.
Notwithstanding this formal structure, the City has not operated over the past
decade with this structure. Rather, the City has been dominated by Mayors that have
acted largely independent of the Council, and the respective city councils have been
largely deferential to the Mayor position similar to a Strong Mayor/Weak Council form
of government.
At the time of the flood, the City had recently undertaken a municipal election and
new elected officials were set to take office during the first week of July, 2016. The elected
officials as of July 2016 were as follows:
Mayor Bob Henry Baber
Recorder Chris Drennen
Council (Ward 1) Ann Spencer
Council (Ward 1) Jeremiah Novak
Council (Ward 2) Chris McKenzie
Council (Ward 2) Charles Taylor
Council (Ward 3) James Vannoy
Council (Ward 3) Terry Trivolette
Council (Ward 4) Sherry Chapman
Council (Ward 4) Robin Brown

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This annual publication of the Municipal League of West Virginia additionally classifies the City of Richwood as a
Strong Council/Weak Mayor form of government.

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In addition to these elected officials, the other primary employees and appointed officials
serving in administrative positions in Richwood as of July 2016 were as follows:

City Clerk Abby McClung


Water Clerk Misty Hall
Police Chief Lloyd Cogar
Dir. of City Operations Bob Dooley

Since the flood, and during the course of the Auditor’s examination into the City of
Richwood’s finances, the individuals holding these respective positions have changed.
For clarity sake, this Report references the individuals by their title as of July 2016, and
will note when a subsequent individual has assumed the position in lieu of an above
named individual.

B. Flood of June 23, 2016

A stalled weather front over West Virginia, coupled with multiple rounds of
thunderstorms in a very short time frame produced excessive rainfall in the
central/south-east parts of the
state. 2 Although a flash flood
watch had been issued the day
before, the amount of rain and
“the extreme degree of flooding
was not anticipated in
advance.” 3 Based upon various
reports, the rainfall in the
region was as much as 10 inches of rain in 12-24 hours, and reached historical
proportions.

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“The Historic and Devastating Floods of June 23rd, 2016” National Weather Service.
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Abstract of presentation given Jan. 24, 2017 titled “The West Virginia Historic and Devastating Floods of 23 June
2016: Summary of Impacts and National Weather Service Decision Support Services”; American Meteorological
Society.

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The rainfall in several WV counties on the western slopes of the Appalachians,
including Greenbrier, Fayette, and Nicholas, suggested as much as a 1-in-1000
year event according to annual exceedance probabilities (AEP), and as much as a
1-in-500 year event across several other counties including Alleghany County in
far western VA. 4

In fact, at least one news report stated that “West Virginia received one-quarter of its
annual rainfall in a single day and multiple rivers surged to dangerous levels, including
the Elk River, which broke a record at one stage that had stood since 1888.” 5
While numerous rivers and tributaries swelled above capacity as result of the
excessive rainfall, the flash flooding of several rivers left wide damage and deaths in their
wake. One such river was the Cherry River in Nicholas County. Stretching over three
counties and through Monongahela National Forest, the Cherry River is a tributary of the
Gauley River and receives drainage from Summit Lake. A significant portion of the
Cherry River runs alongside the City of Richwood, and on June 23, 2016, significantly
exceeded its bounds. According to an analysis issued by the United States Geological
Society, the flooding of the Cherry River was in excess of 5 feet near and in the City of
Richwood. 6
By the time the waters receded throughout West Virginia, at least 23 individuals
had lost their lives, and massive damage to infrastructure, homes, and property stretched
over 12 separate counties. While many of these counties are steadily on the road to
recovery, the City of Richwood still struggles more than two (2) years after the flood.

1. Damage and Impact of Flooding upon Richwood

With its close proximity to the Cherry River, the City of Richwood was
catastrophically impacted by the June 23, 2016 flooding. Over 200 homes were
significantly damaged or destroyed, the roads and infrastructure destroyed in various

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Id.
5
“The worst flooding in a century leaves 24 dead in West Virginia”, David Bailey (Reuters), June, 26, 2016.
6
USGS Open-File Report 2017-1140, “Characteristics of Peak Streamflows and Extent of Inundation in Areas of
West Virginia and Southwestern Virginia Affected by Flooding, June 2016” (Ver.1.1, Sept. 2018).

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places, city parks and ballfields washed away, and multiple feet of water covered the
City.

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In addition to businesses, restaurants, and a grocery store, the flooding impacted
the Nicholas County Nursing & Rehabilitation Center in the City of Richwood forcing
the emergency evacuation of nearly 95 residents. 7

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Photo credit: From the Appalachian Magazine article titled “City of Richwood, West Virginia Devastated by
Flooding” with link to social media post by Patty Bailes (dated June 23, 2016)

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Further, the Richwood High School which sat near the Cherry River was damaged
by flood water. While this damage ignited a legal battle that remains on-going, the flood
waters ultimately prompted the closure and demolition of the school, and relocation of
more than 500 students.

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While pictures and descriptions only barely explain the damage and devastation
from the flood, the memories and moments in the immediacy of the flood are lodged in
the minds and hearts of the residents of the City of Richwood. On numerous occasions,
residents and public officials would break down in tears during interviews when asked
to discuss the initial days and weeks after the flood. The emotions and memories very
clearly remain as reminders of a city still coming to grips with the aftermath of a 1,000-
year flood.

2. Recovery management in the initial weeks after the flood.

In the immediate days following the flood, the City of Richwood struggled with a
lack of leadership and emergency management. While understandable given the
complexity of the damage, the absence of a prepared emergency plan clearly added to
the confusion. Also adding to the confusion was the absence of leadership by public
officials within the City of Richwood as the City was in the middle of a City transition
when the flood hit. The incoming Mayor, Bob Henry Baber, was in Salt Lake City at the
time of the flood. The outgoing City leaders were either dealing with their own personal
damage from the flood, or largely following the direction of others that had stepped in to
fill the void.
Among the early individuals to step in and provide leadership was Jeromy Rose,
a former Mayor of the City of Richwood. Mr. Rose appears to have attempted to bring
some initial organization to the relief efforts. He was subsequently joined by a high
school classmate, Jon Cox, who traveled from Colorado to assist in the recovery. Together
Mr. Rose and Mr. Cox formed an initial leadership team. They also invited newly-elected
Recorder Chris Drennen to assist in the initial recovery management with them.
Within several days, Bob Henry Baber had arrived back in town and assumed the
formal title of Mayor of the City of Richwood. With the return of Mr. Baber, media
attention also became prominent, and scores of volunteers and truck load of donations
began arriving to the City of Richwood.

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In order to organize the donations and volunteers, two primary locations were set
up as headquarters. First, a distribution center was set up at a building known locally as
the Red Gym. This became a place where residents could come for food and supplies
that had been donated. The second location was at the armory. This became the
headquarters for the logistics side of the recovery.
The initial days and weeks also brought outside management assistance as well.
The first was Bob Fowler, the Brooke County Emergency Management (“EM”) Director.
He had been brought in to act as an interim-EM director for all of Nicholas County.8
While Mr. Fowler attempted to help the early leadership team of Baber, Rose, and Cox,
he ultimately was responsible for overseeing the recovery of the entire County, and thus
could not guide the City on a daily basis.
The professional void, however, was quickly filled with outside consultants who
contacted the City offering to assist the recovery and management of potential FEMA
public assistance monies. Based upon our investigation, Mayor Baber and other City
officials were approached by at least two consultants: (1) Simmons Recovery Consulting,
a national emergency management company out of New York; and (2) Applied
Emergency Management Services (AEMS), a newly-created emergency management
consulting firm operated by Bill Hines, a former FEMA employee in their Public
Assistance Program.
According to Mr. Hines, he dropped off a brochure at City Hall within a week of
the flood. He was ultimately contacted by Mayor Baber and invited to a meeting with the
initial leadership group on July 14, 2016 to discuss services he could offer. To Bill Hines
surprise, he was offered the position at the conclusion of his initial meeting. While he
desired the position, he nonetheless advised Baber and the rest of the initial leadership
team that the City needed to advertise or seek a request for proposal before selecting him.
Accordingly, the City purportedly advertised in the paper for consulting services.
Based upon our investigation, only Simmons and AEMS responded to the Request.

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Upon information and belief, the Nicholas County Emergency Director stepped down in the immediacy of the
flood.

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While the reason for his ultimate selection is not clear, Mayor Baber ultimately hired Bill
Hines as the consultant for the City. Based upon meeting minute records, it appears this
decision was ratified by motion of Council on July 18, 2016, and ultimately memorialized
into a written contract several weeks later.9

3. Establishment of the ICS team to oversee recovery

During the course of his retention as a consultant, Mr. Hines also recommended
the establishment of a more formal management structure to oversee the emergency
recovery situation in the City. The initial leadership team of Rose, Cox, Baber, and
Drennen generally had been directing the early emergency recovery. Mr. Hines
recommended that an emergency management team be formalized, and suggested that
the City may be able to recover monies from FEMA for operation of an emergency
management team. Hence, at the same July 18, 2016 Council meeting as Mr. Hines’
retention, the City Council also approved the establishment of an Incident Command
Structure to oversee the flood recovery.

MOTION by Robin Brown for the authorization of Incident Command


Structure to be the lead entity for flood relief
Jeromy Rose to act as incident commander, Jon Cox as Operations
chief
Motion carries

(Richwood Common Council July 18, 2016 meeting minutes).

While the scope and intent of this authorization is disputed by all parties, Jeromy
Rose and Jon Cox thereafter began operation of an Incident Command Structure (ICS)

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The Council meeting minutes for 7/18/16 state:

“MOTION by Jeremiah Novak to hire Bill Hines


Bill Hines, rates 100/hr for debris consult, 90/hr Public Assistance
Discussion of rates, and job duties
Motion carries” attached as EXHIBIT #12

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team. 10 The first step undertaken appears to have been the selection of other members of
the team. Based upon our investigation, it appears that Mr. Hines recommended that a
formal hiring process be adhered to, and suggested that formal titles and job descriptions
be given to those selected. Mr. Hines, however, stayed out of the process and selection
of team members. Rather, that task was undertaken by Jeromy Rose, Jon Cox and Chris
Drennen.
While our investigation was unable to ascertain how individuals were ultimately
selected to interview for one of these positions, it appears that some type of interview
occurred for prospective individuals before they were hired. The interview took place
with Rose, Cox and Drennen asking the questions and making the employment decisions.
Ultimately, a team of approximately twenty-nine (29) people were selected and organized
by Rose, Cox and Drennen. The three of them dictated the job duties, title and pay, and
facilitated their inclusion on the City payroll without any insight or formal approval by
the City Council.
During the course of our investigation, we discovered the following purported
organization structure and membership of the Incident Command Structure team
attached to a Report/Analysis conducted by consultant Simmons Recovery Consulting:

10
This ICS team is denoted in various places and documents as the “ICS” as well as the “Incident Command Team
(ICT)”. While this Report generally refers to the team as the ICS, reference to “ICT” or Incident Command Team do
occur at various parts of this Report and related documents, and should be treated as synonymous with the ICS.

12
13
While few individuals were able to verify the source of this document, the names and
position do correspond generally with records submitted to FEMA seeking
reimbursement for members of the ICS team
In particular, the following document was prepared as part of documentation to
support payment of salaries for the members of the ICS team and other volunteers.

14
15
While other records reflect payments for additional individuals and/or differing formal
titles, the core members of this ICS team remained in place until its formal dissolution
three (3) months later. As reflected in meeting minutes, the ICS team dissolved in
November 2016.

Jeromy Rose addresses council. We have dissolved the Incident


Command team. He thanks Council for empowering the team to do the
work that needed to be done. Bill Hines created this team, but Council
supported it and as a result millions of dollars of projects have been
identified and are being addressed, both in temporary repairs and long
term permanent repairs.

(Richwood Common Council minutes, Nov. 2, 2016) 11


However, while the ICS team was dissolved, the City (possibly without
knowledge of Council) continued to pay certain members of the ICS team for many
months after dissolution.
The dissolution of the ICS team was not the only management change in December
2016. Mayor Baber and Bill Hines had ongoing disagreements over the scope and status
of the flood recovery. Ultimately, the relationship was terminated and Mayor Baber
contracted with Simmons Consulting group to become the City’s new consultant.
Simmons appeared to have remained as a paid consultant up until the beginning of our
formal investigation in September 2017.

C. Removal of Bob Henry Baber as Mayor

Over the ensuing 12 months after the flood, the City continued to suffer significant
financial issues. While Mayor Baber routinely touted potential influx of federal monies
to aid the City, Mayor Baber’s claims and assertions never came to fruition. With the
finances of the City drawing concern, the Council also began noticing issues with the
Mayor’s expenditures, including his City-issued purchasing card. Despite requests for

11
Meeting Minutes attached as EXHIBIT #17

16
receipts for the expenditures over several meetings, the Mayor did not provide
supporting documentation to the Council as requested. Friction between the Mayor and
council grew and ultimately boiled over during the September 21, 2017 City Council
meeting.
During the meeting, members of the City Council went into an executive session
to discuss concerns over Mayor Baber’s spending and lack of documentation. When they
came out of executive session it was made known that Mayor Baber was being placed on
“administrative leave with pay.” City Recorder Chris Drennen was named the interim
Mayor.
Later that evening, Mayor Baber took to social media and posted a lengthy
statement in opposition to the action of the council. In the post, he disputed the absence
of the supporting documentation, and stated that he was going to meet with the State
Auditor’s office the following morning.

Bob Henry Baber


September 22 at 12:56am ·
The City Council asked for my resignation tonight,
but I respectfully declined. I, and the the City
Council, are highly concerned with the integrity of
the City's finances. But to say that it has been a
chaotic and hard year since the Thousand Year Flood
would be an incredible understatement. I too have
been damaged emotionally,spiritually and
financially. But not as badly as so many others for
whom I feel great empathy.
Anyway, I was issued a Purchase order card which
has been used for travel (which the City was aware
of) to Philadelphia to negotiate with FEMA and to
meet with the law firm fighting the 428 grant
program that has allowed the relocation of Long Beach hospital....just like our
schools.
Unfortunately the folder with receipts was misplaced. I have spent weeks
tracking them down, and now have 90 per cent of them in hand.
Also, I let trusted workers use the P card to make needed purchases for the City.
Many purchases were at Dollar General in Richwood, mostly in small amounts
for events for the people, supplies (paper plates, decorations for the dedicated
homes, and the like.) We've requested receipts from Dollar General but it's a time
17
consuming process to go to corporate. There are others I'm still trying to track
down.
So, I am going down to the State Auditors in Charleston tomorrow to finish
documenting expenses incurred.
For the past 15 months I have tried to clean up the town, secure new houses,
secure wastewater repairs, fix roads and the parks, recruit and thank volunteers,
put a new roof on City Hall, fight like a tiger for our schools and move the City
forward.
Anyway, for now I've been put on paid administrative leave. I believe it will all
turn out alright. Be and remain: Richwood Strong. I am....and always will be.
Please don't go negative on this post. Remember: A house divided cannot stand.
Share if you care to. 🍒🍒

(Facebook posting by Bob Henry Baber)

As referenced in the Facebook posting, Mayor Baber drove the next day to the
Auditor’s Office in Charleston. He also organized and held a press
conference outside the Auditor’s office where he reiterated the
statements from the prior evening’s Facebook post. He also made
comments admitting to potential violations of law. 12
Given the nature of the comments by Mayor Baber, the Auditor’s
office declined to formally meet or interview with him at that time.
Additionally, unknown to Mr. Baber at the time, the Auditor’s office
was in the process of initiating a formal examination of Mayor Baber’s
purchasing card expenditures. 13 However, the examination into
Mayor Baber’s purchases ultimately turned into a full examination

12
Comments made during his statements outside the Auditor’s Office were reflected in various news reports,
including an article by Brad McElhinny of WV MetroNews titled “Richwood Mayor Baber admits messing up with
state-issued card as well as an article by Ryan Quinn of the WV Gazette titled “Richwood mayor on leave amid
investigation of purchases” wherein Mayor Baber is quoted as saying:
“There are going to be some issues with the card where we got out of our lanes,” Baber said. “I did not
know you can’t allow other people to use your p-card, so, of course, ignorance of the law is no excuse. So
I probably am in some legal peril, and that’s quite worrisome to me, of course, and the last thing in the
world I would ever want to do, of course, is damage Richwood’s recovery efforts.”

13
Prior to Mayor Baber’s posting, the Auditor’s Office had already identified potential issues and was in the
process of initiating an investigation. The action of Council and Mayor Baber’s appearance at the Auditor office
accelerated the scope and pace of the examination into the potential issues.

18
and investigation of the entire City of Richwood finances as more and more information
was reviewed and discovered.
While the Auditor’s financial examination remained on-going, the battle between
the Mayor and the City Council continued to escalate. On October 23, 2017, Mayor Baber
challenged the purported removal, and filed a legal action in the Kanawha County Circuit
Court to stop his removal. Surprisingly, Mayor Baber also sued the Auditors’ office to,
among other things, stop the Auditor’s examination and investigation into the City’s
finances.
In particular, the Petition filed by Mayor Baber averred the following against
Auditor McCuskey: 14

51) Accordingly he asks this Honorable Court issue a writ of mandamus


compelling the respondent State Auditor to complete this investigation and
announce any finding regarding the same immediately.

55) Under the circumstances of what has already occurred here, the allegations set
forth in paragraphs 30 and 31 above referring to pending annual audits of the City
of Richwood by the respondent State Auditor for previous fiscal years bear
ominously for the petitioner.

57) Such deprivation causes him irreparable harm without an adequate remedy of
law, thus he asks this Honorable Court enjoin the Richwood respondents with the
respondent State Auditor from using the dubious grounds for any outcome of
these pending annual audits of past fiscal years to deny or continuing to deprive
the petitioner from carrying out the duties of his office.

Petition, filed Oct. 23, 2017


In short, the counts against Auditor McCuskey sought to stop the on-going investigation
and examination because the prior fiscal audits would “bear ominously” on Mayor Baber;
and would deprive Mayor Baber from the opportunity to carry out the duties of his office.
During the initial hearing on Mayor Baber’s legal action, the Circuit Court
promptly dismissed Mayor Baber’s claims against the Auditor’s office. The Court

14
Copy of the Petition is attached as EXHIBIT #47

19
additionally ruled that it did not have jurisdiction to hear the claims against the City
Council, and Mayor Baber’s claims against the Council were transferred to the Nicholas
County Circuit Court.
While the matter remained pending in Nicholas County, the City Council
attempted again to remove the Mayor from office to address potential procedural issues
with the first attempt. This time, a formal petition and public hearing was held by the
City Council. The Petition for Removal set forth numerous allegations against Mayor
Baber. Ultimately, the revised Petition and procedure to remove Mayor Baber from office
was deemed sufficient by the Court, and in May 2018, a three judge panel was appointed
by the West Virginia Supreme Court of Appeals to hear the Petition for Removal.
On June 15, 2018, an evidentiary hearing took place before the judicial panel. The
hearing stretched over two days, and included multiple witnesses, including Mayor
Baber. Following the evidentiary hearing, the judicial panel issued an Order on July 20,
2018, directing that Mayor Baber be removed from office. Among the findings and
conclusions were the following:
Accordingly, based upon the foregoing, this Panel finds and concludes that
the Petitioner has presented overall clear and convincing evidence to show that
the Respondent, being fully aware of the restrictions and responsibilities of P-Card
usage, and being fully aware of the ramifications of non-compliance, on multiple
occasions did blatantly, disregard the P-Card rules, policies and procedures and
willfully and unlawfully delegated his Local Government P-Card to unauthorized
persons to make purchases.
Even though the foregoing P-Card violations would alone be sufficient to
support the Respondent's removal from his elected position, the questionable
nature of many of the P-Card purchases in combination with the Respondent's
failure to obtain authorization and his failure to maintain and timely provide
receipts for those purchases, only lends additional support for the Mayor's
removal.

(Order Ruling Upon Resolution for the Removal of Bob Henry Baber as the Mayor of Richwood,
West Virginia, Pursuant to W.Va. Code §6-6-7, pg. 17) 15

15
Copy of the Order is attached as Exhibit #46

20
Following his removal, Recorder Chris Drennen was named as the new Mayor of
the City or Richwood, and remains in that capacity today.

D. Other Personnel Changes in City Government


In addition to the removal of Mayor, there have been other changes in City
government leadership during the months after the flood. The first major change was
the resignation of the City’s Director of Public Works Bob Dooley. Upon his resignation,
Mayor Baber appointed Jack Massey as the new Director of Public Works. Mr. Massey is
the uncle of Mayor Baber’s purported “step-daughter” Cara Perkins.
Mayor Baber also appointed two other individuals as City employees in the
aftermath of the flood. The first was his purported “step-daughter” Cara Perkins as his
assistant. The second was his former gubernatorial campaign spokeswoman Tiffany
Washington as Human Resources director. Both individuals subsequently left
employment, and are no longer City employees.
Other changes occurred in City Council following the flood. Council member
Terry Trivolette was replaced on Council by Britt Nicholas in the fall of 2016; and Council
members Charles Taylor and Jeremiah Novak were replaced on February 16, 2017 by
replacement Council members Chuck Toussieng and Glen Weiler.
Finally, city employees Abby McClung and Misty Hall both resigned during the
past 18 months. Ms. McClung resigned several months into our investigation, and was
replaced by Ms. Hall, who subsequently resigned on September 21, 2018.

21
III.
TIMELINE OF KEY EVENTS

Based upon documents, emails, minutes, memoranda and other written records,
as well as interviews with witnesses, the following is a chronology of key activities and
events relevant to this Report. Where a date has been approximated or estimated based
upon witness recollection or potentially conflicting evidence, “(est.)” has been placed
after the date.

2016
June 14, 2016 Richwood municipal election. Baber elected Mayor; Drennen
as Recorder; and 4 new Council members.

June 23, 2016 Flash Flooding decimates Richwood and communities in 12


counties of West Virginia leaving at least 23 dead.

June 24, 2016 Drennen leaves town for Snowshoe Motocross event

June 25, 2016 (est.) Jon Cox arrives in Richwood after driving from Colorado

June 26, 2016 (est.) Drennen arrives back in town. Asked to attend meeting to
organize recovery.

Baber arrives back in town from trip to Salt Lake City, Utah

June 27, 2016 (est.) Organizational meeting at Red Gym. Distribution Center set
up

July 7, 2016 First payroll run after flood. 36 new people added to
payroll.

July 8, 2016 2nd payroll payments after flood.

July 13, 2016 Initial meeting with Bill Hines about becoming consultant

22
July 18, 2016 Council Meeting to retain Bill Hines as Consultant

Council Meeting adding Jeromy Rose and Baber as head of


ICS team.

Aug. 1, 2016 FEMA Kickoff meeting

Oct. 2016 Richwood receives Community Disaster Loan for $512,000

Oct. 13, 2016 (est.) FEMA/DHSEM payment of $98,192 deposited by city


(presumably for PW 56 (Sewer Line))

Nov. 2, 2016 Council formally dissolved ICS

Nov. 30, 2016 Two FEMA/DHSEM payments totaling $496,735 deposited


by city (presumably for PW 202 (Main Water Intake))

Dec. 19, 2016 City payments to Cox, Rose, and Ritchey totaling $94,075
as “deferred payment” for ICS work

Dec. 20, 2016 Two FEMA/DHSEM payments totaling $95,785 deposited


by city (presumably for PW 223 (Food Distribution))

Two FEMA/DHSEM payments totaling $519,112 deposited


by city (presumably for PW 281 (Debris Removal))

Two FEMA/DHSEM payments totaling $6,345 deposited by


city (presumably for PW 335 (Park Pool))

Two FEMA/DHSEM payments totaling $10,519 deposited


by city (presumably for PW 202 (Main Water Intake))

2017

Sept. 21, 2017 Baber placed on “Administrative Leave” by City Council

23
Sept. 22, 2017 Baber posts social media post suggesting he gave his p-card
to others; Baber holds press conference outside of Auditor
Office in Charleston, WV

Oct. 23, 2017 Baber files Petition in Kanawha County Circuit Court
challenging his purported removal; includes State Auditor in
Petition

Nov. 2017 Hearing on Baber Petition; Kanawha County Circuit Court


dismisses State Auditor from Petition; transfers remaining
counts against Richwood City Council to Nicholas County
Circuit Court

2018

May 2018 Supreme Court appoints a 3-Judge panel for removal


proceeding

June 15, 2018 Evidentiary hearing held before 3-Judge Panel

July 20, 2018 3-Judge Panel issues Order directing Baber removal from
office; Recorder Drennen becomes Mayor

24
IV.
FINDINGS

Over the past year, the State Auditor’s Public Integrity and Fraud Unit has
conducted a multi-faceted investigation into the City of Richwood finances. This
investigation has been lengthy and difficult, and has involved extensive document
review and numerous witness interviews.
Based upon the investigation, we are able to make the following findings. In
rendering these findings, it is important to note the City did not maintain, possess or
make available all of the documents and information requested by our office. As reflected
throughout this Report, the City failed to maintain supporting documentation for
expenditures, or maintain an accurate accounting of its monies. Further, additional
information might exist that we were neither provided nor privy to, including
information from private individuals or entities outside of the City of Richwood
government. While we have attempted to obtain requested or necessary information
from other sources, the unavailability of certain documents and/or review of information
maintained by other entities may alter these findings.

A.
MISMANAGMENT OF CITY FINANCES AND
ABDICATION OF FISCAL RESPONSIBILITY BY CITY COUNCIL

FINDING #1: Systemic failures and individual misconduct over the last several
years have left the City of Richwood in such financial distress that the City may be
unable to financially recover.

While a host of negative colloquies could be stated for the absence of governance
by the elected officials in the City of Richwood, the most applicable may be that they put
their head in the sand and hoped that their self-induced money problems would

25
magically disappear. Indeed, the City continues to live under a misguided belief that a
financial bail-out is right around the corner, and that the large federal loan, misused
FEMA funds, and owed tax monies will simply be “forgiven”.
The reality of the financial situation is that the City government has enormous
liabilities in excess of their expected revenue. As of July 1, 2018, the City of Richwood
has the following known major liabilities outside of their known utilities and expenses: 16

Liabilities: Amount: Note:


Federal Taxes $ 452,720 (Not including civil penalties and interest; as of December 31, 2017)
State Taxes $ 56,957 (Including penalties and interest; as of March 6, 2017)
P-Card $ 19,893 (As of July 26, 2018)
Total $ 529,570

In addition to these known liabilities, the potential exists that FEMA may disqualify some
of the monies paid to the City of Richwood from the flood in June 2016 necessitating
repayment back to FEMA.
As of the end of April 2018, FEMA had paid approximately $3.1 million to the
City of Richwood for flood recovery.

Amounts received from FEMA:


Community Disaster Loans $ 512,544 (As of April 30, 2018)
Public Assistance Grants $ 2,574,657 (As of April 30, 2018)
Hazard Mitigation $ 36,500
$ 3,123,701

16
Based upon our examination and information provided to our office, the City of Richwood is also in significant
arrears to multiple vendors, state agencies, and utility providers, including at least $147,252 owed to Mon Power
for the city’s electricity.

26
Based upon our investigation, the potential exists that a significant portion of the
$3.1 million received by the City may have to be repaid back to FEMA. These concerns
are expressed in Sub-Findings #7.1 to #7.8 in this Report. While a detailed investigation
will have to be completed by FEMA and/or the FEMA Inspector General, our
investigation found the following:

• Of the $2,514,715 in total FEMA Public Assistance Grant expenditures, $518,925


were transferred to the General Fund Operating bank account, where the monies
subsequently lost identity due to commingling of funds. 17
• Of the $2,514,715 in total FEMA Public Assistance Grant expenditures, $562,742
could not be traced to an applicable or approved project worksheet. 18
• Of the $2,514,715 in total FEMA Public Assistance Grant expenditures, we found
questionable expenditures and documentation in PW’s 202, 470, 471 and 970.
Collectively, the City received approximately $909,923 from FEMA for these four
projects. 19

If FEMA deems all of the foregoing bullet points to be justification for the de-obligation
of these funds, then the City of Richwood may have to repay approximately $1,991,510
of the monies it received back to FEMA. Further, there is additional concerns that:
• The monies from the FEMA Community Disaster Loan (“CDL”) may not have
been expended in compliance with the terms of the loan agreement precluding
any potential for forgiveness.

When added to the known liabilities, the potential liabilities of the City of Richwood are
in excess of $3 million.

17
See WVSAO Summary of Transfers attached as EXHIBIT # 8.
18
See WVSAO Summary of Expenditures not applicable to PW attached as EXHIBIT # 9
19
Concerns about these four FEMA Project Worksheets (“PW”) are discussed in Finding #7, and related Sub-
Findings # 7.2. to #7.4

27
Liabilities: Amount: Note:
Community Disaster Loan $ 523,408 (Projected amount as of June 30, 2018)
Federal Taxes $ 452,720 (Not including civil penalties and interest; as of December 31, 2017)
State Taxes $ 56,957 (Including penalties and interest; as of March 6, 2017)
P-Card $ 19,893 (As of July 26, 2018)
Public Assistance Grants Spent on Non-applicable Project Worksheets $ 562,742 (As of June 30, 2018)
Public Assistance Grants Transferred to the General Operating Fund $ 518,925 (As of June 30, 2018)
Questionable Public Assistance Grants expenditures $ 909,923 (As of June 30, 2018)
Total $ 3,044,568

Assuming no magic bailout, the financial picture for repayment of these liabilities
is dire considering the annual declining budgeted revenue for the City of Richwood and
continued growing expenses.

RICHWOOD FILED BUDGETS

Revenue Expenses
FY 2017 $ 961,555 $ 965,687
FY 2018 $ 954,340 $ 1,023,554

While the City has reflected a slight carry over each year to balance their budget, there
does not appear to be a financial ability to repay either the potential liabilities ($3 million)
or even the known major liabilities.
While the financial picture looks difficult for the City, the dire financial situation
is one of the City’s own making. While
detailed throughout this Report, the
City engaged in conduct that was The result is a systemic failure by the entirety of
incompetent, inattentive, and fiscally
City government to appropriately and
competently handle public monies.
irresponsible. The result is a systemic
failure by the entirety of City
government to appropriately and competently handle public monies.
Some of the key findings underlying the City’s financial mismanagement, are
further detailed in the following sub-findings. These findings are categorized into the

28
following two general topics: City-wide financial management issues (Part I) and
potential improper payments involving specific individuals (Part II).

PART I
Financial Management Issues

SUB-FINDING #1.1: The City of Richwood failed to maintain an accurate


accounting of its finances resulting in complete financial disarray following the
flood.

While the scope of the investigation did not focus on the financial practices of the
council prior to the flood, it did reveal that any semblance of accuracy was abandoned
following the flood and remains questionable to this day. While there are a host of
reasons that have contributed to this situation, most of it is attributable to (1) an absence
of knowledge of the finances by the Recorder or the City’s finance committee, and (2) the
Mayor’s (and others) misstatements about the finances of the city that were blindly relied
upon by council, including specifically FEMA’s reimbursement of certain expenses.
While the former may be indicative of neglect or incompetence in office, the latter
misstatements to council may have been criminal in nature. 20

(1) Lack of financial knowledge or oversight


With respect to the neglect of the Recorder and Finance Committee, the City
Council generally deferred all financial actions to the Finance Committee. The Finance
Committee consisted of several council members and the Recorder. The Recorder, while
ex officio, served as the chair of the City’s Finance Committee. The intended function of
the committee was to review the city finances and accounts in a separate meeting, confirm
cash flow and accounts, and make recommendations to the full council for payment of

20
W.Va. Code §61-3-37 makes it a crime for any person “who, knowing that a statement in writing has been made,
respecting the financial condition or means or ability to pay, . . . represents on a later day, either orally or in
writing, that such statement theretofore made, if then again made on such day, would be then true, when in fact
such statement, if then made, would be false, and procures upon the faith thereof, for the benefit either of himself
or of such other person, firm or corporation, either or any of the things of benefit mentioned herein, shall be guilty
of a misdemeanor.”

29
bills and other expenses. While the full council had the ability to take action independent
of the finance committee, it was the longstanding practice of the council to defer to the
finance committee and Recorder for the handling and recommendations of the city
finances.
During the investigation, it became readily apparent that neither the Recorder nor
the finance committee ever scrutinized or took independent action to determine the true
nature of the city’s finances. Rather, all de facto financial responsibility was vested in, and
delegated to, a single employee (Abby McClung), sometimes with little to no oversight
by the Recorder or finance committee. Indeed, during her sworn interview, Recorder
Chris Drennen admitted that Abby only gave them partial information, and they never
independently verified what they were being presented.

(Page 73)
11 Q. [AUDITOR OFFICE] But would you-all, as part of your monthly
12 balance reconciliation everything, there would obviously
13 have to be a denote -· a line item that says this was
14 paid out.
15 A. [DRENNEN] No. We haven’t had reconciliations.
16 Q. Let me - - there’s some questions to ask then.
17 You said each month you would be given a statement of how
18 much was in there and how much was paid out?
19 A. Just account balances, yes.
20 Q. You-all wouldn’t require listing of what was
21 paid out?
22 A. I didn’t know to.
23 Q. How would you-all know what you’re being told
24 is correct then?
(Page 74)
1 A. We wouldn’t.
***

7 Q. Let's go back. When you're recorder, this is


8 pre-acting mayor. You're in charge of finance committee.
9 You-all are in charge of paying bills out. You-all would
10 only get a line that said this is how much is in XYZ
11 balance and from that, you-all would decide to make all
12 these payments?

30
13 A. (Deponent nods.)
14 Q. And you-all had no back-up material what was
15 paid during the ensuing month to compare paid out to
16 prior month, this is starting, this is paid out, this is
17 the balance?
18 A. No. And council had mentioned that a few
19 times, when we were trying to change the way that we did
20 that, because I could see from other committees that they
21 would actually have like a - it read like a bank
22 statement. Everything that came in and everything that
23 went out, but Abby indicated that it was just really
24 difficult to do all of that, because of everything else
(Page 75)
1 that she was burdened with keeping track of. I mean, it
2 was a lot.
***
14 Q. But Abby had the ability to run reports, didn’t
15 she?
16 A. Yes.
17 Q. So she could have been asked to run a report
18 that shows exactly that information, what was paid out
19 that month and what came in, a true balance sheet?
20 A. Yes, but she said that that would not be a
21 clear depiction of everything, because some stuff was
22 electronic, like, some stuff was paid electronically. I
23 guess, our -- we had a $5,000 a month -- we still have
24 $5,000 a month bond payment that had always been
(Page 76)
1 electronically drafted. And some stuff was automatically
2 went to her P-card account, like bulk fuel services.
3 That was, I think, about 500 a month.

***
16 Q. Abby told you it was too difficult for her to
17 go run a report?
18 A. That it was a lot of information to try to
19 track down, but she said she was working on it. She said
20 she was...

***

31
(Page 77)

5 Q. This is as you're recorder in charge of finance


6 committee. Did you personally require or request Abby to
7 give a more detailed balance sheet for each one of your
8 meetings?
9 A. Not for each one of the meetings, no.
10 Q. So she would present to you just a line item
11 balance upon which you-all would base your decisions to
12 pay or not pay?
13 A. Yes.
***
22 Q. You-all pretty much relied upon her to tell you
23 what the balance sheets were - - balances were?
24 A. Yes.
(Page 78)
1 Q. Did you take any independent verification or
2 seek a third party to verify that information?
3 A. No.

[Chris Drennen Examination Under Oath, Feb. 13, 2018, pages 73 -78]

With respect to the purchasing card expenditures, Ms. Drennen also indicated that
the finance committee did not review or inspect them.

13 Q. Right, but you still would have to pay someone


14 using a P-card. You would get a bill like a credit card
15 statement and then who would pay that bill?
16 A. Abby would pay the bill.
17 Q. Did that have to be brought before finance
18 committee?
19 A. It wasn't for a long lime.
20 Q. Okay. That was not the normal pattern and
21 practice then?
22 A. No.
23 Q . So that' s an invoice that did not have to come
24 before finance committee?
1 A. No. It should have, but it didn't.

[Chris Drennen Examination Under Oath, Feb. 13, 2018, pages 59-60]

32
4 Q. Okay. Okay. But as finance committee, you-all
5 did not personally review the P-card statements?
6 A. No.
7 Q. What else did Abby have control of to make
8 payments, that you in finance committee didn't see or
9 were aware of until you later understood?
10 A. She also had a P-card account. It was, like,
11 what they called a ghost account. She didn't have an
12 actual card. Just a number to pay city expenses off of.
13 Q. Again, you-all wouldn't review those then?
14 A. No.
15 Q. She made - - she made a lot of purchases with
16 that ghost account. Are you aware of that?
17 A. Yes, I am now.

[Chris Drennen Examination Under Oath, Feb. 13, 2018, page 62]

Ultimately, later in the interview, Ms. Drennen admitted she did not know that
finances were her responsibility as Recorder.

(Pg. 149)
17 Q. These were employees going through the finance
18 committee to be approved, were they not? Recorder Drennen:
19 A. Yes, there was - I'm just going to level with
20 you. My recorder duties got neglected for a long time, “A lot of the
21 while this was going on, the most of what I did -- and it financial stuff I
22 was difficult even then to make sure that the minutes didn't -- one, I
23 were taken and dictated and handed back to council. A didn't know
24 lot of the financial stuff I didn't -- one, I didn't know was my
(Pg. 150) responsibility, I
1 was my responsibility, I didn't know that I was supposed didn't know that I
2 to be looking over this stuff, that it was even expected was supposed to
3 that -- I didn't even know that the recorder was the
be looking over
4 treasurer. It's a lot of the stuff what was told to me
this stuff,…”
5 by other people. I wasn't even aware of it, so I didn't
6 know to look for it.

[Chris Drennen Examination Under Oath, Feb. 13, 2018, pages 149-150]

In addition to a lack of oversight, the Recorder, Mayor and Abby also executed
checks without Council review or approval. For example, Ms. Drennen admitted

33
executing a reimbursement check for Mayor Baber without bringing it before Council or
the finance committee. 21

10 Q. That was one. What are some other examples?


11 A. Oh, gosh. There was one for reimbursement on
12 his -- I think it was travel expenses and cell phone,
13 that he said that he had called council individually
14 about reimbursement for that. I did sign off on that
15 one. That was for, like, $2,400, I think.
16 Q. Why did you sign off on that?
17 A. Because I believed him.
18 Q. Okay. And he told you that he had gotten
19 approval by calling every individual member?
20 A. Yes.
21 Q. Was that ever brought forth between finance
22 committee?
23 A. No.
24 Q. Was it ever subsequently brought up at a city
1 council meeting?
2 A. Not at that time.
3 Q. Are you aware of the open meetings law
4 requirements about having things happen in actual meeting
5 versus calling individuals up?
6 A. I am.
7 Q. At the time, were you aware of that or not?
8 A. No.
9 Q. But because he said he had approved everyone,
10 you went ahead and signed off on a check to him?
11 A. I did.
12 Q. Who else was on that signature?
13 A. I think Abby. I'm not sure.

[Chris Drennen Examination Under Oath, Feb. 13, 2018, page 67-68]

While it may be common for smaller communities to centralize the finances upon
a single employee, it is still incumbent for segregation of duties to exist. At the very least,
it is incumbent upon the Recorder and/or the finance committee to look into the actual

21
The reimbursement check itself is the subject of later discussion in this Report (See Sub-Finding # 1.9), and was
also held to be an improper payment by the 3-Judge Panel that removed Mayor Baber from office.

34
payments and expenses to verify (and hold accountable) the employee they have vested
control of all monies.
The City failed to do this, and the result has been an ongoing reliance upon
assumed numbers and cash flow with little or no confidence in the actual finances at any
single time. Sadly, despite our office’s attempt to recreate the finances of the City, the
accuracy of the financial picture must still be qualified.

(2) Misstatements of City’s Finances


While the absence of definable numbers and cash flow should have been a glowing
red flag by the City, the Mayor and other elected officials instead painted inaccurate
pictures of future FEMA reimbursements and omitted the full scope of the ICS
expenditures from Council. Many of the examples can be gleaned from the Council
minutes (and recordings of the meetings) which contain statements (or the absence of
statements) by the Mayor and others that directly contrast with the reality of the situation.
For example,
 During the July 14, 2016 Council meeting, Mayor Baber states that the volunteers
paid by the Mayor would be reimbursed by FEMA. Specifically, the Mayor stated:

“So FEMA does allow us to hire folks and we have. Most of them; and I’ll have
to just tell you, and it’s been kind of interesting; every single person was doing
their job before they were quote, unquote, hired, if you will. The hiring came
later. It followed with us just going to them and saying, “Oh, we need to put
you on the payroll because you can be reimbursed for your work by FEMA.”
And every single person said, “I did not come down here to do this for money,
I’m down here to do this for Richwood and for my heart and the heart of the
people.”

[Auditor staff transcription of video-recorded July 14, 2016 Council meeting]


In reality, the Mayor had no basis for which to make this statement. Although he states
that he has spoken to FEMA, our review found that he states later in the meeting a more

35
qualified statement about talking to FEMA. To date, FEMA has not approved the
reimbursement of all the volunteers paid by Mayor Baber. 22

 During the September 15, 2016 Council Meeting, Mayor Baber responded to a
question from a Council member as to whether the $500,000 Community Disaster
Loan would be enough. 23 The minutes reflect that the Mayor stated:

Baber: This is just a pass though we will be fine the, guard will help
address these houses. We're going to keep throwing them numbers. We
haven't actually spent that much, I don't think we're amassing debt. The
CD Load is based on projected loss."
Mayor Baber’s statement that the City hasn’t actually spent much and that the
City was not amassing debt are definitely contradicted by the City’s dire financial state.
At the time of this statement, the City was already struggling to pay its tax liabilities
and had incurred significant increases in its payroll amounts. Further, the City was
struggling to pay vendors and in need of a loan.

 During the October 13, 2016 Council Meeting, Mayor Baber misstated the
timeframe in which the loan would have to be repaid. 24 Specifically, the minutes
state the following:

Baber: So the loan for the public, to refresh you memories, is a 512k dollar
loan at 1% interest repayable in 30 years if we should have to take it all. This
is for FEMA on projected loss of income. I have been thinking about this
today and we initially thought around January 1st was home, but probably
because of Serve Pro, Mendon piping, and all of these other things, that date
might get pushed back another six months or so. It's hard to say, but four to
six months in that neighborhood then is when things are going to get a little
bit tougher. We'll start seeing a little bit of a gap in terms of that immediate
flood repair and we may not yet be all that much in the new construction
although new construction will and could generate a lot.

22
Our investigation found that some of these paid volunteers were reimbursed by FEMA under the distribution
center project worksheet (PW# 223).
23
Sept. 15, 2016 Council meeting minutes attached as EXHIBIT #15.
24
Oct. 13, 2016 Council meeting minutes attached as EXHIBIT #16.

36
In reality, the actual terms of the loan necessitate a repayment within five (5) years,
not 30 years as stated by Baber. Further, on a more technical basis, the interest rate
was 1.25%. However, as to the 30 year repayment, Mayor Baber knew this was a
misstatement. In accepting the loan, he had to sign a loan document which expressly
stated that: 25

“I understand that if approved by FEMA the CDL is a loan for a period of


five years.”

Further, the Mayor’s statements that the City may need to utilize these funds 4 to
6 months down the road is equally false. Upon receipt of the monies nearly 6 days later,
the City drewdown all of the monies and spent them on items in possible contravention
of the loan terms.

While discussed later in Sub-finding #1.6 of this Report, the Community Disaster
Loan may not be used to pay vendors working on FEMA Public Assistance-related
expenses, nor should PW monies be used to repay the loan. Rather, it is intended to help
bridge lost revenue (B&O taxes, sales taxes, etc.) to the City during a natural disaster.
More importantly, in contrast to the Mayor’s statement, it is not waived nor is it simply
forgiven. Rather, this is a low-interest loan that is intended to be repaid within five (5)
years. Further, the loan was to be drawn-down on an “as needed” basis. The City instead
drew down the entirety of the money in one lump sum.

The Mayor executed the loan papers and was fully apprised that this was a loan
that could only be used to offset lost revenue or for other approved purposes. Yet, his
remarks (and failure to correct other council member misstatements) suggest that the loan
could be used to pay disaster relief vendors, and that the loan itself would not ultimately
have to be repaid.
Overall, the Recorder, Mayor, and members of the Finance Committee neglected
to perform their duties to ensure that accurate information was maintained and conveyed

25
See CDL loan application page signed by Baber attached as EXHIBIT #48

37
on the finances of the City. This led to uncertainty and financial disarray, which was
further exacerbated by the Mayor and other officials’ misstatements as to the finances.
While the investigation attempted to recreate the financial status of the City, there does
not appear to be a clear accounting of the finances to date that would allow the City to
state its financial condition without qualification.

SUB-FINDING #1.2: The Mayor unilaterally added employees to city payroll


without Council approval causing the payroll to more than double in the immediate
weeks after the flood.

Among the numerous actions of City officials/employees that contributed to the


financial distress of the City, Mayor Baber’s unilateral hiring and payment of individuals
after the flood led to the initial financial distress of the City following the flood.
During the course of our investigation, we were made aware that in the early days
after the flood Mayor Baber selected individuals and volunteers to go to City Hall and be
made a temporary employee of the City. During our various interviews with employees
and residents, we were made aware that these selected individuals would come to the
City Hall and tell the city employees (typically Abby McClung) that Mayor Baber sent
them in and to sign them up as an employee. These individuals then filled out the various
employee/tax forms and were placed on the City payroll. Then, during the first payroll
run following the flood (July 7 and July 8), and for several weeks thereafter, these
individuals were paid wages as City employees. All of these hires and payments were
done without City Council approval.
Based upon our review of payroll records, we identified the following:

# of employees paid on June 23, 2016: 27


# of employees paid on July 7, 2016 and July 8, 2016: 63

Our examination of the temporary employees paid did not reveal any specific need or
criteria utilized in the hiring and payment. Instead, the only common denominator was
that they were hand-selected by the Mayor. Further, there does not appear to have been
any unique work performed that distinguished them from other residents or individuals

38
that were volunteering in the flood recovery. Rather, it simply appears that the Mayor
personally picked individuals affected by the flood and paid them as “employees” with
the City’s money.
Interestingly, the Mayor boasted of his hirings and payments after the fact during
a July 14, 2016 meeting of the City Council. 26 According to the video recording of the
meeting, the Mayor stated the following:

“Miss Recorder has not had a chance to put our financial statements. I will tell
you that we are spending money like wildfire. We have had to hire about …
umm…thirty? Twenty-eight? I don’t know. We’ve hired a lot of people to keep
the city moving. You know we are a town without a drug store, without a food
store and without a Dollar General store. So we are a town that is pretty much
surviving on gifts and donations and volunteers to move this stuff out to the
people. So FEMA does allow us to hire folks and we have. Most of them; and
I’ll have to just tell you, and it’s been kind of interesting; every single person
was doing their job before they were quote, unquote, hired, if you will. The
hiring came later. It followed with us just going to them and saying, “Oh, we
need to put you on the payroll because you can be reimbursed for your work
by FEMA.” And every single person said, “I did not come down here to do this
for money, I’m down here to do this for Richwood and for my heart and the
heart of the people.”

[Transcribed from the video of the July 14, 2016 City Council meeting]
Putting aside the charitable nature and assumed altruistic intent of the Mayor, the
Mayor unilaterally chose to use the City’s money as his own. As was referred to during
the investigation, it was as if he was playing Santa Claus for certain families with the
public’s money.

26
During our review of the official minutes of the Richwood City Council maintained at City Hall, we were unable to
find or locate the minutes for this July 14, 2016 meeting. However, this City Council meeting (and others) was
video recorded by an outside entity known as SCTV and archived on their website.

39
SUB-FINDING #1.3: The ICS team had unfettered discretion to hire individuals
and to spend City monies without Council approval causing the payroll to nearly
triple in the six months after the flood.

The absence of meaningful oversight or administration by the Richwood City


Council was no more prevalent than in its interaction with an entity known as the
Incident Command Structure (“ICS”) team. Specifically, the ICS was allowed to pay
numerous individuals as employees without Council approval. 27 Indeed, our
investigation revealed that the ICS appeared to have intentionally structured itself with
individuals that had oversight and control of the City monies. This allowed ICS to
circumvent the Council in making hires and expenditures.
Central to allowing this to happen
was Mayor Baber and Recorder Drennen.
Indeed, our investigation revealed that the ICS
As elected public officials charged with
appeared to have intentionally structured itself
fiscal oversight, it should have been with individuals that had oversight and control
incumbent on them to bring this to the of the City monies.

attention of the City Council and/or limit


the unsustainable size of the ICS team. Both Baber and Drennen were given leadership
positions within ICS, and should have been good stewards of the City’s monies. They
also should have made Council aware of what was transpiring financially with the ICS.
Based upon our review of Council meeting minutes, it appears the council was
only made aware of the growing size and payment of the ICS during the August 18, 2016
meeting, more than a month after the hirings and payments. 28 During that meeting, the
City’s hired consultant (Bill Hines) explains the positives of the ICS. While some
questions are raised about the duration and cost of the ICS, the Council was generally left
to believe that these ICS salaries will be approved and reimbursed by FEMA.
Notwithstanding these false assurances, the Council does not appear to have been
made fully aware of the familial relationship of the ICS hires or the continuing excessive

27
Separate findings in this Report (Finding # 4 and Sub-Finding # 7.6) discuss how the leaders of the ICS primarily
hired friends and family members as City employees in the amount of approximately $468,455 in wages.
28
A copy of the August 18, 2016 minutes are attached as EXHIBIT #14

40
payments made after the August 2016 Council meeting. Instead, it appears that Drennen
and others kept the full extent of the hiring and payments of ICS members (including
themselves) from the City Council.
Additionally, in order to maintain control of the City’s finances, it appears the ICS
hired others related to those that may have been in a position to question the ICS payroll.
In particular, the ICS hired and paid H.C. Spencer nearly $34,248.75 in the six months
following the flood to handle various ICS functions. Mr. Spencer is the son of Ann
Spencer. Ms. Ann Spencer is a longstanding member of the Richwood City Council, and
the council member with signature authority in the City. The ICS also made City
employee Abby McClung an integral member of the ICS. Ms. McClung had signature
authority on the checks, and oversaw expenditures of the City finances.
In short, the leadership of the ICS was able to create a system wherein everyone
that had signatory authority over City funds or who was in a position to manage those
funds became part of the ICS. In doing so, the ICS was able to hire and expend monies
without first going through Council or otherwise obtaining Council oversight or
approval prior to being expended. Rather, the ICS had control of the City’s checkbooks
and funds, and proceeded to expend monies without restraint.
The outcome of this activity by the ICS caused the payroll of the City to nearly
triple. Based upon our review, we found that:

• Net payroll amount for the period of January 1, 2016 to June 30, 2016 (pre-flood):
$231,782

• Net payroll amount for the period of July 1, 2016 to December 31, 2016 (post-
flood): $696,688

• # of employees six months leading up to the flood: 43


# of employees six months following the flood: 103
Approximate total number of temporary workers added following the flood: 76

41
This unchecked, increased spending by the ICS created a domino effect that placed
the City substantially over their budget and perpetually behind.

SUB-FINDING #1.4: The City of Richwood failed to remit Federal and State taxes
on multiple occasions, despite recording garnishments on employee paystubs and W-
2s.

During the course of the investigation into the City’s finances, we discovered
certain financial liabilities indicative of the City’s financial distress. In particular, it was
determined that the City of Richwood failed to make required employee contributions
and employee tax withholding payments to the Internal Revenue Service as well as the
State Tax Department from July 2016 through October 2017.
The only payments occurring during this 15 month period appear to have been (1)
a random tax payment totaling $13,180.84 on January 23, 2017; and (2) another random
payment to the IRS that cleared on July 13, 2017. 29 Neither of these payments to the IRS

29
The January 23, 2017 payment actually was comprised of three payments of varying amounts totaling
$13,180.84.

42
appear to have been directly linked to an actual amount due. Further, no supporting
source documents were discovered during our examination of City records, nor correlate
these payments to a particular reporting period.
The examination did note that a series of payments made on November 14,
November 28, December 12, and December 27 of 2017 were applied to the fourth quarter
of calendar year 2017; correlating with the corresponding quarterly tax liability of
$46,896.84. It appears that following this date, the City of Richwood again began to timely
make the required remittances to the IRS. 30
While the absence of these payments was clear, the reason for the failure to pay
was not as certain. Based upon our investigation, it was determined that the
responsibility to remit the payment (via IRS form 941) was that of employee Abby
McClung.
During our interview, Ms. McClung agreed that it was her responsibility and that
she did not pay it.

(Pg. 33)
BLM [WVSP Lt. Brad Mankins]: Abby, I had some questions­
AM [Abby McClung]: Okay.
BLM: Uh, I think some of these may have even come up the other night at
your all's meeting about the taxes--
AM: MMMM. HMMM.
BLM: --that were or were not being paid by the town of Richwood at that
time. The 941 returns for the first quarter of 2016 through 20I7
indicated that the taxes were being deducted-
AM: Right.
BLM: --but Federal and State authorities have no record
AM: Right.
BLM: --of ever receiving that money.
AM: No, they were not paid. The City didn't have the funds to pay
them?
***

30
WVSAO Summary of Tax Payments attached as EXHIBIT # 3

43
BLM: Okay, unless I'm reading some of the sheets wrong for the quarters
of ' 16 and ' 17, it’s indicative that those payments were sent out
and were, were withheld.
AM: We sent in the, the filings, but no, they weren't paid.

(Pg. 34)
BLM: Okay who was responsible for completing those 941's?
AM: For the forms?
BLM: Yes, Ma' am.
AM: I mean, I suppose I was.

[Statement of Abigale McClung taken by Lt. B.L. Mankins on December 4th, 2017 at 1046
hours, excerpts from pages 33 -34]

When further inquiry was made as to whether other City officials were aware of
the owed taxes, Ms. McClung indicated they were. However, she repeatedly declined to
say that she was expressly directed by City officials not to pay the taxes to the IRS or State
Tax Department.

(Pg. 34)
BLM: Okay. Whose decision was it not to pay that money into the Federal
System or the State System?
AM: Well no one specifically said we're not paying this. Like I said, it
was just a general conversation that everybody knew that the City
didn't have the funds to pay them. That as soon as we got
reimbursed uhm, for all our labor, we'd be able to catch all that up.

(Pg. 35)

Jones [SAO John Jones]: Uh, who all was involved in this discussion that
would have been aware of the tax situation for the City of
Richwood?
AM: Uh, Mayor Recorder and we've even had it in Council meetings
and finance committee meetings. But as far as the forms reflecting
that they had been paid, it's because up to that point uhm, they
were being paid and that’s just the form we sent in and it said you
know uhm, zero liability for this quarter because that's how the
form's set up and I'm assuming the form just needed changed that

44
we print off from the system for that box to be unchecked that said
that you make bi-weekly contributions-so.
Jones: So from, from the time period of, of the flood, the quarter ended
September of ‘16 all the way up through the end of ‘17 fiscal year
June, the quarter ended June of ‘17 so you're saying that the Mayor
and that Council was aware of the fact that the City was not paying
their Federal and State payroll taxes.
AM: Yes I'd even told, we'd had a former consultant, Dave Branks
through Simmons-­
Jones: MMMM. HMMM.
AM: --and they were trying to get a line of credit through United Bank
for--and he'd even asked me, do you guys have any outstanding
debt and I told him, you know, gave him the numbers on all that
and he factored that into the City's outstanding debt when they
were applying for loans.

(Pg. 37)
Jones: Okay, okay. I guess from my perspective, I, I, I'm very curious and
interested as to how the Council, if in your statement you're saying
the Council, the Mayor, the Finance Committee, which we know
and understand is comprised of certain Council members, I believe-
AM: MMMM.HMMM.
Jones: If they were aware of this non-payment of taxes and how serious
that it was and how it was a growing number uhm, I'm interested
as to who made the decision to continue to not pay taxes. I don't-
AM: I don't think it was really a decision to not pay them. It was the City
did not have the funds in the account to pay them. I mean, if you
look back at the City's finances, there's periods of time where the
insurance was cancelled you know. There just was not funds in the
bank to pay them.

(Statement Continuation Pg. 4)


Hammons [SAO Carl Hammons]: Did anybody within the City
Administration of Richwood direct you not to pay the taxes?
AM: Uhm, they didn't say do not pay these but like I said it was a
general discussion; you know, we owe this debt uhm, hopefully we
will get reimbursed very soon and be able to pay these. Like we
knew that it was one of the things we had to pay as soon as we got
money reimbursed to us.

45
[Statement of Abigale McClung taken by Lt. B.L. Mankins on December 4th, 2017 at 1046
hours, excerpts from noted pages]

Relatedly, at least one other City official (Recorder Drennen) indicated that other
officials were at least aware of the financial strain of the City and delayed tax payments.
(Page 78)
4 Q. [Auditor] Who did the tax returns?
5 A. [Chris Drennen] Abby.
6 Q. And the W-2's?
7 A. Abby.
8 Q. Who's responsible to pay the taxes to the state
9 and federal?
10 A. Abby.
11 Q. Are you aware if those are paid?
12 A. I'm aware now that they weren't.
13 Q. Okay. Did Abby McClung ever state to you that
14 she was not going to pay them?
15 A. No.
16 Q. Was she ever directed by anybody to tell her
17 not to pay them?
18 A. Not that I know of. Not that I've heard
19 directly, no.
20 Q. What do you mean by that?
21 A. A few council people had said that she told
22 them that Bob Henry told her not to worry about it, but
23 to me, that feels like hearsay because I didn't hear it
24 myself.
(Page 79)
1 Q. She never told you that personally?
2 A. No.
3 Q . At any of your finance meetings, did she ever
4 make a statement or indicate that you-all didn't have the
5 money to pay the taxes?
6 A. No. The only thing that she did address
7 specifically, and it was at finance, was she said that we
8 were behind on two quarters' worth of ICS payroll.
9 That's the only thing that she specifically addressed.
10 She said she had been in contact with the IRS and was
11 waiting on them to get back to her, because they had a
12 personnel change and the guy that was working on it
13 before was no longer with them, but that they were going
14 to get back to her and work out a payment plan, but only
15 related to those two quarters and only to ICS payroll.

46
16 Q. What did she indicate was missing to ICS
17 payroll? That tax payments for that?
18 A. Yes.
19 Q. Okay. When did that - - when generally did she
20 tell you that?
21 A. I don't recall, specifically. I would have to
22 look back through my notes. I'm sure it's in there.
23 Q. What two quarters did she indicate that were
24 missing?
(Page 80)
1 A. I think the first and second quarter of fiscal
2 year for 2016.
3 Q. But-
4 A. June through December of 2016 .
5 Q. She indicated - -what did you-all say upon
6 learning that? What did you do upon learning that
7 information?
8 A. I just told her to stay in contact with IRS and
9 make sure that we did whatever we needed to do to get it
10 paid.
11 Q. Okay. And what was your understanding what was
12 supposed to happen?
13 A. She said she was waiting for them to contact
14 us.

[Chris Drennen Examination Under Oath, Feb. 13, 2018, page 78-80]
While Recorder Drennen stated on multiple occasions in her interview that she
was not fully aware of the tax liability, nor aware that the City was in arrears to the IRS
or State Tax Department until late 2017, as head of the finance committee she should have
been more diligent to confirm the payments were occurring, especially after being made
aware of the failure to pay by Abby in early 2017.
Notwithstanding the investigation’s inability to substantiate why the payments
were not made, the investigation did determine the scope of this potential financial
liability to the City. As of December 31, 2017, the Municipality of Richwood was in
arrears a total of $509,677, comprising of $452,720 (excluding penalties and interest) to
the IRS as well as $56,957 (including penalties, additions and interest as of March 6, 2017)
to the West Virginia State Tax Department.

47
While the State Tax Department declined to provide an updated statement, a
recent spreadsheet supplied by the City of Richwood indicates that as of January 14, 2019,
the City of Richwood owes $526,016 in Federal taxes and $71,594 State taxes. 31

SUB-FINDING #1.5: The City of Richwood failed on multiple occasions to remit


payments to the Consolidated Public Retirement Board (“CPRB”) on behalf of the
City employees, despite recording garnishments on employee paystubs.

In addition to the failure to remit tax payments, we discovered an additional


financial liability. Specifically, it was determined that the City failed to remit Public
Employee Retirement System (“PERS”) obligations to the Consolidated Public
Retirement Board (“CPRB”) on multiple occasions. The amounts were combinations of
the employee PERS deductions from gross wages and the employer contribution of the
City of Richwood.
As with the tax payments, it was the responsibility of employee Abby McClung to
remit the payments to the CPRB. However, based upon our investigation, it appears that
Mayor Baber also was aware of this financial liability. Indeed, upon information and
belief, Mayor Baber told a representative of the CPRB that he would make a payment on
the arrears following the receipt of a FEMA reimbursement of Public Assistance Grants.
While our investigation suggested that a payment was ultimately made, the City
has continued to fail to timely remit monies to the CPRB since the flood. Based upon our
review, on June 27, 2016, four ACH transactions occurred totaling $7,143. 32 These
amounts were verified as remittances for the May 2016 payroll. It was noted that the next
remittances were not made until October 17, 2016, at which time the City of Richwood
remitted June and July 2016 obligations in an untimely manner. This practice of untimely
remittances continued until March 9, 2017, when the City failed to remit any obligation
until August 24, 2017 (a span of nearly six months). The ACH payments made on August

31
Please note, the tax liabilities identified by the City are higher than those identified by our office as of March
2017.
32
ACH stands for Automated Clearing House. This is an electronic funds transfer system.

48
24, 2017 and August 30, 2017 totaled $20,366 and were applied to payrolls ranging from
February of 2017 to March of 2017.
More alarming is the fact that ACH payments amounting to $38,060 and $21,491
occurred on September 13, 2017 and February 7, 2018, respectively. Both series of
transactions presumed to have been reimbursed or financed wholly by the following
transfers from the FEMA bank account to the General Fund Operating bank account.
Our overall examination of the City’s payment history of CPRB reflects a pattern
or untimely, sporadic payments. When payments were made, there were typically
multiple payments within a month and covering various monthly obligations. For
example, a payment to CPRB on February 7, 2018, appeared to have remittances for the
following months:

Aug. 2017 $ 3,080

Sept. 2017 $ 6,298

Oct. 2017 $ 6,556.23

Nov. 2017 $ 5,557

The following graph details the historical payment history of the City of Richwood to
the CPRB. 33

33
WVSAO Summary of CPRB Supporting Data is attached as EXHIBIT # 4.

49
50
SUB-FINDING #1.6: The City obtained a Community Disaster Loan and
subsequently spent the funds on expenses in contravention of the loan agreement.

While the City’s financial mismanagement substantially contributed to the


difficult financial situation, the June 2016 flood also affected the City’s tax collections and
other revenue streams (e.g. water bill payments). To bridge the potential loss of revenue
to the City during the flood recovery, the City sought and was awarded a Community
Disaster Loan in the amount of $512,544 from FEMA. Although a CDL is intended to be
drew down on an “as needed” basis, the City drew down the entirety of the loan upon
the monies becoming available.
Per the loan terms, interest is accrued at $17.55 a day; consequently, as of June 30,
2018, the CDL loan amount outstanding is $523,408.
While this is a long-term liability of the City, the Mayor and other City officials
have publicly asserted that this loan is forgivable, and have failed to treat or account for
this loan as an outstanding liability of the City. Whether these statements and assertions
are intentional misrepresentations, or simply a lack of understanding, the City appears
to have disregarded the conditions and rules governing the loan. Specifically, the
following rules are relevant:

44 CFR § 206.375 Loan administration


(b) Financial management
(1) Each local government with an approved Community Disaster Loan shall
establish necessary accounting records, consistent with local government's
financial management system, to account for loan funds received and disbursed
and to provide an audit trail.

44 CFR § 206.371 Loan program.


(f)Use of loan funds. The local government shall use the loaned funds to assist in
providing essential services. The funds shall not be used to finance capital
improvements nor the repair or restoration of damaged public facilities. Neither
the loan nor any cancelled portion of the loans may be used as the non-Federal
share of any Federal program, including those under the Stafford Act.

51
Based upon our investigation, the City appears to have violated both of these
governing rules.
With respect to the first condition above, the City of Richwood failed to keep an
appropriate accounting of its monies. As discussed in Findings #1 and #2 of this Report,
the City failed to establish the necessary accounting records nor provide an accurate
accounting of funds being received and disbursed for their particular purposes. Further,
the lump-sum drawdown of CDL funds were deposited into the City’s general operating
fund creating an inability to provide a specific audit trail for the expenditure of the CDL
funds.
With respect to the second condition, it appears that City officials did not utilize
these CDL funds for their intended purpose of supplementing for lost revenues resulting
from the flood. Although the true identity of the actual funds utilized to pay these and
other invoices is undeterminable given the placement of the funds into the general
operating account, the City appeared to treat this as a general loan and spent the entire
value of CDL funds in 12 days. Among the numerous payments made subsequent to the
CDL draw-down are improvements and facility repairs in direct contravention of the
governing rules.
While the rules governing the CDL provide a mechanism for a cancellation or
reduction in the amount to be repaid back, any such reduction is precluded if the local
government breaches the other governing rules or uses the funds to underwrite pre-
disaster debts.
44 CFR § 206.376 Loan cancellation.
(c)Revenue Calculation procedures.
(5) It is not the purpose of this loan program to underwrite pre-disaster budget or
actual deficits of the local government. Consequently, such deficits carried
forward will reduce any amounts otherwise eligible for loan cancellation.

Accordingly, even if the loan could potentially be reduced or cancelled, the City has
expended the funds in a manner in contravention of the agreement and likely precluded
the loan’s cancellation. More succinctly, even if the City is correct that the loan could be

52
forgiven, the manner in which the City has utilized the monies may preclude it from
being forgiven.

SUB-FINDING #1.7: The City failed to properly utilize or acquaint itself with the
contracted accounting software system.

One of the overriding difficulties in assessing the City’s financial status was the
inability to acquire information from the accounting software system or from the
proprietor of the system. 34
During our investigation and interviews with employees, it became readily
apparent that at most one or two employees had any understanding of the City’s
accounting software. Even still, those employees had, at best, cursory understanding of
the system or ability to generate financial reports. Indeed, when we inquired into reasons
behind the poor utilization of the accounting system, staff and other city officials noted
issues such as the following:

• Inadequate training on the system


• High costs related to Maintenance and Support
• Difficulty in obtaining assistance from vendor
• Reliance on the company and independent contractor to provide constant
assistance with the software

Even more problematic to the under-utilization of the system was the failure of city
employees to compile all material financial transactions within the accounting system.
Specifically, it was noted during our examination that the City of Richwood failed to
input or maintain in the accounting software system all electronic fund transfers,
electronic debits and credits, bank account reconciliations and various other transactions
throughout the examination period.

34
Throughout the course of our investigation, inquiry was made to the proprietor of the City’s accounting system
for documentation and records. These inquiries often went unanswered or shifted back to the City. The difficulty
in obtaining information from the proprietor of the City’s accounting system significantly impacted the ability to
timely and reasonably conduct our examination of the City’s finances.

53
It is axiomatic that an accounting software is only as good as the information
inputted. Despite paying monies for an accounting software system, the City
underutilized the program, and
limited its accuracy by failing to
input transactions. Sadly, the Few people had an understanding of the City’s
finances, relied upon partial information, and
utilization of the accounting
continued to act as everything will simply
software is indicative of the entire correct itself in the end.
financial management of the
City’s finances. Few people had
an understanding of the City’s finances, relied upon partial information, and continued
to act as everything will simply correct itself in the end. The reality is that, to date, the
City is unable to provide a reliable statement reflecting its financial condition from its
accounting software system.

PART II
Potential Improper Payments to Individuals

SUB-FINDING #1.8: In addition to her Recorder salary, Chris Drennen was paid
as an employee of the city without apparent Council approval.

As the elected Recorder of the City of Richwood, Chris Drennen is entitled to be


paid a monthly salary of approximately $400. After deductions, this typically resulted in
a net take-home pay of $343.69 each month. Calculating this payment out for the six-
month period of year 2016, the expected income for Recorder Drennen from the City of
Richwood during year 2016 should have been about $2,401.86 ($2,062.14 (Net)). 35

However, our examination discovered that Ms. Drennen was paid $45,179.61
($31,810.38 (Net)) by the City of Richwood during the six-month period of 2016. Upon
investigation into this substantial payment of Ms. Drennen, it was discovered that Ms.

35
Ms. Drennen’s term as Recorder began on or about July 1, 2016.

54
Drennen made herself an employee of the City under the guise of the ICS team, and paid
herself an hourly salary of approximately $30/hour.
In addition, despite the termination of the ICS team in November 2016, Ms.
Drennen continued to pay herself into January 2017. 36 Specifically, it appears that Ms.
Drennen received $11,535 ($8,374.57 (Net)), from the November pay period ending
November 13, 2016 to January 8, 2017.
Ultimately, Ms. Drennen was paid a total (gross) pay of $45,357.75 for the time
period of June 2016 to the end of January 2017 as an ICS team employee. This amount is
in addition to her Recorder pay.

During our investigation, we specifically inquired of Ms. Drennen why she was
paid the monies. She stated that she was paid because she was a member of the ICS team.

(Pg. 204)
1 Q. So you would have been paid -- let me ask you
2 this. What was the 1437 payment for?

36
Ms. Drennen’s last employee payment as an ICS member appears to have been made on January 9, 2017 for the
pay period ending January 8, 2017.

55
3 A. I'm sorry.
4 Q. What would the --
5 A. That was for working for the city for ICS.

***

(Page 205)
23 Q. Okay. The next one, which is in the middle
24 number 3, you have an overtime payment which is the next
(Page 206)
1 day for 17.64 which nets out if you look out to the right
2 1342 which look on the next that's number 3.
3 A. Uh-huh.
4 Q. So you did charge for overtime?
5 A Yes.
6 Q. Get paid for overtime?
7 A Yes.
8 Q. That was time and a half?
9 A. Yes.
10 Q. Okay. Again, at this point in time you're
11 deeming yourself to be an employee of the city?
12 A. Yes.
13 Q. Okay. As we go through, we'll continue to see
14 these reflected. So if I look down the chart where there
15 are payments, other than the 343, all that money would be
16 for work you did for ICS; is that correct?
17 A. Yes.
18 Q. Okay. That ultimately stops, the last check
19 would be in 1/9/2017?
20 A. Yes.
21 Q. Okay. Why did you stop working on 1/92017/?
22 A. Tiffany Washington and Bob Henry Baber asked me
23 to stop working.

[Chris Drennen Examination Under Oath, Feb. 13, 2018, excerpts pages 204-206]

While the impropriety of the ICS team payments are discussed in greater detail in
other findings (See Sub-Findings #1.3 and #7.6), our investigation was unable to locate
or substantiate any discussion or approval by the City Council of Ms. Drennen’s
additional payment as an ICS employee. Indeed, few, if any, of those interviewed were
aware of Ms. Drennen’s additional payments.

56
However, Ms. Drennen’s assertion that she was getting paid as an ICS employee
is partially contradicted by the fact that she started being paid before the ICS team was
even formed.
(Page 204)
6 Q. Okay. So you would have worked 80 hours for
7 that first paycheck?
8 A. I'm sure it was more than 80 hours, but --
***
13 Q. Now, you would not have been approved at this
14 point in time by the city as an employee of the city,
15 correct?
16 A. On 7/6?
17 Q. Uh-huh.
18 A. I would have been approved? Oh, no, I don't
19 guess so.
[Chris Drennen Examination Under Oath, Feb. 13, 2018, pages 78-80]

As the chair of the Finance Committee, Ms. Drennen is responsible for overseeing
the City’s payroll payments, and ensuring an accurate report is made to City Council.
While her additional ICS employee payments do not appear to have been specifically
made known to Council, Mayor Baber and other officials were aware (or should have
been aware) of these additional payments. Based upon our review, Mayor Baber, Abby
McClung, Ann Spencer, and even Ms. Drennen herself signed these extra paychecks to
Ms. Drennen on various occasions.
Even more problematic, Ms. Drennen was aware that these payments to her may
not be proper or reimbursable under FEMA. Indeed, she had specific conversations with
the City’s disaster recovery consultant (Bill Hines) about the potential impropriety of
paying Mayor Baber and herself additional pay under FEMA because they were elected
officials.
(Pg.136)
1 Q. [AUDITOR] So again, I guess the same rules would apply for
2 Chris Drennen as with Abby that you would have to be able
3 to define separate work, correct?
4 A. [BILL HINES] That's correct.
5 Q. And she would be able to get paid for doing the

57
6 additional ICS work provided she can provide
7 justification for that additional work.
8 A. Not necessarily.
9 Q. Okay.
10 A. The distinction with Chris was she was an
11 elected entity.
12 Q. Okay. What does that mean? What's the
13 difference there?
14 A. Is that it was just like the mayor situation,
15 when I saw his name on a list in the early days. I
Consultant Bill Hines: 16 actually walked in to Chris and said, "I need to have a
17 Sasquatch conversation with you."
“I've been involved in 18 Q. What's "Sasquatch" mean?
thousands of FEMA 19 A. You ever seen one?
project worksheets, 20 Q. Okay.
hundreds of final 21 A. I've been involved in thousands of FEMA project
inspections, I've never 22 worksheets, hundreds of final inspections, I've never
paid for an elected 23 paid for an elected official in West Virginia in disaster
official in West Virginia 24 recovery and response. Never.
in disaster recovery and (Pg. 137)
response. Never.” 1 Q. So that would definitely be--
2 A. It was the first time I'd ever seen an elected
3 official paid for disaster-related work. So that then
4 transitioned over to her position? He says okay. If
5 these need to be paid positions or you feel you should
be
6 paid, let's get an ethics opinion, let's get something in
7 writing to cover you. I never received that product.
8 Q. Let me check: Are you talking about the mayor
9 here or are you talking about Chris Drennen?
10 A. Both.
11 Q. Okay. So you had to just -- you had this
12 conversation with Chris Drennen about needing to get an
13 ethics opinion about paying for her?
14 A. And the mayor.

[Bill Hines Examination Under Oath, April 9, 2018, pages 136-137]

58
Additionally, she was also aware that the City’s attorney (Harley Stollings) had
specifically advised the Mayor (as an elected official) against seeking additional pay for
work done as part of the flood recovery.37

(Page 222)
19 Q . Were you ever made aware of a former opinion request
20 of Harley by Mayor Baber as to the availability of him being
21 paid?
22 A. Yes.
23 Q. What was the response of that letter?
24 A. Bob Henry told us that there was no response and he
(Page 223)
1 told council that there was no response, but when I was
2 cleaning out his office, I found that there was a response.
3 Q. What did that response say best you remember?
4 A. Told him absolutely and unequivocably, no, you are
5 not allowed to be paid.

[Chris Drennen Examination Under Oath, Feb. 13, 2018, pages 222-223]
Yet, Ms. Drennen still maintains she is entitled to more than $45,000 of additional
pay as a self-designated City employee for work allegedly done as a volunteer (Pre-ICS)
and as a member of the ICS team.

SUB-FINDING #1.9: Mayor Baber received reimbursements for questionable


expenses, many times without knowledge of City Council.

During the course of our examination of the City’s finances, we discovered that
during Bob Henry Baber’s time as Mayor of the City of Richwood, he would often request
reimbursement for purchases made, travel expenses, attendance at various functions (i.e.
Chamber of Commerce), personal utilities billed to his properties, and personal cell
phone usage (including a bill for a period prior to his mayoral responsibility). While

37
A copy of the Stollings letter to Baber is attached as EXHIBIT # 38

59
some of these expenses were contemporaneously made known to the City Council, others
do not appear to have been made known to the Council.
Rather, the typical pattern was for the Mayor to direct City employee Abby
McClung and/or Recorder Chris Drennen to pay him a check for purported expenses or
items that he wanted to be reimbursed. Mayor Baber’s request, and subsequent payment,
typically occurred without Council knowledge or review.

(Continuation Pg. 9)
Jones: [SAO John Jones] Do you, Abby, remember specifically being asked to
authorize the check for payment by signing it when it conflicted with
Council, when it conflicted with Council's direction?
AM: [Abby McClung] Yes.
Jones: And you did in fact, sign those checks.
AM: I did and then uhm, I had spoke to I think it was Robin Brown about it,
you know, like hey, he had me go ahead and pay Tiffany Washington this,
you know, and then there's a couple times where he told me to uhm, pay
him and then I would call Robyn or Chris you know and tell them, like
hey, he wants me to pay Tiffany and I know you guys don't want me to
and he would be like go ahead and do it; I'm the Mayor, you know, so.
Jones: Abby, were there ever any other situations that you felt that, or
experienced that in your capacity as a signature of power for the Town of
Richwood accounts, as far as being asked or directed to sign checks
authorizing them for payment when in fact it either was not presented to
Council or it went against Council' s discretion?
AM: Yes, the instance with the apartment deposit for Paul Contene and then
also with those uhm, flyers for the Gazette or Register Herald, or where
ever. Yeah, but during that time uhm, honestly

(Continuation Pg. 10)

like I said, myself and Misty Hall were kind of like, we were kind of
shunned almost during that point and she had already been fired and
uhm, and if we didn't snap right to whatever Tiffany Washington wanted
then we were subject to disciplinary action and all that, so.

[Statement of Abigale McClung taken by Lt. B.L. Mankins on December 4th, 2017 at 1046
hours, excerpts from noted pages]; See also, transcript excerpt in Sub-Finding #1.1

60
wherein Recorder Drennen approved reimbursement check for Mayor Baber without
Council or Finance Committee approval.
During the scope of our examination, four reimbursements were made to Mayor

Bob Henry Baber that were found to be questionable. 38

(a) Cherry River Festival Fireworks


A check was found to have been written to the Mayor with the description of
“Fireworks for Cherry River Festival” for $800.00 on July 29, 2016.

38
During the course of our investigation, members of City Council petitioned to have Mayor Baber removed from
office. Among the issues asserted in the Petition for Removal was alleged improper reimbursement of personal
expenses. Following a hearing before a 3-Judge panel, on July 20, 2018 Mayor Baber was removed from office by
Court Order. The Court’s findings included some of the reimbursements discussed in this Sub-Finding.

61
While there was no documentation on the check itself, a review of the General Fund
Operating account check register indicated that the reimbursement was purportedly for
fireworks for the Cherry River Festival:

Disbursement Payment Or
Type: Activity Date: Type: Reference: Name: Description: Debit:
AP 7/29/2016 Check 123493 Baber, Robert Henry Fireworks for Cherry River Festival $ 800.00

AP - Accounts Payable
PR - Payroll
VC - Voided Check

While this might have been a legitimate purchase for the benefit of the City, we
were unable to locate or ascertain any source documents relating to this purchase. We
were also unable to locate the vendor from which this purchase was made. Rather, as we
later learned from Mayor Baber, he gave the money to someone who “walked in off the
street” to buy fireworks in Tennessee.
(Page 153)
1 Q. The first reimbursement appears to have been for
2 $800 in the August of 2016 for fireworks for a festival.
3 Our office can't seem to locate an invoice. So can you
4 just tell me a little bit about what this was for?
5 A. This was for the Cherry River Festival.
6 Q. Who actually purchased the fireworks?
7 A. I believe the gentleman's name was Chris Lodge.
8 Q. Is that who purchased them? Or was that the
9 company or the vendor?
10 A. I believe that is who purchased them.
11 Q. What company were they purchased from; do you
12 know?
13 A. I do not know. But I believe they were in
14 Tennessee.
15 Q. Do you know who selected this company?
16 A. He did.
17 Q. Who?
18 A. Chris Lodge.
19 Q. And who was he?

62
20 A. He was the man that just kind of walked in off
21 the street, and I knew he had a history of doing personal
22 fireworks show and could do a whole lot with very little.
23 And so --
24 Q. Is he a friend of yours?
(Page 154)
Rather, as explained by Mayor
1 A. No, I didn't - I don't - he's Baber, he gave the money to
not a friend, someone who “walked in off the
2 just -- just a person -- a -- a person I street” to buy fireworks in
know. Tennessee.
3 Q. Was there any type of a
receipt regarding that
4 purchase?
5 A. He submitted an invoice. I thought he submitted
6 an invoice. I don't remember.
7 Q. Were these fireworks approved by City Counsel?
8 A. I don't believe they were.

[Examination Under Oath Bob Baber, Dec. 14, 2017, pages 153-154]

(b) Personal Phone

As part of a total reimbursement payment in the amount of $1,855.97 on January


12, 2017, Mayor Baber sought and obtained reimbursement in the amount of $486.82 for
payment of his personal cell phone. Specifically, the mayor was paid reimbursement for
the following:

Cell Phone
Invoice Reimbursement
June 24 thru July 23 Invoice $ 113.51
May 24 thru June 23 Invoice $ 140.99
July 24 thru August 23 Invoice $ 113.51
August 24 thru September 23 Invoice $ 118.81
Total $ 486.82

The City of Richwood did not have a cell phone reimbursement policy. We also did not
identify any other full-time employee in which the City paid their personal cell phone

63
bill. Mayor Baber, however, believed he was entitled to it because of the flood recovery
efforts as Mayor. He maintained that Council approved the payment.

(Pg. 168)
10 Q. Okay. All right. Another expense appears to be
11 telephone bills. Can you tell me about these?
12 A. Well, yeah. The City has now stopped paying my
13 cell phone bill, but for months and months they did pay
14 it because of the flood when it happened.
15 Just - they were just paying my personal
16 portion of the cell phone bill, and I just used that --
17 there wasn't any time to get new phones. So we just –
18 and I had business cards made with my personal cell phone
19 on it, and it was very important that I do so.
(Pg. 169)
23 Q . Okay. And why did you seek reimbursement again
24 Why did you seek reimbursement?
(Pg. 170)
1 A. For my cell phone? Because I needed it to do
2 city business.
3 Q . And Council was also aware of that one, correct?
4 A. Oh, absolutely. They paid it for months and
5 months.
6 Q. Does the City of Richwood have a cell phone
7 policy?
8 A. Not to my knowledge.
9 Q. Do you know who actually approved that
10. expense - -
11 A. I -
12 Q. -- to be paid?
13 A. I believe City Council did.

Mayor Baber later clarified that:

(Pg. 170)
22 [BABER]: But as I've already told you, it looks like
23 there was some pretty big gaps in what payables were put
24 in front of them. So I -- I don't -- can't specifically
(Pg. 171)
1 say and don’t know whether my cell phone bill was ever
2 put in front of them

64
[Examination Under Oath Bob Baber, Dec. 14, 2017, excerpts from 168 -171]

During the course of our investigation, we were unable to locate any agreement or
express approval by Council for the reimbursement of Mayor Baber’s personal cell phone.
While Mayor Baber’s assertion that it was for flood recovery may be plausible, our review
of the reimbursed cell phone records discovered that at least one of the reimbursed
invoices were for a time period PRIOR to flood.
Specifically, one of the AT&T personal cell phone bills Mayor Baber was
reimbursed for reflected the following:

This same pre-flood cell phone reimbursement was also raised against Mayor Baber
during the course of his removal proceeding. Following a review of the evidence,
including Mayor Baber’s sworn interview with the Auditor’s office, the 3-Judge panel
concluded that it was a violation of law.

65
Much like the Respondent's receipt of reimbursement for the power bills,
the Respondent's receipt of reimbursement for his personal cell phone bill for
time when he was neither the Mayor, nor an ICS commander, would also
independently constitute official misconduct and/or incompetence as those
terms are defined under W,. Va. Code§ 6-6-1, and the same would warrant the
removal of Bob Henry Baber from his elected position as Mayor of Richwood,
West Virginia, pursuant to W. Va. Code§ 6-6-7.

[Order Pg. 25] 39

While the Mayor has already been removed from office as a result of this payment,
the remaining payments are also questionable as there does not appear to have been an
express approval by Council for this reimbursement.

(c) Personal Electricity Payment

Similar to the personal cell phone bill, Mayor Baber additionally obtained
reimbursement for electricity at a building that he and his purported step-daughter (Cara
Perkins) used following the flood. Specifically, Mayor Baber was reimbursed $931.82 for
personal electricity bills related to the Deitz-Spencer Building which he owns.

Mon Power
Invoice Reimbursement
Due July 05, 2016 $ 183.50
Due September 01, 2016 $ 383.30
Due October 05, 2016 $ 365.02
Total $ 931.82

When the Mayor was asked for reasoning behind the reimbursement of his
personal electric bills, he noted that he was entitled to the reimbursement for power
consumed during the voluntary use of his building for flood recovery activities.

(Pg. 166)
3. Q. All right. There also appears to be multiple

39
A copy of the 3-Judge panel Order is attached as EXHIBIT # 46

66
4 expenses regarding this check. On January 12th, 2017,
5 you were paid a total of $1,855.97.
6 A. Right.
7 Q. My first question is: Whose signature are these
8 on this check?
9 A. That's Chris Drennen and Abigail's. McClung,
10 Abby McClung's.
11 Q. Okay. One of the expenses you were reimbursed
12 for appears to be for a power bill at home. Can you tell
13 me about this?
14 A. No, it's not a power bill for home. It is a --
15 the bottom of the Deed Spencer store in Richwood,
16 West Virginia. The clothes distribution center got
17 pushed out of the armory. So I offered -- I offered that
18 space to the city to distribute clothes.
19 But it was a rather damp, moist space, and also
20 it had flood water in it, so while the bills seem
21 relatively high is they had to run a number of
22 humidifiers and -- so they were just paying -- I donated
23 the building.
24 No good deed, I guess, goes unpunished. But,
(Pg. 167)
1 yeah, so that is what this was for. It wasn't for my
2 home.

***
13 Q. Okay. And that, in fact, is your property?
14 A. Yes, sir.
15 Q. Okay.
16 A. And many other sting -- many other things were
17 stored in that building from the city too that were
18 formerly down at the armory. We had to clean the armory
19 out to make that the second city for Richwood.
20 So things from the Cherry River Navy and things
21 from Christmas ornaments, lots of different things ended
22 up in my building for which I charged the city no money.
23 Q. Okay. Regarding that expense on the power --
24 A. Yes.
(Pg. 168)
1 Q. - did you make Council aware of it?
2 A. I don't specifically remember making them aware
3 of that bill, no.

67
[Examination Under Oath Bob Baber, Dec. 14, 2017, excerpts from 166 -168]

However, during our review of the Mayor’s reimbursed invoices, we discovered


one bill in particular with a due date of July 5, 2016 for service PRIOR to the flood and
PRIOR to him becoming Mayor. We also noted that he indicated that the building itself
was also flooded, and he needed to run humidifiers.
Both of these observations by our office were also made by the 3-Judge panel
hearing the Mayor’s removal proceeding.

Based upon the foregoing, the Panel finds that the Petitioner has provided
sufficient evidence to clearly and convincingly show that the Respondent
improperly received from city funds, reimbursement and payment for power
bills incurred at a private business owned by the Respondent.
Accordingly, the Panel finds and concludes that the Respondent's
submission and receipt of payment as reimbursement for power usage at a
building belonging to the Respondent constitutes official misconduct and/or
incompetence as those terms are defined by W. Va. Code § 6-6-1, and,
accordingly, warrant the removal of Bob Henry Baber from his elected position
as Mayor of Richwood, West Virginia, pursuant to W. Va. Code§ 6-6-7.

(Order Pg, 25)

Further, the 3-Judge panel challenged Mayor Baber’s claim of altruism in seeking
the reimbursement.

Under the given circumstances presented herein, the Respondent's behavior is


the epitome of an improper abuse of one's political position to gain personal
favor, advantage, or gain. Moreover, Respondent's attempt at trivializing his gain
and exalting his selflessness, offers this Panel no solace from this type of
objectionable self-dealing conduct.

(Order Pg. 25.)

While the Mayor has already been removed from office as a result of this electricity
reimbursement payment, the remaining payments are also questionable as they appear
to be purely personal in nature, and there does not appear to have been an express
approval by council for this reimbursement.

68
(d) Mileage and other Purchases

Another area of questionable reimbursements to Mayor Baber relate to various


mileage and purchase reimbursements he was paid. Mayor Baber was issued
reimbursement checks on December 14, 2016, February 11, 2017, and May 28, 2017, for
various items, including specifically related to mileage expenses, dinner, and multiple
purchases. While some of these items are purported to have been for City-related
business, the absence of approval by Council, and the manner in which they were paid
(including signing a reimbursement check to himself) were found questionable during
our examination.
With respect to the procedures and documentation, Mayor Baber again had
minimal to no documentation or receipts supporting the reimbursements. Rather, based
upon our examination, it appeared that Mayor Baber merely submitted a form denoting
items in which he was claiming reimbursement. This was most notable with respect to
the mileage forms submitted for reimbursement.
The first form submitted sought mileage he has deemed reimbursable, without
any approval actions or review noted by any individual. The following is $1,011.96 in
mileage attributable to the reimbursement check number “0124095” for the amount of
$2,405.95. There is no attestation to the validity or accuracy of the reported amounts, nor
is there a signature from an “Authorized Approver”.

69
Based upon our review of the issued reimbursement check, Abby McClung and Chris
Drennen’s signed and issued the check to Mayor Baber.
The second form submitted also delineated mileage he had deemed reimbursable,
without any approval actions noted. The following totals $1,057.32 in mileage attributable
to the reimbursement check number “0124784”. This mileage reimbursement was
included with other items in which he sought reimbursement. The total amount paid in
check number “0124784” was $1,446.05
As with the other form, there is no attestation to the validity or accuracy of the
reported amounts, nor is there a signature from an “Authorized Approver”.

70
West Virginia Code §12-3-18, states in pertinent part that:

It shall be unlawful for any county court, board of education or the council of the
municipal corporation, or any other body charged with the administration of the
fiscal affairs of any county, school district, independent school district or
municipality, to pay claims for services rendered or materials furnished unless
an itemized account therefore is filed by the claimant covering the claim....The
president or presiding officer of the fiscal body allowing claims shall indorse on
all accounts allowed the words "allowed and payment authorized," together with
the date of allowance and signature of the president or other presiding officer.

This did not appear to occur with respect to Mayor Baber’s reimbursements. There was
no signature attesting to the accuracy and legitimacy of his claims, nor were there any
signatures denoting Council review and subsequent approval of the expenses found
during the course of our examination.
While this alone raises concerns about the propriety of such payments, a larger
concern related to the fact that Mayor Baber signed his own reimbursement check to
himself. Specifically, check number “0124784” for $1,446.05 was signed by Abby
McClung and Mayor Baber.

71
The absence of appropriate documentation or approval by any individual other than
Mayor Baber is alone questionable. However, couple these absences with discovery that
Mayor Baber signed the reimbursement check to himself raises significant issues and
concerns over both the validity of the purchases and the oversight that exists in City
government.

72
SUB-FINDING #1.10: Payments were made to Baber’s former gubernatorial
spokesperson in contravention of the Council’s directive.

During our review of contractual payments by the City, we discovered


approximately $13,600 was paid to an outside Human Resources consultant named
Tiffany Washington. At first blush, nothing seemed out of the ordinary or inappropriate.
However, when the City was unable to produce a signed copy of a contract between the
City and Ms. Washington, we further inquired as to the scope of the services and work
provided by Ms. Washington. We also sought supporting documentation for the
payments, including justification for the rate of pay.
Our inquiry revealed that the City Council approved the hiring of Ms. Washington
at the request of Mayor Baber on or about November 2, 2016. There was no signed
contract with Ms. Washington. 40 Instead, the Council minutes reflect that Ms.
Washington was to be paid $1,000 a month for her services. The minutes do not reference
this as a baseline pay or qualify that this was for the first 25 hours of work. Rather, the
minutes imply a flat fee of $1,000 a month for services.

40
While there does not appear to have been a contract, our investigation did uncover an email dated May 20,
2017, that purported to memorialize a separate pay arrangement AFTER council began inquiring about the
excessive payments. Specifically, the email was in the form of a forwarded email by Caroline “Cara” Perkins to
Councilman Chuck Toussieng, containing the following email from Ms. Washington:
“Below are the terms of my contract with the City of Richwood. I have worked and been paid under these
terms since November 2, 2016.
This contract is for the period of 18 months.
Salary/Rate
For $1000 per month baseline salary, 35 hours per month of service are included. After that, the hourly
rate of $35-60 per hour (range based on level of complexity) kicks in.
Fee
For special projects (e.g. Employee Handbook) that are likely to take up a considerable number of hours
(against the included hours), a flat-fee will be charged based on complexity level and time estimated to
complete the project.
Incentives
For tasks that result in the garnering of items with an assessed value, a percentage of, at least, 20% is to
be paid to me; for items/actions, taken by me, that result in a savings to the city, at least, 15% is to be
paid to me.
[Copy of Washington Email attached as EXHIBIT # 40]

73
According to the payroll records, Ms. Washington was retained by the city from
November 2016 to June 2017. She received a total of $13,579.00 from the city for her 8-
month work as a consultant, well in excess of the salary approved by City Council.

Type: Activity Date: Distribution: Reference: Name (Vendor): Description: Payment Or Debit:
AP 11/18/2016 Check 124114 Tiffany Washington HR Services $ 750.00
AP 12/12/2016 Check 124210 Tiffany Washington HR Services $ 1,250.00
AP 1/06/2017 Check 124342 Tiffany Washington General HR Consulting Services $ 1,000.00
AP 1/17/2017 Check 124366 Tiffany Washington Human Resource Consulting $ 719.75
AP 2/02/2017 Check 124462 Tiffany Washington HR Services $ 596.25
AP 2/10/2017 Check 124482 Tiffany Washington HR Services for January 2016 $ 2,413.00
AP 3/07/2017 Check 124589 Tiffany Washington partial payment on invoice 0000008 $ 1,000.00
AP 3/28/2017 Check 124642 Tiffany Washington HR Contractual Services $ 1,925.00
AP 4/17/2017 Check 124737 Tiffany Washington HR Contract Services $ 925.00
AP 4/28/2017 Check 124783 Tiffany Washington Contractual HR Services $ 1,000.00
AP 5/23/2017 Check 124854 Tiffany Washington Contract HR Services $ 1,000.00
AP 6/12/2017 Check 124944 Tiffany Washington Contractual HR Services $ 1,000.00
Total $ 13,579.00
AP - Accounts payable
PR - Payroll
VC - Voided Check

As reflected above, on multiple occasions, Ms. Washington billed, and was paid, in
excess of the monthly amount approved by Council. Many of the checks to Ms.
Washington were signed by Mayor Baber and co-signed by City employee Abby
McClung. While Ms. Drennen signed some of these payments as well, we were unable
to ascertain if the City Council was made aware of these payments in contravention of its
directive.
Additionally, our inquiry also revealed other notable facts. First, Ms. Washington
did not reside in the State of West Virginia at any time during her contracted work.
Instead, she resided in the State of Florida. Further, our investigation could not
substantiate any time or date in which Ms. Washington physically performed work in the
City of Richwood during her term of consultation. Rather, upon information and belief,
it appears that Ms. Washington conducted all activity via phone from Florida.
Second, our inquiry revealed a prior professional relationship between Mayor
Baber and Ms. Washington. According to comments made to the press at the time, Ms.
Washington served as Mayor Baber’s campaign spokesperson during his run for

74
Governor in 2014. Other articles were discovered mentioning Tiffany Washington in
relation to Mayor Baber and his gubernatorial involvements dating back to the year 2011.
According to web searches, it appears Bob Henry Baber was a candidate for office with
the Mountain Party in the years 2011, 2012, and 2014.
Finally, our inquiry revealed that Ms. Washington has a threatened
lawsuit/pending claim against the City arising out of the consulting relationship with
the City. While we have not been privy to the nature of the matter, various city officials
have indicated that it is a breach of contract matter.
Given the absence of a written contract, such claims warrant further review by the
City and consideration by the City’s counsel. Further, we have been made aware that
Mayor Baber has been very active in the dispute and its potential resolution. If true, the
City needs to examine the existence of a conflict, especially in light of: (1) the Mayor
having a longstanding professional relationship with Ms. Washington; (2) the Mayor
personally selecting and recommending her hire; (3) paying her in excess of what was
authorized by Council; and, more importantly, (4) allegedly seeking further payments to
Ms. Washington after the City Council became aware of the payments and terminated
the relationship.
With respect to this latter point, Abby McClung testified that Mayor Baber asked
her to cut checks to Ms. Washington after City Council said they didn’t want to pay her
anymore.
Jones: [SAO John Jones] Do you, Abby, remember specifically being asked to
authorize the check for payment by signing it when it conflicted with
Council, when it conflicted with Council's direction?
AM: [Abby McClung] Yes.
Jones: And you did in fact, sign those checks.
AM: I did and then uhm, I had spoke to I think it was Robin Brown about it,
you know, like hey, he had me go ahead and pay Tiffany Washington this,
you know, and then there's a couple times where he told me to uhm, pay
him and then I would call Robyn or Chris you know and tell them, like
hey, he wants me to pay Tiffany and I know you guys don't want me to
and he would be like go ahead and do it; I'm the Mayor, you know, so.

75
[Statement of Abigale McClung taken by Lt. B.L. Mankins on December 4th, 2017 at 1046
hours, Continuation Page 9]

While the hiring of Ms. Washington appears to have been a reaction to the absence
of any substantive employee or Human Resource policies in place at the City of
Richwood, the manner and amount of payment were noteworthy. Notwithstanding, the
payment history clearly reflect payments to Ms. Washington in excess of what Council
authorized.

SUB-FINDING #1.11: Payments were made to Baber’s purported step-daughter


which appear to be in contravention of the Council’s directive

On or about November 2, 2016, the City Council approved the hiring of Cara
Perkins as an Assistant to the Recorder. Ms. Perkins is the purported “step-daughter” of
Mayor Baber. 41 Her salary was set at $14.00 an hour for 40 hours per week. Her tenure
as an employee of the city was set at 75 days.
At the time of her hiring, Perkins had already been working as a paid City
employee under the guise of the ICS team. Her title was “Assistant to the Mayor”. As an
ICS member, she was paid $19.00/hour and $28.50/hour overtime pay for this job. The
ICS team was formally disbanded in the November 2, 2016 City Council meeting; thus,
Perkins’ employment as assistant to the Recorder began the same day her job as Assistant
to the Mayor was terminated.
As stated, the length of employment as “Assistant to the Recorder” was set by City
Council at 75 days. On January 5, 2017, the City Council meeting minutes reflect
discussion about Ms. Perkins continued employment.

Councilwoman McKenzie states that we have offered Caroline Perkins 3 options


regarding her continued employment with the city. She will get back to us by the
13th with her choice of available options.

41
The actual familial relationship between Mayor Baber and Ms. Perkins is unknown. Although Mayor Baber often
refers to Ms. Perkins as his “step-daughter” we were unable to determine any legal or familial relationship to
support this claimed familial title.

76
Ms. Perkins’ status of employment is not mentioned expressly in the Council minutes
again. However, Ms. Perkins is noted in the February 2, 2017 Council meeting minutes
regarding getting people to sign up for mitigation.

On August 10, Mayor Baber states in a Finance Committee meeting that Perkins
and another employee were going to be laid off. Ms. Perkins does not appear to have
received pay after August 2017. Hence, despite the approval of only 75 days employment,
it appears that Ms. Perkins was paid for approximately 210 days of employment in
contravention of the original Council directive.

While this is noteworthy, it should be noted that Ms. Perkins had a continued
presence in City Hall well after her 75 days. It is possible that a separate employment
agreement was reached that was never expressly approved by Council.

However, the manner in which Ms. Perkins left is also noteworthy. During the
August 10, 2017, Finance Committee meeting, Mayor Baber announced he was going to
lay Ms. Perkins and another employee off, instead of voluntary resignation. The propriety
of such action was immediately questioned.

Mayor Baber we're gonna lay off Hannah and Cara.

Councilwoman Brown why would we lay them off though? They're they're both
going back to school, it's their choice to leave, why would we pay them
unemployment?

Councilwoman Spencer we're not laying them off, we don't need to pay
unemployment for either.

Mayor Baber I think you should for Cara. She has worked hard for us and this is
a slap in the face.

Councilwoman Brown it’s not about someone’s worth. She's leaving. What we
do in the future about that position doesn't have anything to do with
unemployment. She is choosing to leave. We are drowning in bills that we can't
pay and we can’t continue at this rate

77
Richwood Finance Committee, meeting minutes (Aug. 10, 2017), page 2 42

This decision to lay-off Ms. Perkins was part of the City Council’s Petition for
Removal against Mayor Baber. During the February 15, 2018 City Council meeting in
which Mayor Baber responded to the allegations against him, he specifically addressed
this issue. According to the video recording of the meeting, Mayor stated: 43

“It was open for the board that I asked that Cara be laid off, I brought that before
the Council. The Council said ‘No’, I walked away from it. It turned out, Jack
Massey was her supervisor, anyway. He did lay her off – end of story.”

[Transcribed from the video of the February 15, 2018 City Council meeting]

Hence, according to Mayor Baber, Ms. Perkins was terminated by Jack Massey in
contravention of the Council’s directive. It is uncertain whether Perkins actually ever
received any unemployment from the West Virginia Workforce.
She was, however, paid a net payroll total of $30,183.27 during her employment
for Richwood from June 23, 2016, to August 16, 2017.

SUB-FINDING #1.12: Prior to leaving employment, employee Abby


McClung appears to have paid herself for more vacation days than earned.

Upon examination into the personal time and vacation time hours of employee
Abigail McClung, it appears that Ms. McClung paid herself for unused vacation time in
violation of the City’s policies and procedures. Specifically, we found that Ms.
McClung issued herself a check for 208 hours of vacation hours prior to her voluntary
resignation of employment. Additionally, it appears that Ms. McClung manipulated
her allotted vacation totals to derive the 208 hours for which she was paid. In total, Ms.
McClung was paid $3,120 for this improper vacation payout.

42
A copy of the Aug. 10, 2017 minutes is attached as EXHIBIT # 19
43
This City Council meeting was video recorded by an outside entity known as SCTV and archived on their website.

78
During the course of our examination, we were provided a folder from the City
containing the personnel policies and procedures manual. Upon review of the contents
of the folder, we discovered a signed manual with an effective date of March 16, 2005. 44
In addition to this signed manual, we discovered three additional documents which
appear to be attempted manual revisions in subsequent years. 45 None of these
purported revised manuals contain signatures nor references to approval by Council.
Further, during our review of Council minutes, we were unable to identify where
Council approved any of the three purported policy revisions that were in the folder. In
fact, we identified several references to the revisions being rejected and/or tabled.
As such, the 2005 version appears to be the operative policy and procedures
manual guiding the City of Richwood employees. Notwithstanding, for purposes of this
finding, all four versions contain the same prohibition that employees may not be paid
out for unused vacation leave. Specifically, the 2005 Personnel Policies and Procedures
Manual, policy states:
“Employees must use their vacation time before the end of the fiscal year, which
is June 30. Vacation credit cannot be carried over to the next year and will not be
paid out without taking the time off.”

[City of Richwood Personnel Policies and Procedures Manual, effective date March 16,
2005, page 24] 46

The subsequent attempted manual revision outlines similar, if not the exact, policy.

• “Employees must use their vacation time before the end of the fiscal year,
which is June 30. Vacation credit cannot be carried over to the next year
and will not be paid out without taking the time off.” (2015 Draft
Revision; pg. 8)

• “Vacation days must be used as vacation days in order for the employee
to be compensated. Vacation days shall have no value until taken by the
employee. Upon termination, the employee shall not be entitled to pay for

44
The manual includes a statement that the manual was adopted at a regular meeting of the Richwood City
Council held on December 2, 2004.
45
The three proposed revisions are respectively dated 2015, 2016, and an undated version that we believe was
being worked on by Tiffany Washington (the City’s paid Human Resources consultant)
46
A copy of the 2005 manual is attached as EXHIBIT #20

79
vacation days not used during employment. Upon termination no
employee shall be paid for unused vacation days. Vacation days may not
accumulate year to year and must be used on an annual basis.” (2016
Draft Revision, page 11)

• “Terminated employees are not paid for any unused vacation days/time.”
(Tiffany Washington draft revision; §6-Leave Policies)

During our analysis of Abigail McClung’s payroll register, we discovered that she paid
herself leave PRIOR to resigning her position as an employee, and continued to work
after being paid out her leave.
A review of Ms. McClung’s paycheck details below showcase her alleged
manipulation of payroll functions to pay out vacation time:

As seen above, earned vacation time as of pay period ending October 11, 2017 is
80 hours with a balance of 82.25 hours.

On pay period ending October 25, 2017, the balance of vacation time decreased
from 82.25 hours to -125.75 hours (as noted above); thus, representing a 208 hour
decrease in vacation time, equating to 26 eight-hour days.

80
On the same pay period, and issued through a separate paycheck distribution
(check number 125404), Abigail McClung received a payout of vacation time amounting
to $3,120. The check amount for the net vacation payout was $2,231.52.

The authorizing signatures on the check belongs to Chris Drennen (Recorder)


and Ann Spencer (Councilwoman). 47

47
Notably, the endorsement lines on the reverse side of the check display Abigail McClung, as well as, Misty Hall’s
signature. Ms. Hall was a co-worker of Ms. McClung in the City of Richwood.

81
B.
MISMANAGEMENT AND POTENTIAL MISUSE
OF FEMA MONIES

During the course of examining the City of Richwood’s finances, we discovered


serious issues arising out of the receipt and management of funds from the Federal
Emergency Management Agency (FEMA) following the June 2016 flood. These funds
were sought by the City under FEMA’s Public Assistance grant program, and the City
has received approximately $2.6 million towards recovery. However, in attempting to
trace the monies funding recovery projects, our investigation revealed significant
questionable activity, including potential misconduct. We also encountered poor
recordkeeping by the City, and an inability by the City or its employees to provide an
accurate accounting of the FEMA monies it has received and expended.

(1) Background on FEMA Public Assistance Program


An outgrowth of the Robert T. Stafford Disaster Relief and Emergency Assistance
Act (“Stafford Act”), FEMA’s Public Assistance (“PA”) program authorizes the President
to provide Federal assistance when the magnitude of an incident or threatened incident
exceeds a State or local government’s capabilities to respond or recover from a disaster.48
Through the PA program, FEMA provides supplemental federal disaster grant
assistance for debris removal, life-saving emergency protective measures, and the repair,
replacement, or restoration of disaster-damaged publicly-owned facilities, and the
facilities of certain non-profit organizations. The PA program also encourages protection
of these damaged facilities from future events by providing assistance for hazard
mitigation measures during the recovery process.
The PA program does not provide direct assistance to private individuals or
businesses. FEMA aids individuals under a separate program known as the Individuals

48
Title 42 of the United States Code (U.S.C.) § 5121 et seq.

82
and Households Program (“IHP”). Rather, the Public Assistance program is intended to
aid public entities (e.g. States, counties, Boards of Education, municipalities, etc.) in their
recovery from the disaster.

(2) Application and Grant process


In order for a public entity to receive Federal assistance, a series of steps must
occur in a coordinated effort between FEMA, the State and the local public entity. The
process begins with an emergency or disaster declaration by the President of the United
States. The declaration would include the nature and type of the emergency; the time
period during which the disaster occurred (known as the incident period); the
geographical areas affected; and the type of assistance to be offered (e.g. IHP, PA, etc.).
Following the declaration, FEMA contacts the State to begin the PA process.
Typically, this involves establishment of State fiscal officers and Joint Field operations.
More importantly, FEMA and the State execute agreements designating the State as the
GRANTEE of the federal funds and resources under the PA program.
Thereafter, the local governmental entities necessitating assistance will execute a
Request for Public Assistance (“RPA”). This then designates that local public entity as a
potential SUBGRANTEE under the PA program. The rules and regulations require the
RPA to be filed within 30 days of the declaration.
Following the acceptance of the RPA, FEMA and the State will set a meeting with
the local entity (Subgrantee) to do an assessment and preliminary determination of the
damage. Educational information about the process and types of assistance are also
discussed at this meeting. This meeting is generally referred to as the “Kickoff meeting”.
After the kickoff meeting, the local entity has 60 days to identify and report
damage to FEMA for which they seek federal monies. The identification and reporting
of damage is documented in a Project Worksheet (“PW”). Depending on the size and
scope of the desired project, a separate PW may be submitted for each damage identified.
The PW itemizes the damage and requests an amount to be paid by FEMA for assistance.

83
The PW is submitted to the designated State coordinator for review. If approved
by the State, the PW is submitted to FEMA for review and approval of the amount sought
in federal monies. If approved by FEMA, FEMA will establish an amount to be provided
(referred to as “obligated” monies) to the local entity.
Those obligated monies are sent to the State, less 25%. The State, as Grantee,
receives the money and is responsible for disbursing the money to the local entity.

(3) Small and Large projects


When applying for grants, projects may be labeled as either small or large
projects bases upon the amount of money sought by the local applicant. The threshold
differs by year and by disaster. For the fiscal year 2016, in which all PWs for Richwood
were submitted, the threshold for projects was $121,800.00. Those under the threshold
were deemed small projects and those above, are deemed large projects.
The significance of the small/large project distinction is the manner in which
FEMA will make payment. If it is a small project, payment for the project is issued up
front and a notification of completion to FEMA is required once the project is finished.
For large projects, payment is made on the basis of actual costs determined after
the project is completed; although interim payments may be made as necessary. Once
FEMA obligates funds to the grantee; further management of the assistance, including
disbursement to sub-grantees is the responsibility of the grantee (i.e. the State).

FINDING #2: The City of Richwood failed to properly manage or maintain an


accurate accounting of monies received for flood recovery.

Despite receiving over $2.6 million of Public Assistance monies from FEMA, the
City is unable to demonstrate or account for the more than 18 projects it has received

84
money for from FEMA. 49 Despite our lengthy investigation and repeated inquiries, the
City still does not maintain an accounting of the monies expended, nor does it know with
accuracy where the monies for each project have been spent.
During the early part of our examination into the City’s finances, we asked the
City of Richwood for an accounting and documents relating to monies received from
FEMA. Instead of being provided a ledger or similar document reflecting an accounting
of FEMA monies, we were told that none existed. Rather, we were directed to a room
containing multiple file cabinets and folders of project worksheets with only minimal
organization.
We were also directed to speak with a City employee by the name of H.C. Spencer
who was allegedly overseeing the flood recovery matters for the City, as the City’s FEMA
liaison. 50
We reiterated our requests for an accounting of the FEMA PW expenditures or
some sort of tracking system. Mr. Spencer was able to provide a purported tracking
spreadsheet of the City of Richwood’s FEMA project worksheets. 51 However, he was
unable to produce the supporting documentation or calculations contained within the
spreadsheet at that time. 52
Mr. Spencer indicated that this was an informal spreadsheet that was being
utilized by the City’s consultants (Simmons and AEMS). He, however, could not speak
to its accuracy. He continued to disavow the accuracy of the spreadsheet, during our
office’s interview of him nearly 4 months later.
(Pg. 91)
20 Q. [AUDITOR OFFICE] Okay. Do you keep, like, an accounting of all
21 monies received and paid out?
22 A. [HC SPENCER] I have started since I took over, you know, in
23 this current role. I did, in preparation for this

49
The City has actually initially applied for funding for a total of 23 (appears to be 26 after separating TAMB001
“Catch-All” project worksheet) projects, however, FEMA has only approved 18 projects.
50
H.C. Spencer is the son of City Council member Ann Spencer. H.C. Spencer was hired as an employee following
the flood and was paid $34,248.75 (Gross) in the six months following the flood.
51
A copy of the spreadsheet provided by Mr. Spencer is attached as EXHIBIT # 27
52
Despite our office’s multiple requests, and time spent trying to trace the FEMA monies, we were subsequently
provided months later a purported ledger of payments paid to vendors from H.C. Spencer.

85
24 meeting, printout the bank register for the FEMA account.

(Pg. 92)
8 Q. Is there anything else you brought with -- with
9 this, with you today?
10 A. I have my own spreadsheets I that consider
11 working documents. And what I mean by that is: I -- I'm
12 not-- it's going to give you a snapshot--
13 Q. Sure.
14 A. -- of the projects, but it's not going to be
15 accurate to the penny.
16 Q. That's fine. Do you mind sharing that too since
17 it's--
18 A. I don't mind.
19 Q. Okay.
20 A. As long as we're under the understanding that
21 it's a working document and I'm not claiming these
22 numbers to be accurate.

[H.C. Spencer Examination Under Oath, April 18, 2018, pages 91-92]

Notwithstanding his claims of potential inaccuracy, the other important statement


by Mr. Spencer was that he did not begin creating this document until after he became
the FEMA liaison for the City. According to his testimony, he didn’t become the FEMA
liaison until October 2017, after the start of our investigation and examination into the
City of Richwood finances. Stated another way, the City did not have an
accounting/tracking spreadsheet of FEMA expenditures for nearly 18-months after the
flood, and after more than $2.6 million had been provided and expended by the City of
Richwood.
The absence of an accounting of FEMA monies is unsurprising given the poor
financial records of the City as a whole. However, the inability to provide a true and
accurate accounting is problematic given the requirement that the City must account for
all expenditures to FEMA, or risk having to repay all monies back to FEMA.

86
10 Q. What if something doesn't match up, what
11 happens?
12 A. I don't know.
13 Q. It would--
14 A. I'm assuming -- I hate to assume, but I assume
15 then that they could possibly take back the money. I
16 mean, would be the ultimate failure, so to speak.

[H.C. Spencer Examination Under Oath, April 18, 2018, page 91]

The absence of such an accounting made our examination extremely difficult, and
necessitated a protracted attempt by our office to trace and recreate the FEMA monies
spent by the City. During our examination, we identified that the City had a separate
banking account for FEMA monies. In an effort to identify and track the FEMA monies,
we obtained bank records and began tracing the financial activity in the City’s FEMA
account.
In short, the Auditor’s office had to begin creating the City’s accounting and
tracking of the FEMA monies because the City allegedly did not have one as it related to
the FEMA Project Worksheets. Further, while tracing the FEMA account monies, we
discovered that the City utilized the FEMA funds for unapproved FEMA projects and
purposes. While we believe we were ultimately able to obtain a fair understanding and
accounting of the FEMA funds, we are unable to state with certainty an exact accounting
of the FEMA monies. 53

FINDING #3: The City of Richwood diverted project-specific funds from their
intended purpose.

During our examination of the City of Richwood’s receipt of FEMA funds, it was
discovered that the City co-mingled received monies, and were using FEMA monies for

53
A copy of our attempted accounting of FEMA funds in the City’s FEMA account is attached as EXHIBIT # 5 and
EXHIBIT # 6

87
projects that had either not been approved by FEMA or for payments unrelated to the
project for which it received money (e.g. employee salaries and unrelated vendors).
While this is partially due to the lack of accounting of funds maintained by the
City, our examination revealed that on multiple occasions the City was intentionally
diverting these FEMA monies in disregard of their intended purpose. In reaching this
conclusion, we identified $562,741.56 of payments out of the designated FEMA account
that were not part of an approved or known FEMA project:

Not applicable to approved project worksheets:

Check
Date: Number: Amount: Vendor: Appears to have been applied to:
12/19/2016 0000011 $ 14,378.50 Daniel Ritchey EOC/TAMB001
12/19/2016 0000012 $ 19,946.37 Jeremy Rose EOC/TAMB001
12/19/2016 0000010 $ 59,751.10 Jonathan Cox EOC/TAMB001
12/20/2016 0000002 $ 2,597.50 Cecil I. Walker Machiner CO. Unknown
12/28/2016 0000008 $ 35,581.51 Nicholas County Landfill Unknown
2/21/2017 0000021 $ 6,225.00 Dennler Fence LLC Sludge Press-No Project Worksheet
2/23/2017 0000022 $ 1,774.95 Rish Equipment (Remaining portion of check 0000022) Unknown
3/3/2017 0000023 $ 2,379.94 Lowes of Summersville TAMB001
3/8/2017 0000025 $ 12,854.08 Leslie Equipment Co. TAMB001
3/14/2017 0000028 $ 47,971.02 Simmons Recovery Consultants TAMB001
3/17/2017 0000029 $ 22,874.27 Applied Emergency Management Services LLC TAMB001
3/23/2017 0000030 $ 4,124.66 Rish Equipment TAMB001
4/14/2017 0000036 $ 10,804.00 Nicholas County Landfill Unknown
4/21/2017 0000040 $ 10,132.85 Appalachian Aggregates, LLC (City Expense Portion) Unknown
4/28/2017 0000043 $ 295.34 United Rentals TAMB001
4/28/2017 0000042 $ 2,083.06 Leslie Equipment Co. Part of check related to TAMB001; Check is outstanding
5/10/2017 0000047 $ 15,657.54 The Thrasher Group Nonobligated Sewer Collection
5/26/2017 0000051 $ 29,813.80 Simmons Recovery Consultants TAMB001
6/15/2017 0000053 $ 7,500.00 Kanawha Trucking TAMB001
6/22/2017 0000056 $ 44,613.74 Simmons Recovery Consultants TAMB001
7/20/2017 0000062 $ 3,300.00 Muck Truck Septic Unknown
7/31/2017 0000063 $ 620.00 Mike Davis Unknown
8/14/2017 0000064 $ 3,300.00 Muck Truck Septic Unknown
7/14/2017 0000060 $ 11,406.00 Craigsville Construction Unknown
7/14/2017 0000059 $ 3,300.00 Muck Truck Septic Unknown
7/21/2017 0000058 $ 11,000.00 Orders Construction Company Sludge Press-No Project Worksheet
8/14/2017 0000065 $ 17,205.73 Simmons Recovery Consultants TAMB001
9/20/2017 0000073 $ 20,000.00 The Thrasher Group Sludge Press-No Project Worksheet
9/22/2017 0000068 $ 82,155.50 Simmons Recovery Consultants TAMB001
9/25/2017 0000070 $ 8,000.00 Appalachian Aggregates, LLC Unknown
9/26/2017 0000072 $ 24,000.00 Orders Construction Company Sludge Press-No Project Worksheet
10/30/2017 0000076 $ 5,000.00 Orders Construction Company Unknown (Outstanding Check)
10/30/2017 0000077 $ 12,095.10 The Thrasher Group Sludge Press-No Project Worksheet
11/7/2017 0000080 $ 5,000.00 Orders Construction Company Unknown
11/3/2017 0000079 $ 5,000.00 United Rentals
Total $ 562,741.56

88
Further, we discovered significant transfers of money from the FEMA account to
the City of Richwood’s general account. Based upon our review, these transfers
correlated in a large part with payroll and other non-specific project debts owed by the
City.
In particular, our examination revealed the City of Richwood made six transfers
from the FEMA Fund to the General Fund, totaling $518,924.57, from a period of
December 2, 2016, to September 25, 2017.

FEMA Account General Fund Operating Account


Transfer Out Transfer In
Check Number: Date: Amount: To Order of: Date: Amount: Note:
Not Applicable 12/2/2016 $ 55,567.82 General Fund 12/2/2016 $ 55,567.82 Deposit slip states: By phone Abby and Chris
Not Applicable 12/28/2016 $ 151,356.75 General Fund 12/28/2016 $ 151,356.75 Deposit slip states: Per phone/spoke with Abigail Little & Bob Baber
Not Applicable 2/22/2017 $ 100,000.00 General Fund 2/24/2017 $ 100,000.00 Deposit slip states: From FEMA acct.
Not Applicable 6/12/2017 $ 125,000.00 General Fund 6/12/2017 $ 125,000.00 Deposit slip states: Per Abby Little & Mayor Baber
Not Applicable 7/5/2017 $ 60,000.00 General Fund 7/5/2017 $ 60,000.00 Deposit slip states: By Abigail McClung and Bob Henry Baber from 11015468
0000069 9/25/2017 $ 27,000.00 City of Richwood (1) 9/27/2017 $ 27,000.00 Check signed by Chris Drennen and Ann Spencer
Total: $ 518,924.57 Total: $ 518,924.57

During the period of these transfers, total payroll payments for the City of
Richwood that coincided with this specific period totaled over $400,000.00.
Notwithstanding the transfer to the City, we are unable to locate any return transfer from
the General Fund to the FEMA Fund.
Finally, our tracing of dollars clearly reflected a “robbing Peter to pay Paul”
payment method by the City wherein monies from specific projects were used to pay
expenditures for other project expenditures.
Overall, based upon our review and tracing of FEMA funds, the City has gotten
into such a financial hole due to the diversion of funds that it may not be able to ever
complete certain projects.

89
FINDING #4: The ICS’s excessive payments to themselves inhibited the City of
Richwood’s recovery from the flood.

Throughout the course of our investigation we continually encountered questions


about the role and power of the Incident Command Structure (“ICS”) team. While the
necessity of an ICS is a debatable policy decision for any entity following a disaster, the
Richwood ICS team clearly exceeded any semblance of an auxillary unit to the City, and
instead became the de facto government for the City of Richwood. 54 The leadership of
the ICS believed themselves answerable only to themselves, and undertook activities and
actions that they themselves selected without concern to the City budget, City Council,
or the greater recovery of the City.
This was no more prevalent than the manner in which the ICS leadership chose to
hire their friends and family members as paid employees of the City costing the City at
least $468,455 of monies that could have gone towards flood recovery.

(1) General Background on ICS and OES


Under the FEMA guidelines, there is an allowance for the creation of an emergency
management program to oversee and handle the immediate crisis and emergency
situation following a disaster. While this is typically part of a larger Office of Emergency
Services (“OES”) within a county or community, the intent is merely to be a designated
entity to bring structure and coordination until the immediate emergency subsides to
recovery phase.
Historically, the state and individual counties have established their own OES for
purposes of dealing with such emergencies. Indeed, up until this flood event, no other
City or municipality in Nicholas County had utilized their own respective OES or ICS
team to manage an immediate emergency.

54
See also Sub-Finding # 1.3 of this Report which discusses how the ICS structured itself such that those with
oversight or control of City Finances were made members of the ICS.

90
(Page 100)
17 Q. [STATE AUDITOR] Okay. What is the ICS structure?
18 A. [BILL HINES] Incident command system. That's a generic,
19 "who's on first" type playbook provided to FEMA by the
20 fire fighting world.
21 Q. Okay. Tell me about the ICS. Why is it
22 necessary?
23 A. The ICS, it provides a deliberate road map if
24 you turn on all the bells and whistles, so to speak, it
(Page 101)
1 -- it provides a deliberate road map to decision-making,
2 capabilities, assessments, things like that. It is very
3 cellular in nature, so it can expand or contract based on
4 the need of the event.
***
20 Q. Is an ICS team a volunteer? Is it a paid thing?
21 Does it vary?
22 A. It varies.
23 Q. Okay. What determines whether it's going to be
24 volunteer versus pay?
(Page 102)
1 A. The need, quite frankly. The -- if you had
2 bodies available, the federal government could -- would
3 look at that. I know that I did in other states.
4 In writing 403 project worksheets and subgrants,
5 the authorities were there to look at professionals
6 actually performing this. And it's a surge activity, so
7 you're in and you're out. For a local community to -- to
8 do this, their need being pronounced because the event
9 happened, they were transitioning administrations, they
10 did not have a dedicated emergency management director,
11 city hall and their most pronounced emergency management
12 entity, the fire department, they couldn't get along long
13 enough to make a cup of coffee between each other.
14 It was a lot of the us-versus-them type
15 situation, and so the discussion was, "Well, how do we do
16 this moving forward?" "Well, here is one way." "Oh,
17 yeah. We --we know those letters. Somebody else said
18 that to us." "Yes, I'm sure Bob Fowler did." "Okay. So
19 what does that look like?" Boom.
20 ICS is a component of NIMS, the National
21 Incident Management System. It is a required training
22 component if you accept Stafford Act funds in other

91
23 areas.
24 FEMA also funds preparedness, so when they put
(Page 103)
1 out E -- it's called EMPG, emergency management grant
2 program. The biggest customers would be states, local
3 fire departments, first-responder type entities.
4 You're required to train and know NIMS and ICS
5 in for -- in exchange for a receipt of those funds. So
6 it's a background component. It's not a perfect bicycle,
7 but it's one everybody can ride.
8 Q. Is ICS comparable to an OES at, like, various
9 county level or anything?
10 A. It -- it could be. The distinction -- and it's
11 real techie -- is an OES is more of a -- I'm just
12 showering you with acronyms.
13 Q. Yeah.
14 A. It's more of a multi-agency coordination center.
15 Q. Okay. I'm with you.
16 A. Okay. So the state OES, state emergency manage
17 -- the state war room, if you will, they're a
18 multi-agency coordination center. ICS really is boots on
19 the ground.

[Bill Hines Examination Under Oath, April 9, 2018, pages 100-103]


However, depending on the emergency, a municipality may only need to set up
an ICS for a couple weeks to oversee the emergency response.

3 Q. Okay. Roughly, what is the general time frame


4 for an ICS? And I know it's case-dependent, what is the
5 general kind of bench -- is there a benchmark of kind of
6 how long an ICS structure is in place for?
7 A. No, sir.
8 Q. How long is it -- what --
9 A. For, I mean, if you want to talk standard,
10 run-of-the-mill West Virginia disasters --
11 Q. Sure.
12 A. -- a couple weeks.
13 Q. Okay.
14 A. It best.
15 Q. So an ICS would be in place and then we're
16 talking for the emergency side of this?

92
17 A. For the response.
18 Q. Emergency response to be a couple weeks --
19 A. Yes, sir.
[Bill Hines Examination Under Oath, April 9, 2018, page 120]

It is important to note, however, there is no requirement that the members of the


ICS team be paid. Rather, the ICS may be comprised of unpaid volunteers trying to bring
structure and order in the immediacy of an emergency.

6 Q. Does the ICS have to be paid, or can it just be


7 all volunteer?
8 A. It can be all volunteer.

[Bill Hines Examination Under Oath, April 9, 2018, page 104]


Indeed, there were numerous unpaid volunteers (many of whom were residents
of Richwood and surrounding communities) working long hours aiding in the recovery
from the flood. While these volunteers could have been formally organized as the ICS,
Richwood instead created a large ICS team of paid workers, most of whom were friends
and family members of the self-appointed ICS leadership team.

(2) Richwood ICS team


Formed several weeks after the June 23, 2016 floods, the Richwood ICS team was
intended to be a collection of individuals that organized the immediate emergencies
facing the City. While the idea of an ICS was supported by the City’s first consultant
(Bill Hines), the ICS team instead turned into a mechanism of payment for three primary
people to pay themselves and their family and friends at the expense of the FEMA flood
monies.
Specifically, our investigation revealed that the self-appointed leaders of the
Richwood ICS team were:
 Jeromy Rose
 Jon Cox
 Chris Drennen

93
Based upon our examination of the finances, these three individuals paid
themselves a combined total of $217,825.24 (Gross) for their work as the head of the ICT
from June 23, 2016 to December 31, 2016.
Although Jeromy Rose and the ICS was vested with limited authority by the
Richwood City Council on July 18, 2016 to oversee the recovery from the flood, the ICS
instead grew in excess and became primarily a conglomeration of friends and family
members of Rose, Cox and Drennen.
Based upon our examination, there were no ICS reporting requirements to City
Council nor were there procedures established to designate the specific fiduciary duties
that the ICS would perform. Rather, based upon our investigation, it appeared that
Richwood council members were not regularly updated or made aware of the actions
and fiscal activity of the ICS.
Instead, similar to Mayor Baber unilaterally placing individuals upon payroll in
the immediate aftermath of the flood (See Sub-Finding # 1.2), the three ICS leaders
unilaterally paid themselves, their friends, and their family members as City employees
without prior Council approval. They alone selected the size of the ICS. They alone
selected who would be on the ICS. They alone dictated the amount each selected person
would make per hour. In short, the ICS team was hand-picked by three individuals who
appeared to have selected only their family and friends.
Based upon our examination, we ultimately determined that the Richwood ICS
consisted of at least 31 position that were filled by 29 people.

94
95
Based upon our calculations, the City of Richwood incurred approximately
$468,455 of wages, greatly exceeding their normal payroll wages, during the time the ICS
was in operation. While the City has submitted a request to FEMA for reimbursement
for these ICS wages (PW #TAMB001), FEMA has not approved or paid any of the payroll
payments of the City for these ICS members. 55

55
Potential problems with PW#TAMB001, including improper and unreasonable payment amounts, are further
discussed in Sub-Finding #7.6

96
(3) The family and friends of ICS leadership
In addition to the $217,825.24 paid to themselves, the ICS leadership team of Rose,
Cox and Drennen hired and paid their family and friends a total of $145,104.25 (Gross).
As reflected in the diagram below, the hand-picked members of the ICS all had a close
connection to one of the 3 ICS leaders. 56

Jeromy Rose (ICS Incident Commander; Jon Cox (ICS Operations Chief; H.C. Spencer (ICS Director-Debris and Dan Ritchey (ICS Logistics Chief; Friend
Richwood High School Class of 1987) Richwood High School Class of 1987) Construction; Richwood High School of Rose)
Class of 1987)

2016 Net Pay: $ 25,282.51 = 2016 Net Pay: $ 82,090.92 2016 Net Pay: $ 25,400.70 2016 Net Pay: $ 17,685.77
2016 Gross Pay: $ 36,303.75 2016 Gross Pay: $136,341.88 2016 Gross Pay: $ 34,248.75 2016 Gross Pay: $ 23,666.25
Hire Date: 6/22/2016 Hire Date: 6/29/2016 * Hire Date: 7/18/2016 Hire Date: 6/23/2016
Term. Date: 12/18/2016 Term. Date: 8/6/2017 Term. Date: Currently Employed Term. Date: 12/18/2016
*Timecard reflects 68 hours as of Examination
worked prior (6/26/16-6/28/16) Field Work

Chris Drennen (Recorder/ICS Planning Melissa Gumm (ICS Executive Jocelyn Swearingen (ICS
Chief) Assistant/Sister of Drennen) Administrative Assistant/Best Friend
and Past Co-worker with Drennen)

2016 Net Pay: $ 31,810.38 = 2016 Net Pay: $ 10,319.02 2016 Net Pay: $ 6,666.36
2016 Gross Pay: $ 45,179.61 2016 Gross Pay: $ 13,908.00 2016 Gross Pay: $ 8,668.50
Hire Date: 6/23/2016 Hire Date: 7/8/2016 Hire Date: 6/23/2016
Term. Date: Currently Employed Term. Date: 10/30/2016 Term. Date: 10/20/2016

Jon Cox (ICS Operations Chief; Richwood Jackie Cox (ICS Volunteer Kevin Cox (Engineering- Missy Cox (Data Anayst/Engineering-
High School Class of 1987) Coordinator/Mother of Jon Cox) Planning/Brother of Jon Cox) Planning/Sister-In-Law of Jon Cox)

2016 Net Pay: $ 82,090.92 2016 Net Pay: $ 13,524.71 2016 Net Pay: $ 13,015.06 2016 Net Pay: $ 20,623.09
2016 Gross Pay: $ 136,341.88
= 2016 Gross Pay: $ 17,680.25 2016 Gross Pay: $ 17,770.50 2016 Gross Pay: $ 29,162.00
Hire Date: 6/29/2016 * Hire Date: 6/26/2016 Hire Date: 7/13/2016 Hire Date: 7/13/2016
Term. Date: 8/6/2017 Term. Date: 10/30/2016 Term. Date: 9/4/2016 Term. Date: 12/11/2016
*Timecard reflects 68 hours
worked prior (6/26/16-6/28/16)

56
In addition to the ICS team, Chris Drennen is linked to two additional individuals that were paid as part of the
City’s flood recovery. Terry Arnold, Chris Drennen's brother, was hired under the Food Distribution (PW#223) as a
fork lift operator at the Red Gym and Armory. Terry Arnold was paid a total of $7,409.88 (gross) / $5,720.01 (net)
for the 2016 tax year. In addition, Brent Butler, a close friend of Chris Drennen was hired for Hazard Mitigation
work and was paid a total of $10,718.38 (gross) / $7,988.42 (net) for the 2016 tax year. Brent Butler continued to
work for the City of Richwood and collected $9,814.53 (net) until June 12, 2017, when her employment ended.

97
Additionally, the three principal people were also not alone in trying to enrich
themselves. During the course of our investigation, we learned that Mayor Baber tried
on multiple occasions to pay himself under the guise of the ICS.

9 Q. Okay.
10 A. The mayor was very persistent on receiving
11 payment, which I stood in the way of point blank. I
12 said, "Sir, if you want to open your funding stream, do
13 not submit that. If you do submit that as it stands, it
14 is a -- it is a sore thumb. It will stop, and all other
15 eligible components on that project worksheet will be
16 held up until this one decision is made."

[Bill Hines Examination Under Oath, April 9, 2018, page 142]


In light of the objections of Bill Hines, Mayor Baber was not paid as an employee
of ICS. However, Bill Hines was subsequently fired and replaced by another consultant.57
While he may not have been successful in directly paying himself as an ICS
member, Mayor Baber did have his purported “step-daughter” Cara Perkins appointed
and paid by the ICS as his “assistant”. As his assistant, Ms. Perkins was paid $21,749.25
for approximately four months of work as an ICS team member. During the same time,
Ms. Perkins either lived with Mayor Baber and/or lived in rental property owned by
Mayor Baber.
Further, despite the City formally shutting down the ICS on November 2, 2016,
the City of Richwood continued to pay monies to multiple ICS members, including
expending monies up until the Auditor’s examination began its inquiry into the City’s
finances.
While the original intent of an ICS may have been good-intentioned, it quickly
became an opportunity that was exploited by the three leaders of the Richwood ICS. The
excessive size of the ICS was unnecessary, and the excessive amount of money paid to

57
Mayor Baber ultimately sought and paid himself $2,443.54 via check dated April 27, 2017, for alleged flood work
performed during the 2 week period ending on July 8, 2016. In other words he paid himself for volunteer work
the week prior to becoming Mayor and his first week in office as Mayor.

98
the hand-selected friends and family members detracted from any semblance of a
legitimate, workable organization.
Instead, the overriding effect of the
Instead, the overriding effect of the ICS was to
ICS was to facilitate payment to facilitate payment to three leaders and away
three leaders and away from from necessary recovery efforts.

necessary recovery efforts.

FINDING #5: The City of Richwood paid exorbitant amount of monies to outside
consultants with questionable return.
The extensive damage of the June 2016 flood brought nationwide attention to the
State. Hundreds of people flooded the state as volunteers, and even more donated items
or contributed money in furtherance of the flood recovery. The nationwide attention,
and potential FEMA monies involved in the recovery, also brought emergency
management consultants into the state to “assist” local governments with the FEMA
Public Assistance grant program.

Historically, consultants have typically not shown interest in the state or any of
the prior natural disasters. On rare occasion, a consultant may assist the state at the
DHSEM level, but no one could recall a prior invasion of consultants in the state as was
seen following the June 2016 flood. Previously, local governments relied upon county
offices of emergency management and the West Virginia DHSEM to guide them through
the FEMA application and grant process. Additionally, FEMA assigns individuals to the
respective local entities to aid in completion and submission of project worksheets for
payment.

Hence, there has historically not been a need to seek out or retain outside
consultants to aid in the submission of project worksheets for FEMA monies. This
disaster changed everything. Anecdotally, difficulties with the State’s administration
and guidance of FEMA monies left many local entities uncertain where to turn for help.

99
Additionally, some County OES were equally dysfunctional and/or unable to handle the
scope of the disaster. Finally, some local municipalities were overwhelmed and grasping
for any lifeline that was tossed their way.

This perfect storm of failures and confusion created a void of leadership, guidance,
and trust throughout the affected counties that was filled by consultants offering a
flashlight in the darkness. Consultants invaded this state from around the country
offering promises of more monies
from FEMA, and guidance through
This perfect storm of failures and confusion
the purported bureaucratic process. created a void of leadership, guidance, and
Lost in these promises was that the trust throughout the affected counties that was
consultants are paid vendors, and filled by consultants offering a flashlight in the
darkness.
must be paid by the local
government. While FEMA offered
assistance free of cost, the level of distrust and/or misbelief that FEMA was trying to limit
how much it gave is prevalent throughout the State. By utilizing consultants, some local
officials believed they were gaming the system to the benefit of their constituents.

The outcome has not been what many had anticipated. While some consultants
are able to structure their payments as reimbursable under project worksheets (i.e. DAC),
the reality is that services provided by the consultants may be unnecessary and/or non-
reimbursable. Further, the money paid to consultants may exceed the benefit that is being
provided.

Richwood’s experience with consultants following the June 2016 flood covered the
gambit of all these things. Their experience and utilization of consultants should be an
example to be studied and discussed going forward. As reflected in the two sub-findings,
Richwood had some positives with consultants and some negatives. At the end of the
day, however, the City paid nearly $250,000 for two consultants, with mixed results.

100
Check Bank
Check Date: Number: Account: Amount: Vendor:
10/21/2016 123936 General $ 5,294 Applied Emergency Management Services LLC
3/14/2017 0000028 FEMA $ 47,971 Simmons Recovery Consultants
3/17/2017 0000029 FEMA $ 22,874 Applied Emergency Management Services LLC
5/26/2017 0000051 FEMA $ 29,814 Simmons Recovery Consultants
6/22/2017 0000056 FEMA $ 44,614 Simmons Recovery Consultants
8/14/2017 0000065 FEMA $ 17,206 Simmons Recovery Consultants
9/22/2017 0000068 FEMA $ 82,156 Simmons Recovery Consultants
Total $ 249,928

SUB-FINDING #5.1: Although fired by Mayor Baber for disagreeing with the
Mayor’s desired conduct and direction, Consultant Bill Hines was well-intentioned
and provided early guidance, but allowed the ICS to exceed all reasonableness.

As the first consultant retained by the City of Richwood, Bill Hines sought to
provide structure and organization to a City that was struggling with leadership and the
aftermath of a catastrophic disaster to the City. As a former FEMA field representative,
Mr. Hines was well-versed in the FEMA Public Assistance program and was able to
provide early guidance in the preparation of PWs. He appeared to be a stickler for
documentation, and avoidance of errors that may cause a PW to be questioned or unduly
scrutinized.

Based upon our review of documents and submissions to FEMA, Mr. Hines
appeared to perform his work as originally contracted. He was able to get numerous
PWs for Category A items out quickly and with payment back to the City. Overall, seven
(7) PWs were approved and funded by FEMA within six months of the disaster, including
nearly $700,000 in Category A debris removal.

However, Mr. Hines did have some missteps, many of which appear to have been
the product of his newness as a consultant. According to our interview with him, Mr.
Hines indicated that he had only formally opened up his consulting business in March
101
2016, roughly 3 months before the flood hit. Hence, the June 23, 2016 flood was his first
major disaster.

Among his initial missteps was the recommendation of the creation of the ICS.
While he suggested the ICS in an effort to bring organization to the immediate disaster
recovery, he allowed the ICS to exceed all reasonableness. He either was unaware of the
expansive nature of the ICS and/or failed to reign it in early in its creation. Instead, he
fostered the segregation of the ICS as a separate entity capable of guiding the City’s
emergency recovery efforts. This ultimately allowed the ICS to become a de facto City
government that made all fiscal decisions relating to the flood recovery.

He also erroneously relied upon Mayor Baber and Recorder Drennen to be the
conduit of information to the City Council. While a large portion of the failure rests with
Mayor Baber and Recorder Drennen, Mr. Hines needed to be more proactive in ensuring
the City Council was made aware of what the ICS was doing.

Another misstep arising from his newness to the consultant world, was the
communication between the ICS and him. During our review of emails between Mr.
Hines and the ICS leadership team, we noted several odd items and questionable
statements by Mr. Hines. Among those that caught our attention were the following:

 “Most importantly, We are not doing anything that fraudulent. Don't


worry, that’s just my term no one has used that word specifically although
I can understand foIks’ hesitance on this methodology. The fact of the
matter is the policy that governs these costs allows applicants, and not the
federal government, to estimate. However, we must do it in a credible
fashion and illustrate that.”

 “The bottom line for everyone is this is what it takes to justify what we do
with the people’s money. Outside of uneducated guesses by the public as
to what goes on why, and the occasional graft/corruption (it happens,
hence the dumb rules), everyday civil service is about qualifying your
existence. It is more important than ever in today’s society.”

102
[Email from Bill Hines dated Nov. 17, 2016 to various ICS individuals.] 58

Notwithstanding these were questionable statements (and in some cases alarming), our
overall impression of Mr. Hines work product appeared to be reasonable and above-
board.

At multiple times during the course of his consultation work for the City, he
appears to be pushing back on Mayor Baber and others who begin to lose focus of the
overall recovery picture. In particular, Mr. Hines appeared to have questioned the focus
shifting singularly to the schools and away from the City recovery as whole.

5 Q. Did you ever do or involve with a PW for the ICS


6 team, then?
7 A. I was to a certain degree. It was in developing
8 the early data to submit to FEMA. However, I had stood
9 on it because the city unfortunately -- in the ICS notes
10 for each one of their meetings, there was a pronounced
11 amount of discussions on the schools.
12 Q. Okay.
13 A. And the issue I had, the criticism, the pushback
14 I had on the administration, the mayor's office
15 specifically at the time, which he never rested control
16 of, albeit in writing he agreed with me when I sent the
17 recommendation, they did not divorce that activity from
18 the ICS crew.
19 So when you talk about a 3-hour meeting with all
20 the employees under the ICS and you spend a majority of
21 that meeting talking about facilities you don't own and
22 maintain, FEMA becomes a non-participant at that point.
23 Q. Let me see if I can understand. The schools --
24 I'm familiar with the ongoing issue.

(Page 140)
1 A. Uh-huh.
2 Q. The schools would not -- say the school, the
3 Richwood, would have been owned by the County Board of
4 Education. So it would have been a County BOE FEMA issue
5 a not a City of Richwood issue; am I understanding that
6 correctly?

58
A copy of the Nov. 17, 2016 email from Bill Hines is attached as EXHIBIT # 39

103
7 A. Yes, sir.

[Bill Hines Examination Under Oath, April 9, 2018, pages 139-140] See also Hines
interview excerpt in Finding # 4 relating to his refusal to pay Mayor Baber for ICS work
or to include reimbursement in a PW.

Ultimately, our investigation determined that Bill Hines (by and through his
company AEMS) was paid a total amount of $28,168.03, though he invoiced the city for
$30,784.66. His last check was issued on March 17, 2017, from Richwood’s FEMA account.

SUB-FINDING #5.2: Simmons Recovery Consultants, LLC, was paid an excessive


amount of money with no clear return on the monies paid by the City.

At the request of Mayor Baber, the Richwood City Council on December 2016,
retained Simmons Recovery Consultants, LLC (“Simmons”) to “assist us in auditing our
flood recovery work.” Our impression of the work performed by Simmons was
dramatically different than Bill Hines. During the course of our examination, we could
not determine any appreciable benefit brought to the City from the retention of Simmons.
Indeed, their real reason for being retained was nebulous at best:

1 Q. To do what? I want to make sure I understand.


2 To do what? What was he saying he wanted them to do?
3 A. Two things: To help them with the schools
4 conversation and to help them with gap loans.
5 Q. What are "gap loans"?
6 A. As he under -- as he explained it to me was that
7 there was a process that this consultant could help them.
8 And I've never heard of that before, and I stay in close
9 contact with my colleagues -- I call it my support group,
10 but these are former-- also former FEMA employees who
11 are doing this on the civilian side.
12 I'd never heard of that, but apparently, the way
13 he described it was that Simmons Recovery could come in
14 and help them with the school discussion and help them
15 garner funding that would bridge the time period between

104
16 when the project worksheet was obligated and when the
17 actual check was in hand. So that was his explanation of
18 it.

[Bill Hines Examination Under Oath, April 9, 2018, page 145]

In an examination of Richwood City Council meeting minutes, it was determined


that Simmons Consulting first came into contact with the City of Richwood in the original
bidding for the consulting contracts after the June 2016 flood. The City of Richwood did
not hire Simmons consulting at the time but rather hired the firm owned by Bill Hines.
Upon information and belief, Simmons Consulting was subsequently approached by
Jeromy Rose and Bob Baber about performing a Disaster Impact Risk Assessment for the
City of in order to determine that the city was receiving the maximum amount of FEMA
funding possible.

(1) Original Contract and modifications

The contract with Simmons to perform a Disaster Impact Risk Assessment was
brought before City Council and approved in a meeting on December 1, 2016. According
to city council minutes and a contract obtained in the investigation, the original contract
with Simmons Consulting was for the sum of $4,975 and was to examine the City of
Richwood’s current state of affairs as they relate to the FEMA Public Assistance
Program. 59 According to Council minutes, this was not to be a permanent change from
Bill Hines to Simmons consulting, but was simply to be an assessment of the City’s
projects and explore ways in which to receive more funding from FEMA. Bob Baber
stressed to the council many times that Bill Hines would still be under contract and this
was not a dismissal of Bill Hines and a permanent hiring of Simmons Consulting.

However, in an interview with the Auditor’s office on April 9, 2018, Hines seems
to show a different sentiment about the work being done by Simmons. “It was a great

59
A copy of the City’s Master Service Agreement with Simmons is attached as EXHIBIT # 29

105
report. I wish they wouldn’t have paid for duplicate work.” He went on to explain that
he had performed the same work that Simmons was contracted to perform.

Invoices acquired by the Auditor’s office indicate that Bill Hines last billable
activity took place on January 20, 2017 and he is not mentioned after this date as the
consultant for the City of Richwood. Simmons Consulting was officially hired as the
consultants for the City of Richwood on January 30, 2017.

According to the Simmons Consulting contract, their task was to “provide the
Client the outsourced assistance to achieve the Clients recovery goal of obtaining the
maximum financial return possible from grant sources of FEMA, mainly the Public
Assistance Program.” The hourly rates laid forth within the contract are as follows:

Principal/Director $295/hr

Engagement Manager $185/hr

Senior Insurance Specialist $175/hr

Senior Consultant $155/hr

Consultant $137/hr

The contract also included travel expenses at a rate of $89 for lodging and $51 per
diem. In addition to the hourly rates and travel expenses, the contract contained a clause
that stated that the total contract value was not to exceed $105,000.

This contract was modified on May 12, 2017, when Mayor Baber signed a contract
modification that raised the maximum contract value from $105,000 to $210,000. 60 The
document was signed by Mayor Baber on behalf of the City. There is a reference within
the City Council minutes of May 11, 2017 to renew the Simmons contract, but no mention
of an amount or specific mention of a modification. 61

60
Copy of the contract modification is attached as EXHIBIT # 30
61
A copy of the May 11, 2017 Council meeting minutes are attached as EXHIBIT # 31

106
On July 26, 2017, another contract modification was signed by Mayor Baber that
raised the maximum contract value from $210,000 to $315,000. 62 However, we were
unable to locate a reference in City Council minutes approving this modification or
renewal.

(2) Second Report by Simmons

In addition to providing general consulting services, Simmons Consulting also


prepared a Damage Description and Dimensions/ Scope of Work Data Package for the
City of Richwood. 63 This was a second written report by Simmons in which they
attempted to justify to FEMA the large expenditures of the City of Richwood. Included
in the report were explanations of various funding concerns, including higher than usual
Direct Administration Costs, salaries of top ICS commanders, including salaries of Jon
Cox and H.C. Spencer in particular.

(3) Total monies paid to Simmons Consulting

In an examination of all source documents that were made available to the


Auditor’s office, it was determined that Simmons Consulting invoiced the City of
Richwood for $122,375.56 for services provided from January 25, 2017 until August 19,
2017. However, Simmons Consulting received $221,759.79 in check payments from the
City of Richwood, which is $99,384.23 above what Simmons invoiced. 64

62
Copy of the second contract modification is attached as EXHIBIT #
63
A copy of this report is attached as EXHIBIT # 33
64
During the course of our examination, our office reviewed all the PW’s that were made available, as well as
examined the vendor invoice file provided by the City of Richwood and was unable to locate any invoices for the
time frame of April 29, 2017 to August 7, 2017. This gap in invoices may account for the discrepancy in amount
invoiced and amount paid. Checks issued by the City of Richwood during this time frame reference invoices that
were received during that time frame, however, in the investigation, none of those invoices were able to be
obtained.

107
FINDING #6: Despite receiving money from FEMA for specific repairs, the City
appeared to rely upon other entities to do the projects for which they were paid.

As reflected in Finding #3, the City diverted monies received for one project and
instead utilized the monies for other uses. In doing so, the City found itself having
received monies to make repairs, but never ultimately making the necessary repairs. Still
needing these projects completed, the City appeared to rely upon outside sources to
supplement the needed work, even though the City received money to complete the
repairs themselves.

While the Dain and Pratt Park projects are prime examples of other entity’s (for
example, the Nicholas County Community Foundation) stepping in to make the repairs
(without reimbursement or payment from the City), other projects appear to also have
been completed by other entities. In short, our examination determined multiple
instances where the City was paid monies for recovery projects that were actually
completed or donated by other outside entities.

(1) Bruce Vance and United Coal Company

During the course of our examination of Richwood’s submitted FEMA projects


and various records, we noticed that United Coal Company donated numerous man
hours and equipment to the City of Richwood for items that Richwood received monies
to perform. In particular, we discovered United Coal donated time and resources for the
following PW’s:

Dain and Pratt Parks (PW#470/471)

Rails to Trails (PW#970)

Walnut St. Slip Repair (PW#702)

108
Examples of these donations were also identified within the ICS meeting minutes
as well as social media accounts.

• August 23, 2016 ICS meeting notes:

• September 9, 2016 ICS meeting notes

• Facebook post by HC Spencer

109
All of the mentioned work in the social media post and ICS meeting minutes were
projects in which the City of Richwood obtained funding to perform, yet appeared to rely
upon the generosity and donations to complete the work.

(2) JC Roman Construction Company

In addition to United Coal, we identified at least one other vendor that donated
numerous man hours and equipment for work related to a PW that City of Richwood
was paid money to perform. Specifically, JC Roman (and his company JC Roman
Construction) brought equipment and individuals to assist in debris removal and other
recovery efforts. 65 According to their website, the company donated roughly 600 man
hours and equipment to aid Richwood. 66

65
In addition to his company, JC Roman’s half-brother also travelled with his company’s (MD Russell) equipment
and resources to Richwood to aid in recovery.
66
Screenshot captured from JC Roman’s website: http://jcroman.net/community_involvement)

110
However, unlike United Coal Company, JC Roman Construction Company was
apparently paid $42,399 by the City of Richwood for this donated man hours and
equipment that was attributable to PW 281 (debris removal).

According to various social media posts by Jeromy Rose, however, it appears that Mr.
Roman subsequently donated these monies back to Richwood.

111
112
Overall, the generosity and donations provided by companies like United Coal
Company and JC Roman Construction appeared to drive the City of Richwood’s recovery
and repairs. Yet, it appears the City of Richwood sought and/or obtained payments for
the same work that was donated by various vendors and volunteers, and diverted the
FEMA monies to other purposes, including salaries to ICS members.

FINDING #7: Potential misconduct and questionable action with project


worksheets necessitates review by the FEMA Office of Inspector General and may
result in the City of Richwood having to pay back monies.

A. PW Background
The FEMA Public Assistance process is guided by funding requests generated and
supported by a Project Worksheet (“PW”). At the so-called “Kickoff” meeting, the the
subgrantee (i.e. local government) has sixty days in which to identify specific finding
requests that it will seek funding from FEMA to repair.
For each finding item identified, the local government will set forth, among other
things, the amount sought, the project to be undertaken, the calculation of the expenses,
and provide supporting documentation. All of this information is consolidated into a
“Project Worksheet” and submitted to FEMA for approval.
At the time of submission, a local # is assigned (e.g. TAMB001). After approval by
FEMA, a formal number is assigned (e.g. PW # 202, 470, etc.). FEMA processes PA grant
funding according to the type of work the applicant undertakes. Eligible work is
classified into the following categories:
• Emergency Work Category A: Debris removal Category B: Emergency protective
measures

• Permanent Work Category C: Roads and bridges Category D: Water control


facilities Category E: Public buildings and contents Category F: Public utilities
Category G: Parks, recreational, and other facilities

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A separate PW is necessitated for each category of work as well as each identified
project. Hence, a single disaster may generate multiple Project Worksheets for funding.

B. City of Richwood PWs


As a result of the June 2016 flood, the City of Richwood sought funding from
FEMA for 26 project worksheets (“PWs”). These are summarized as follows:

PW Number Amount
(or Local Sought by Amount Amount
Number): Description: ICS: Obligated: Received:
1 56 Sewer Line $ 190,000 $ 130,923 $ 98,192
2 223 Food Distribution $ 127,714 $ 127,714 $ 95,785
3 281 Debris Removal $ 727,146 $ 692,150 $ 519,112
4 335 Park Pool $ 6,345 $ 6,345 $ 6,345
5 425 Water Meters $ 10,520 $ 10,520 $ 10,520
6 202 Main Water Intake $ 662,314 $ 662,314 $ 496,736
7 471 Park Little League Field $ 135,430 $ 102,253 $ 102,253
8 470 Dain Pratt Parks $ 130,000 $ 128,838 $ 96,629
9 578 Mutual Aid $ 90,542 $ 90,542 $ 90,542
10 557 Old Depot Building $ 23,480 $ 25,280 $ 25,280
11 444 Water Lines River Crossings $ 235,695 $ 235,695 $ 176,772
12 912 Lift Station $ 47,497 $ 48,937 $ 48,937
13 920 Temporary Sewer Line Repairs $ 388,477 $ 370,438 $ 277,829
14 935 Culverts $ 137,259 $ 137,377 $ 103,033
15 970 Rails to Trails $ 285,740 $ 285,740 $ 214,305
16 972 Oakford St. Admin $ 72,000 $ 72,294 $ 72,294
17 975 EPM Storm Sewers $ 46,541 $ 86,541 $ 86,541
18 702 W. Walnut Street $ 300,000 $ 249,567 $ 53,553
19 TAMB001 "EPM-Citywide Emergency Operations Center" $ 398,853 $ - $ -
20 101 "EPM-Police (FEMA Local #MLGB005)" $ 70,276 $ - $ -
21 102 "EPM_City Storm Sewers - Cleaning (FEMA Local MLGB004)" $ 86,541 $ - $ -
22 103 "EPM - Roads (FEMA Local #MLGB006) $ 295,265 $ - $ -
23 ECPF011 "WWTP-Sludge Press Bldg A & E PW" $ 1,307,892 $ - $ -
24 104 "EPM - 2nd Food Distribution Center (FEMA Local #MLGB007)" $ 32,864 $ - $ -
25 ECPF009 "Sewer Collection System System Repairs" $ 8,065,000 $ - $ -
26 PPDR "PPDR/Demo State Covering Costs" $ - $ - $ -
Total $ 13,873,391 $ 3,463,468 $ 2,574,658

Of these submitted PWs, FEMA appears to have obligated $3,463,468 in funding and
authorized payment in the amount of $2,574,658 for 18 PWs, as of the end of April 2018.

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FEMA still has pending for review and approval the following PWs:

PW Number Amount
(or Local Sought by Amount Amount
Number): Description: ICS: Obligated: Received:
TAMB001 "EPM-Citywide Emergency Operations Center" $ 398,853 $ - $ -
101 "EPM-Police (FEMA Local #MLGB005)" $ 70,276 $ - $ -
102 "EPM_City Storm Sewers - Cleaning (FEMA Local MLGB004)" $ 86,541 $ - $ -
103 "EPM - Roads (FEMA Local #MLGB006) $ 295,265 $ - $ -
ECPF011 "WWTP-Sludge Press Bldg A & E PW" $ 1,307,892 $ - $ -
104 "EPM - 2nd Food Distribution Center (FEMA Local #MLGB007)" $ 32,864 $ - $ -
ECPF009 "Sewer Collection System System Repairs" $ 8,065,000 $ - $ -
PPDR "PPDR/Demo State Covering Costs" $ - $ - $ -
Total $ 10,256,691 $ - $ -

While these PWs have clearly caught the attention of FEMA and have yet to be obligated,
our review of the other 18 approved/obligated PWs revealed potential issues and
payments in contravention of their intended purpose. Whether the action and activities
of the City of Richwood is legally sound or appropriate under FEMA rules and
regulations is squarely in the purview of FEMA. Accordingly, this Report (and our
investigation) defers all legal judgments and decisions to FEMA in consideration of these
PWs.
However, based upon our review, we identified numerous issues with multiple
PWs that warrant closer scrutiny and review by FEMA and/or the FEMA Inspector
General. Some of these observations and identified issues are detailed in the following
Sub-Findings.

SUB-FINDING #7.1: The City of Richwood failed to submit performance reports for
Project Worksheets as required by the grant agreement.

After receiving funding from FEMA for a large or small project, the receiving
entity is required to submit performance reports detailing the progress on the
expenditure of monies. Specifically, Subgrant Condition 16 states:

115
The subrecipient will submit performance/progress reports in compliance with
the WVDHSEM (West Virginia Division of Homeland Security & Emergency
Management) Public Assistance policies starting 60 days from the receipt of
subgrant award and 30 days after the end of the first federal quarter following the
initial subgrant award…. The subrecipient will submit quarterly
performance/progress reports thereafter to WVDHSEM until the grant
performance period ends. Reports are due on January 30, April 30, July 30, and
October 30.

Of 18 PWs approved and obligated by FEMA, Richwood should have submitted


approximately 140 quarterly reports (A quarterly report for each of the 18 PWs over the
last 2 years). Instead, as of June 2018, Richwood had only submitted seven (7)
performance reports. Of the seven, the most recent performance report for PWs was
submitted on September, 30, 2017. No reports were submitted October 30, 2017, January
30, 2018, or April 30, 2018.
To our knowledge, these are the only reports ever submitted to FEMA (and
relatedly DHSEM) regarding PW updates. This is in direct violation of Subgrant
Condition 16, and could warrant deobligation/repayment of the monies. Further, the
absence of progress reports is indicia of the potential misuse of funds and/or re-direction
of funds for their intended purposes. It is possible that the City of Richwood has withheld
submission of these quarterly reports because truthful statements to FEMA about how
the money has actually been spent may cause the de-obligation of funds.

SUB-FINDING #7.2: FEMA money for PW 202 to repair the water intake was diverted
for other uses leaving the water intake still in need of repair.

During the course of our examination, we attempted to trace expenditures against


specific PWs in which FEMA money was provided. One of the more difficult to ascertain
or trace was the approximate $496,736 provided to the City pursuant to PW202. In

116
particular, we could not identify where money was actually spent or performed in
furtherance of the payment.
As a large project, this money should have been first expended by the City and
payment demonstrated as part of the PW to warrant reimbursement by FEMA. Upon
review of the PW, however, we discovered that this PW was submitted on a Cost Estimate
Format (‘CEF”) basis. In other words, the City relied upon an estimate of damages and
obtained pre-payment from FEMA to make the necessary water repairs to the City’s
water intake line from the Cherry River into the City’s water pump system.

117
Despite receiving this money, however, we also noted that the internal spreadsheet
created and used by H.C. Spencer notes the following with respect to the monies received
from FEMA. 67

The last box (which contains internal notes about the status of the project) states:

Project not started.


Funds were used to pay
other invoices for FEMA
PW work completed.

Upon inquiry to the City of Richwood’s public works director, Jack Massey, he
confirmed that the City had received nearly $500,000 to fix the main water intake and the
money had been given elsewhere.

(Pg 5)
BLM: [WVSP LT. BRAD MANKINS] And I'd asked you earlier are you aware
of any projects that were written up by the Town of Richwood or by the
Town of Richwood and FEMA that the Town of Richwood has received
money to complete things with that never got done?
JM: [JACK MASSEY] Yes.
BLM: Okay explain to me what those may be.
JM: Okay uh, the fresh water intake on the North Fork of the Cherry, I know
they had received money for that—

67
See Richwood PW spreadsheet from HC Spencer attached as EXHIBIT # 27

118
BLM: Tell me what the fresh water intake is or what it does.
JM: The freshwater intake supplies the uh, City water plant with water uh,
then from there it's processed with certain chemicals and things and then
produced to the public.

(Pg. 6)
BLM: Okay.
JM: It's the water system.
***
BLM: That's okay. The water intake uh, you said you either felt like or you were
certain that the Town of Richwood had received a substantial amount of
money to—
JM: I'm certain of that.
BLM: Okay any idea how much was received for it?
JM: I believe it was like five hundred thousand.
BLM: Okay.
JM: If I’m not mistaken.
BLM: And that was to fix the water intake on the North Fork?
JM: Yes, Sir.
BLM: Okay that money was received and you said as far as you know nothing
was done to—
JM: No,
BLM: Okay.
JM: --nothing has been done.
BLM: What was supposed to be done with the money that was.
JM: It was supposed to come —we had already uh, put out bids on that to fix
it and people came in and did the bidding process. I never did get to see
any of that. Uh, the money came in and they were supposed to dig
everything up and replace lines and uh, all the damaged stuff and there is
a box there, uh, I don't know how much damage is done to it
(Pg 7)
but—like I said, we—I took a crew of men up and we just put plastic pipes
in to extend it to keep the flow of water going to the town.
BLM: Okay.
JM: And uh—
BLM: Which was just a—
JM: Just a temporary fix.
BLM: A quick inexpensive fix to make things work?
JM: Yes.
BLM: With that fix that you're talking about you did as a temporary fix, was it
anywhere close to five hundred thousand dollars' worth of repairs?
JM: Oh no Sir.
BLM: Okay how much would you guess that -

119
JM: The fix was? Uh, probably with overtime and stuff, about four hundred
dollars.
BLM: So that's labor parts and everything?
JM: Yes. Jack Massey:

“The fix was? Uh,


[Statement of Jack Massey taken by Lt. B.L. Mankins on March
probably with
26, 2018 at 0932 hours, excerpts from noted pages]
overtime and stuff,
As referenced by Jack Massey, the only known repair that about four hundred
dollars.”
was made to the water intake system was an estimated $400 of
work. Upon information and belief, the intake is still in need of
repair and has experienced problems with the water intake system since the so-called
temporary fix. 68 Based upon the original PW award, the City will still need nearly
$500,000 to make these repairs to the main water intake.
Accordingly, despite receiving nearly $500,000 from FEMA to repair and fix the
City’s water intake system, the ICS leadership instead appears to have diverted the
money elsewhere. While the poor recordkeeping of the City and ICS prevents our ability
to definitively show what was paid with the diverted monies, our tracing of the checking
accounts reflect that the following notable items were paid in the weeks following receipt
of the money for the repair of the water intake
According to an analysis of cash-basis activity within the FEMA account, upon
receiving funds for the water intake, the City of Richwood incurred $245,432.72 in
expenses and a transfer to another account. Specifically, $94,075.97 in pay was issued to
three separate individuals and $151,356.75 was transferred from the FEMA account to the
General Operating account.
Upon transfer to the General Operating, FEMA funds were commingled and
lacked sufficient tracking to determine the expenditure of the FEMA funds. While this is
not the entire amount of the assistance received for the particular project, the subsequent

68
Upon information and belief, the City of Richwood recently experienced a water problem arising from a
complication with the unrepaired water intake. It was indicated the temporary intake became clogged causing the
entire water system to shut down. It was our understanding that potable water had to be brought in for residents
while the system was unclogged and the system was put back online.

120
payments to large payrolls and the transfer to the General Operating accounted for
approximately half the distribution meant for the main water intake.

Check
Date: Number: Amount: Vendor:
12/19/2016 0000011 $ 14,378.50 Daniel Ritchey
12/19/2016 0000012 $ 19,946.37 Jeremy Rose
12/19/2016 0000010 $ 59,751.10 Jonathan Cox
Total $ 94,075.97

Transfer
Check Number: Out Date: Amount: To Order of:
Not Applicable 12/28/2016 $ 151,356.75 General Fund

Combined Total $ 245,432.72

Again, the City received nearly $500,000 from FEMA within 6 months of the flood to
repair the water intake. To date, the City records suggest the project hasn’t even started
yet, and the funds have already been expended for other purposes.

SUB-FINDING #7.3: Stacy Raffo sought and obtained duplicative payment from a
private non-profit organization for items FEMA reimbursed in PW470/PW471.

During the course of our review of specific project worksheets, we discovered that
a paid member of the ICS team sought reimbursement from a private non-profit for the
same items and materials contained in PWs that were sought and paid by FEMA. 69

Specifically, ICS member Stacy Raffo authored an email that was forwarded to a
representative of the non-profit seeking over $100,000 for materials and items to repair

69
The nonprofit desires to remain anonymous as it did not want associated with any potential issues with its
voluntary donation. It is our understanding that when the non-profit was subsequently made aware of the
duplicative payment, the nonprofit indicated that it did not want return of monies. Rather, they merely wanted
whatever residual monies remained to be applied generally to the flood recovery.

121
the fields, equipment, and facilities at Pratt and Dain Park as well as the City Park. 70 At
the time, Ms. Raffo was the Executive Director of the Nicholas County Community
Foundation (“NCCF”), which also had been collecting donations for the Richwood flood
recovery. In light of the request, the non-profit made a donation of $110,000 to the NCCF
for the items specified in Ms. Raffo’s email.
However, the materials and items contained in Ms. Raffo’s email were the same
items identified and sought by the City in two FEMA project worksheets. Specifically,
PW470 sought materials and items at the Pratt and Dain Park. PW471 sought materials
and items at the City Park. FEMA approved and paid for both of these project worksheets
in the amount of $96,628.81 and $102,252.55 respectively.
When inquired about this duplicative project, Ms. Raffo minimized her
involvement and asserted that she was merely relaying information that had been
verbally relayed to her over the phone by Jon Cox. During later questioning, Ms. Raffo
shifted the potential veracity of the list upon Mayor Baber and to another individual,
Melissa Adkins:
(Page 98)
4 Q. [AUDITOR OFFICE] Okay.
5 So someone --- who told you that?
6 A. [STACY RAFFO] Either Mr. Cox, Mr. Spencer or Mr. Baber.
7 Q. And did you do anything independently to verify
8 if that was right or wrong?
9 A. No. honestly I didn't. I guess l just trusted
10 that these people, you know, who were more involved in
11 that aspect of the recovery would know and be honest.
***
23 Q. Okay. All right.
24 I want to ask you more questions about it. But
(Page 99)
1 let's go back to the statement just made. You didn't
2 independently verify and they had made you aware that the
3 PW had not been completed yet?
4 A. Yeah
5 And Melissa at that time was, you know,
6 working --. And I'm not trying to throw Melissa under
70
Stacy Raffo was identified on at least one ICS organization chart as in charge of “special projects”.

122
7 the bus by any means either. You know, she was working
8 Long Term Recovery and was in the city a lot. And you
9 know, had talked to the city about a couple different
10 things. And so it was both of our understanding that
11 this was a need.

[Deposition of Stacy Raffo, May 30, 2018, pages 98-99]

Despite Ms. Raffo’s attempted placement of Melissa Adkins as the primary liaison with
the City of Richwood ICS team, Ms. Adkins does not appear to have ever been a member
or paid employee of the Richwood ICS. However, Ms. Raffo was a paid ICS member.
According to documents submitted to FEMA, Ms. Raffo is identified as a paid member
of the ICS team with the title of “Special Projects”. Further, our investigation revealed
that Ms. Raffo was paid nearly $4,500 ($3,632 (net)) for her work as an ICS employee.

Payments to Stacy Raffo (Incident Command Team)

Activity Check Payment Or


Type: Check Date: Type: Number: Name: Debit:
PR 9/09/2016 Check 123708 Raffo, Stacy $ 1,601.16
PR 10/20/2016 Check 123899 Raffo, Stacy $ 1,321.45
PR 11/14/2016 Check 124096 Raffo, Stacy $ 709.73
Total $ 3,632.34

PR - Denotes payroll check transaction

Notwithstanding Ms. Raffo’s minimizing her role, the list emailed to the nonprofit is
nearly identical to the items and materials submitted to FEMA which were paid as part
of PWs 470 and 471.

123
Upon receipt of the $110,000 donation from the nonprofit, Ms. Raffo began
coordinating with Mr. Cox and others ICS team members to fix the ballfields and
facilities. A review of invoices and payments reflect significant involvement by Ms. Raffo
in the expenditures at the ballfield with NCCF funds. 71
The actions of Ms. Raffo also apparently caught the attention of the NCCF board
members as well. According to Ms. Raffo, the NCCF board president learned of the
potential duplicative payment and directed no further payments be made. Ms. Raffo
further indicated that she resigned on May 30, 2017 after the Board President initiated an
investigation into this potential duplicative payment.
2 Q. ls that the correct resignation letter?
3 A. Yes, sir.
4 Q. Okay.
5 Now, a couple questions I have for you in there
6 is, there's a reference made towards the bottom that says
7 the president of the NCCF conducted an unnecessary
8 investigation because she thought I was being dishonest
9 about FEMA reports.
10. What exactly is -- are you discussing here?
11 A. Because the president of the foundation at the
12 time --- and this was why we noted that [NON-PROFIT] money
was
13 spent --- had directed the treasurer not to pay any of
14 the invoices that I submitted for the project.
15 And she, through a friend of hers that was an
16 attorney, conducted an investigation and used the Freedom
17 of Information Act to obtain project worksheets.
18 But she had gotten a project worksheet for City
19 Park and not Pratt Park. And so I was just frustrated
20 that she hadn’t spoken with me about -- and did it
21 secretly.
22 Q. Sure.
23 And you said monies weren't spent while you
24 were there on the Pratt stuff.
1 Is that right?

71
This is significant given Ms. Raffo’s earlier testimony that Melissa Adkins was the primary person working with
the City. Our review of information did not support or substantiate Ms. Raffo’s assertion that Ms. Adkins was the
primary one working with the City.

124
2 A. No, she had authorized the treasurer not
3 to - - -.
4 Q. Okay.
5 And the reason I ask is, it looks like a couple
6 of invoices did go through while you were still there.
7 A. Yeah. I’m sorry, a couple of the smaller
8 things would have. I’m sorry, I was thinking about
9 larger invoices.

[Deposition of Stacy Raffo, May 30, 2018, pages 102-103] [***NOTE: The reference of the
named private non-profit has been removed and replaced with generic “Non-Profit” on
line 12].
Ultimately, based upon our review of partial NCCF records, we determined that
Ms. Raffo spent approximately $48,712 of the funds received from the private non-profit
in furtherance of the flood recovery at the parks. 72

72
While not pertinent to this specific Sub-finding, we did note that a payment of $6,154.60 was made to the City
of Richwood on May 30, 2017, the same day as Ms. Raffo’s resignation. While Ms. Raffo denies having any
knowledge of the payment, the timing of the payment was noteworthy.

125
More problematic for the City, this potential duplicative payment may ultimately
cause the de-obligation the City of Richwood’s PWs relating to the parks. Specifically,
Subgrant Condition # 2 expressly prohibits receipt of duplicative monies:

The emergency or disaster relief work therein describes for which Federal/State
assistance is requested hereunder does not or will not duplicate benefits received
for the same loss from any other source.

[Request for Public Assistance (State), dated by Mayor Baber July 6, 2016] 73
If deemed to have been duplicative by FEMA, it is possible PW 470 and PW471
may be de-obligated and the City may have to repay both PWs back to FEMA.

SUB-FINDING #7.4: Questionable Purchases of Turface in PW470/PW471


Another allegation that arose during investigation into the project worksheets
relating to the field and parks (470 and 471), is that the City of Richwood allegedly
submitted a need for 52 tons of Turface baseball field sand on both PWs (for a grand total
of 104 tons) when the original amount requested on PW 470 appeared sufficient for
proper field rehabilitation at all parks. The date of the project worksheet provided for
Pratt and Dain Park (PW470) is September 13, 2016. The date of the project worksheet
provided for City Park Baseball Field (PW 471) is October 17, 2016.

73
Copy of the RPA is attached as EXHIBIT # 26

126
[PW #470]

127
[PW# 471]

Based upon our investigation, it appears that FEMA provided funding for 52 tons
of Turface under both PWs. The reimbursements provided by FEMA through West
Virginia Department of Homeland Security and Emergency Management were as
follows: $96,628.81 and $102,252.55 respectively.

Despite getting funds for the purchase of nearly 104 tons of Turface, we were only
able to identify that only 52 tons were actually purchased. The Turface was purchased
from vendor Bruce Donaldson, who was paid $22,620.

128
Per the installation instructions from Turface, the recommended amount of
Turface incorporation for a field is one ton (40 bags) per 1,000 square feet of skinned area.
This would mean that approximately 23 tons of Turface would be needed for Pratt and
Dain Park to properly incorporate Turface into a 12,000 square foot baseball field and an
11,000 square foot softball field. Additionally, seven tons would also be needed for the
City Park baseball field which is 7,000 square feet. This would be a total of 30 tons needed
to properly incorporate Turface into all three fields mentioned in the aforementioned
PWs.

129
The total amount of Turface requested to be bought was 104 tons between the two
PWs, of which, 52 tons was to be used on the City Park field only. Per Turface, Inc.
installation instructions, the amount requested by the ICS would be entirely too much for
the amount of skinned area on a Little League baseball field. If only 30 tons of Turface
were used for all fields, that would leave unaccounted 22 tons of Turface.

During a site investigation of all three fields, an examiner found six tons of Turface
under a white tarp beside the Little League field at City Park. Additionally, the examiner
found another ton of Turface beside the baseball field at Pratt and Dain Park. With the 30
tons of Turface allegedly being used between the three fields and the seven tons of
Turface found between the two parks, there are still 13 tons of Turface which,
presumably, should still be available for use or in storage. These 13 tons accrue to
$5,655.00 in unused product.

The result of the Auditor’s office investigation into PWs 470 and 471 indicates that
either the ICS authors of the PWs were ignorant in their estimates of the amount of
Turface needed for the fields or they were aware of the appropriate amount of Turface
needed and sought to take advantage of FEMA funding. At best, the overestimation
showed a lack of responsibility on the part of the ICS for not verifying estimates. At worst,
it was a purposeful request for resources the city did not need. Regardless, the Turface
PWs appear to have sought duplicative FEMA funding for the Turface.

Finally, it is worth noting that an additional 52 tons of Turface (for a total of 156
tons) were also sought (and funding provided for) from the private non-profit as part of
the $110,000 duplicative request by Stacy Raffo referenced in Sub-Finding # 7.3.

130
SUB-FINDING #7.5: City of Richwood was paid over $200,000 under PW 970 (Rails
to Trails) for work that appears to have been donated from another source

Another Richwood Project Worksheet that caught our attention related to repairs
to the City’s Rails to Trails. Specifically, the City received over $200,000 to remove debris,
replace culverts, excavate ditch lines, and gravel.
During our investigation we discovered information that a significant portion of
the Rails to Trails repairs were completed by donations and volunteers, including
specifically United Coal Company. Upon review of the approved PW, we noted
reference to donated work. However, the requested monies were premised upon a Cost
Estimate Format (CEF) based upon an invoice by Jamie Woods, by and through one of
his companies (Battlecreek).
While CEF is a recognized methodology of calculating work to be performed, our
examination of the scope of the work to be performed suggests that a significant majority
of that work was already performed by the volunteers and donated equipment.
Further, upon tracing the monies after receipt by the City, we were unable to
identify expenditures directly related to PW 970. While it is possible an unknown vendor
performed work on the Rails to Trails, we were unable to find such expenditures. Rather,
it appears that the PW 970 monies were directed towards other purposes instead of the
Rails to Trails repairs.
Overall, we are concerned about the use of the CEF and absence of identifiable
expenditures in furtherance of this project, and would recommend closer scrutiny and
examination of this particular PW by FEMA and FEMA’s Office of Inspector General.

131
SUB-FINDING #7.6: The City of Richwood is seeking reimbursement for
questionable and unreasonable salaries paid to ICS team members under
PW#TAMB001.

Related to the issues presented in Sub-Finding #1.3 and Finding #4, the City has
sought reimbursement from FEMA for the salaries of the ICS team members. As with
other PWs discussed in this Report, the size and scope of this particular PW has varied
over the last two years. At one point, this PW (#TAMB001) was a catch-all salary project
worksheet. However, as consultants have reviewed and shaped the PW, it has increased
and decreased in the amount sought to the point that we were unable to fully ascertain
the exact number of versions submitted to FEMA. Indeed, the numbers even varied
within a single PW version.
For example, the scope of work in one version sought $231,502.54:

132
Yet, the cost summary page of the same PW calculated a differing amount:

133
Further, a breakdown of the ICS members by check payment and hours was
discovered in the City’s records. 74 According to this document, the total monies paid to
ICS members were $343,585.36.
Ultimately, the current amount being sought by the City of Richwood under
PW#TAMB001 is believed to be $231,502.54. 75
It is important to note that this particular PW is of special concern to the City. The
salaries paid to these ICS members are one of the primary reasons for the City’s financial
distress. At the time they decided to pay themselves, the ICS leadership team (including
Mayor Baber) were all under the misbelief that FEMA was going to reimburse them
within 90 days for these salaries. Hence, the expansion and size of the ICS did not appear
to concern the ICS leadership as they thought the City would eventually be made whole.
When the City’s first consultant questioned the size and scope of this PW, he was
ultimately fired. Mayor Baber then brought in another consultant (Simmons) to try and
further refine the PW to get FEMA to approve this PW.
To date, this PW has not been approved by FEMA as an authorized expenditure,
and continues to remain under review. While we are not privy to FEMA’s decision-
making or basis for review, our examination of the PW did find several questionable
issues relating to the retention and payment of the ICS members. While many of these
are contained in our prior findings on this topic, there are additional reasons why this
PW may not be approved by FEMA.

(1) Size and reasonableness of the ICS team


A 30-person ICS team is unneeded and excessive for the size and scope of the
City’s recovery. The point of an ICS team is to bring structure and organization to an
entire City’s flood recovery. Many of the individuals paid as ICS members were already

74
A copy of this TAMB001 employee payroll data is attached as EXHIBIT #36. However, we note this calculation
spreadsheet appears to include individuals outside of the ICS and/or that reimbursement is sought under a
different PW.
75
We would note that this PW seeks reimbursement significantly lower than the amount identified by our
examination as attributable to the ICS team in Finding #4.

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volunteers. They could have remained as unpaid volunteers, and performed the same
tasks. Instead, the ICS leadership opted to pay the team members.
Additionally, while the ICS leadership paid hourly rates that have been deemed
generally acceptable under FEMA’s national guidelines, they were unreasonable in the
context of this disaster. For many of the ICS members, their rate of pay greatly exceeded
their rate of pay prior to the flood. Indeed, many of the ICS members were unemployed
prior to the flood and/or being paid near minimum wage rates. Yet, after the flood, they
paid themselves rates equal to nearly $80,000 salaries.
Finally, at least one individual’s rate and amount of pay appears unreasonable on
its face, and is likely one of the main reasons why this PW remains unapproved.
Specifically, Jon Cox was paid $185,450.80 at a base rate of $61.54/hr. and an anticipated
overtime rate of $92.31/hr. Although Mayor Baber has declared Mr. Cox’s pay as a
“bargain at the price”, the sheer amount of money in such a short amount of time, raises
significant issues and flags which has likely prompted the continued review of this PW
by FEMA.

(2) Several members obtained lump sum payments after cessation of ICS,
instead of contemporaneously with services provided.

Another issue identified during our examination of this PW is that it seeks


reimbursement for monies not contemporaneously paid for services rendered under
FEMA guidelines, reimbursement of salaries may be acceptable if they are actual
employees that are hired and paid in accordance with City and State personnel rules and
labor laws. This would necessitate payment to the employee at the time services are
rendered (e.g. every 2 weeks). However, at least three members of the ICS team were not
paid as typical employees. Rather, they deferred their payments for several months, and
were not paid contemporaneously with services rendered.
Specifically, our review found that Jeromy Rose, Jon Cox and Dan Ritchey were
paid lump sum payments AFTER the ICS had disbanded.

135
ICS Deferred Payroll

Check Pay Period


Date: Number: Ending* : Amount: Employee:
12/19/2016 0000011 12/18/2016 $ 14,378.50 Daniel Ritchey
12/19/2016 0000012 12/18/2016 $ 19,946.37 Jeremy Rose
12/19/2016 0000010 12/18/2016 $ 59,751.10 Jonathan Cox
Total $ 94,075.97

* Denoted as "Pay Period Ending 12/18/2016"; however, it is noted that


this is payroll allegedly elected as "deferred" by the above individuals.

It is worth noting that these payments were made around the time that the City
began receiving an influx of FEMA monies for other approved PWs.

(3) The ICS’s hiring of friends and family may have violated the FEMA grant
conditions

In order to receive money from FEMA, the City of Richwood had to agree to
certain conditions as a subgrantee. These subgrant conditions were contained within
the Request of Public Assistance (State) from the West Virginia Division of Homeland
Security and Emergency Management that was agreed to, and signed, by Mayor Baber
on behalf of the City of Richwood on July 6, 2016. 76 The Subgrant conditions state, in
pertinent part:

The applicant will prohibit employees, contractors, subcontractors for a purpose


that is or gives the appearance of using their positions for personal gain of
themselves or those with whom they have family, business or other ties.

76
A copy of the RPA (State) is attached as EXHIBIT # 26

136
Request for Public Assistance, Subgrant Condition 7

As reflected in Sub-Finding #1.3, the City appears to have violated the


aforementioned condition by allowing the ICS team to hire and pay their friends, family
and classmates. Among those highest compensated members of the ICS team were those
hired by Rose, Cox, and Drennen.

SUB-FINDING # 7.7: The ICS leadership hired classmates and business


associates as vendors under questionable emergency contracts and paid them in
excess of $500,000.

In addition to enriching themselves and relatives as ICS members, Jeromy Rose


and Jon Cox utilized their ICS position to hire and pay their classmates and friends as
vendors to do the City’s flood recovery work. In particular, our examination revealed
that four primary vendors were awarded the expensive debris removal and other
contracts as part of the flood recovery. The selection of these individuals and companies
as paid vendors were primarily based upon Jeromy Rose’s connection to them.
Specifically, they were high school classmates of Jeromy Rose and Jon Cox.

Based upon our examination, the following vendors were paid a total of nearly
$527,000 with still another $150,000 invoiced to be paid.

Invoiced Amount
Vendor: Amount: Paid:
M.D. Russell $ 52,505.00 $ 52,505.00
J.C. Roman Construction $ 42,399.00 $ 42,399.00
AJM Corporation (Jamie Woods) $ 368,935.15 $ 357,947.15
Battle Creek (Jamie Woods) $ 213,204.50 $ 73,678.46
Total $ 677,043.65 Total $ 526,529.61

With respect to the above companies, all are either high school classmates of Jeromy Rose
and Jon Cox, or is related to someone that is a classmate.

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Further, our investigation found that all three contractors were hired as a direct
result of an emergency bid placed for debris removal and signed off by Bob Henry Baber.

In some instances, contracts and hourly rates were hand-written and signed by Bob Baber
when he presumably was out of town (e.g. June 23, 2016).

138
139
140
While the selection of classmates or even friends with local businesses is not a per
se violation, the relationship coupled with the manner and mechanism in which they
were retained (e.g. questionable no-bid emergency contracts) does “give the appearance
of using their positions for personal gain of those whom they have family, business or
other ties.” See Request for Public Assistance, Subgrant Condition 7.

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SUB-FINDING #7.8: The City of Richwood failed to timely repay City of Hurricane
with FEMA designated funds received in PW578.

As yet another example of the City not using FEMA monies for their approved
project, the City of Richwood, on multiple occasions, has failed to repay in-full, or at all,
those vendors and/or municipalities that provided assistance in the form of labor and
contracting or monetary/personnel loans. In one instance, Richwood received aid in the
form of public works employees and police officer from the City of Hurricane, a city that
also provided Richwood with a $32,000.00 monetary gift.
Richwood submitted a project worksheet (PW 578) to reimburse the City of
Hurricane and the Brooke County Commission for mutual aid that it had provided.77
FEMA approved the PW and paid the City of Richwood on February 27, 2017
approximately $90,542, of which $27,473.98 was to be paid to the City of Hurricane.
Despite the City of Hurricane being a sister city to Richwood, and giving
Richwood a separate donation of $32,000, the City of Richwood did not pay the money
to the City of Hurricane upon receipt. Rather, it used the money for other purposes.
It was not until our examination began inquiring about the status of the payment
to Hurricane that the money was reimbursed to Hurricane. Specifically, on March 7, 2018,
nearly two years after the flood, and more than 12 months after it was received by the
City, the monies were paid to Hurricane.

FINDING #8: The State failed to properly or effectively oversee or administer the
FEMA Public Assistance Grant program.

While a lot has been written publically about the failure of the State Department
of Military Affairs and Public Safety in FEMA oversight, our investigation equally
encountered a lack of oversight or proper administration by the State. As referenced in

77
The Brooke County Emergency Management Agency (“EMA”) provided mutual aid along with Hurricane. The
City paid the Brooke County EMA $48,833.44 for the Brooke County aid.

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Finding #5, the lack of leadership and timely guidance fostered the retention of
consultants by local governments.

During the course of our investigation, we continually encountered a general


sentiment from local governmental officials of not knowing what to do. Indeed, from a
State perspective, the handling of a disaster (both financially and practically) needs to
become a priority initiative going forward. While recent media reports have suggested a
lot of management changes within DHSEM have allegedly been made, further training,
guidance, and initiatives need to undertaken with local governments in the handling of
a disaster. 78

While additional training and guidance is a potential long-term task, a more


immediate concern for DMAPS/DHSEM is the handling of FEMA monies. During the
course of our examination of Richwood PWs, we discovered that several PWs had been
fully completed and that they were waiting for the State to perform the close-out on the
PW.

The significance of the close-out is (1) it allows the State to verify work was
properly and appropriately completed, and (2) the City is provided the 25% retention
money held by the State.

During our investigation, we inquired about the status of the close-outs and were
shocked to learn that the State was behind on close-outs, and were still trying to complete
close-outs from disaster declaration in 2012.

(Pg. 101)

19 Q. Okay. On the next page, there were two in the


20 middle, 444 and 223. The reason I ask you about these,
21 because both notations are that they've been sent for
22 close-out and are awaiting state responses for close-out.
23 I just didn't know if you have any information about

78
One such idea may be a handbook/guidebook covering all aspects of a crisis for the first several weeks. This
could include procurement and contracting issues, as well as fiscal management issues relating to FEMA monies
and donations.

143
24 either one of those and see if that is, in fact, correct
(Pg. 102)
1 that they're waiting for state response for close-out.
2 A. I do know they have requested final inspections
3 on two. I don't know that it is those two, but I do know
4 that they have requested for two.
5 Q. Now, do you know - I think – l don’t know of
6 any other ones, so let's assume for purposes of our
7 discussion that those are the two. Do you know what the
8 holdup may be or what is required to complete the close-
9 out?
10 A. We have two FEMA close-out personnel in the
11 State of West Virginia.
12 Q. Okay.
13 A. We have 11 open disasters in the State of West
14 Virginia with 575 project worksheets waiting to be closed
15 out.
16 Q. Wow.
17 A. They're working on it.
18 Q. Okay.
19 A. I mean -
20 Q. No, you answered my question. And I'm not
21 surprised that that's the case. That's why l asked. I
22 was amazed you had l2 events open. That absolutely
23 amazes me.
24 I was just looking to see if there's any
(Pg. 103)
1 veracity to this and whether it may be possible that they
2 are waiting for a close-out is all l was trying to figure
3 out.
4 A. It's not that we're - I mean, they're not
5 making them wait or - it's just they do it on a
6 first-come-first-serve basis. This was a 2016 event. We
7 have 2012, '14 and'15 to get through before we get to
8 2016 so -

[Gregory Myers Examination Under Oath, June 5, 2018, pages 101-103]

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The existence of more than 575 PWs still waiting to be closed out, some of which
date back to 2012, is troubling. The State retains significant monies for each of these close-
outs and the local governments have many times had to front-pay the vendors and need
to be reimbursed.

Until the State performs its close-out review, those monies remain unable to be
directed to the City that is financially in need. Sadly, based upon Mr. Myers testimony,
those impacted by the June 2016 flood may have to wait several more years before they
are fully paid by the State for closed-out PWs.

C.
MISUSE AND MALADMINISTRATION
OF THE CITY’S PURCHASING CARDS

Since 1996, the West Virginia State Auditor has overseen a purchasing card (“p-
card”) program for state agencies. The p-card program works similar to a typical credit
card in which agencies use a designated card to make purchases. At the end of each
month, a statement is provided detailing the purchases made, the agency reconciles the
invoices and receipts, and then the vendor bank is paid by the agency with State funds.
As an incentive, the state receives a percentage of the purchases made on the card back
as a rebate.
In 2008, a new purchasing card program was established for local governments.
Similar to the State program, local governments utilize an Auditor-issued bank card for
purchases. At the end of each month, a statement is provided detailing the purchases
made, the invoices and receipts are reconciled, and then the vendor bank is paid by the
respective local government entity. In return for using the purchasing card, the local
government entity receives a percentage rebate back for purchases made on the p-card.
The local government p-card program is voluntary, and municipalities and county

145
entities have to agree to special rules and regulations to be authorized to use the local
government p-card program.

(1) Rules and Regulations

Pursuant to W.Va. Code § 6-9-2a, the Auditor’s office is specifically authorized to


administer and maintain a purchasing card program for local governments. 79 In
particular, the statute provides:
The purchasing card program shall be conducted so that procedures and controls
for the procurement and payment of goods and services are made more efficient
and so that the accounting and reporting of such payments shall be uniform for all
local governments utilizing the program.

W.Va. Code § 6-9-2a.


In furtherance of the State Auditor’s administration of the program, each local
government must establish and adhere to policies and procedures in the use of the p-
card. While some local governments create their own policies and procedures, most
entities adopt the Auditor’s “Local Government Purchasing Card Policies and
Procedures” (hereinafter “P&P”). 80 The P&P sets forth numerous provisions and
prohibitions relating to the use of a p-card.
In addition to the City’s adoption of the P&P, each public employee or official is
required to sign an agreement prior to receiving a p-card. The agreement, titled “West
Virginia Local Government Purchasing Cardholder Agreement”, sets forth numerous

79
"Local government" is defined by statute as “any unit of local government within the state, including a county,
county board of education, municipality, and any other authority, board, commission, district, office, public
authority, public corporation, or other instrumentality of a county, county board of education, or municipality or
any combination of two or more local governments.” W.Va. Code §6-9-1a(g).

80
Based upon our investigation, the City of Richwood has historically adopted the Auditor’s P&P as their own. The
most recent expression of this adoption occurred on November 15, 2012. Following a period of suspension, the
City of Richwood was again authorized to utilize the p-card and the City Council voted again to formally adopt the
Auditor’s P&P. A copy of the minutes are attached as EXHIBIT # 10 and a copy of the Approved P&P is attached as
EXHIBIT# 21

146
provisions that the employee/official must agree and adhere to in the use of the
purchasing card. Among the more notable provisions are the following:

1. I understand that the Purchasing Card is solely for official business of the
Local Government Entity, intended to facilitate the payment of goods and services,
for conducting official business within applicable activity limits and is not for my
personal use.

2. I understand that the use of the Purchasing Card for payments not
authorized within the Local Government Policies & Procedures will be considered
misuse of the Purchasing Card and will be grounds for (a) immediate forfeiture of
the Purchasing Card (b) disciplinary action which may include termination of my
employment and (c) conviction of a felony. I understand that I am personally liable
for any payments not authorized by the spending unit and permitted within the
Local Government Policies & Procedures.

***
4. I understand that the Purchasing Card is issued in my name and I am
responsible for maintaining the security of the card and for all charges made by or
authorized by me against it. I understand and agree that I will not give the card
bearing my name to any other person to use either on my behalf or someone else's.

***

6. I agree to follow the West Virginia State Law, purchasing guidelines of my


Local Government Entity and established Policies & Procedures.

***

13. I understand it is my responsibility to save all receipts for transactions


posting to my Local Government Purchasing Card and that the issuing bank or
the WV State Auditor's Office does NOT have copies of those receipts.

14. I understand and agree that I will immediately notify my Program


Coordinator and/or the issuing bank of any disputed items appearing on my
monthly bill. I further understand that telephoning will not preserve my rights
and that I must follow up in writing to the issuing bank within 60 days of the date
of posting or may lose my rights to dispute item(s).

147
Each named cardholder must sign this agreement and provide it back to the Auditor’s
office before he or she may begin using the Card. Further, as referenced in the agreement,
use of the p-card also necessitates adherence to other laws, including criminal
prohibitions.

(2) Criminal Prohibitions and Violations.

Pursuant to W.Va. Code § 6-9-2c, a misuse of a purchasing card may result in two separate
felony offenses.

§6-9-2c. Fraudulent or unauthorized use of purchasing card prohibited;


penalties.
(a) It is unlawful for any person to use a local government purchasing card,
issued in accordance with the provisions of section two-a of this article, to make
any purchase of goods or services in a manner which is contrary to the provisions
of section two-a of this article or the rules promulgated pursuant to that section.
(b) It is unlawful for any person to knowingly or intentionally possess with
the intent to use a purchasing card without authorization pursuant to section two-
a of this article or the rules promulgated pursuant to that section.
(c) Any person who violates the provisions of this section is guilty of a
felony and, upon conviction thereof, shall be confined in a state correctional
facility not less than one year nor more than five years, or fined no more than
$5,000, or both fined and imprisoned.
(d) A violation of this section may be prosecuted in the county in which the
card was issued, unlawfully obtained, fraudulently used, used without
authorization, or where any substantial or material element of the offense
occurred.

Stated more succinctly, it is a felony to make purchases in violation of the rules


and regulations (e.g. make personal purchases). It is also a separate felony to utilize a p-
card without authorization.
In addition to the p-card violations, public employees and officials must also
adhere to other criminal prohibitions. For instance, W.Va. Code § 61-3-20, prohibits the
embezzlement of public funds:

148
If any officer, agent, clerk or servant of this state, or of any county, district, school
district or municipal corporation, . . . or any officer of public trust in this state, . . .
embezzles or fraudulently converts to his own use, bullion, money, bank notes,
drafts, security for money, or any effects or property of any other person, which
shall have come into his possession, or been placed under his care or management,
by virtue of his office, place or employment, he shall be guilty of the larceny
thereof. If such guilty person be an officer, agent, clerk or servant of any banking
institution, he shall be guilty of a felony and, upon conviction thereof, shall be
imprisoned in the penitentiary not less than ten years.

* * *

And whenever any officer, agent, clerk or servant of this state, or of any county,
district, school district or municipal corporation, shall appropriate or use for his
own benefit, or for the benefit of any other person, any bullion, money, bank notes,
drafts, security for money or funds belonging to this state or to any such county,
district, school district or municipal corporation, he shall be held to have
embezzled the same and be guilty of the larceny thereof.

W. Va. Code §61-3-20 (in part).


Further, a deprivation of public monies through a fraudulent scheme can also be
raised when misusing a purchasing card.

(a) Any person who willfully deprives another of any money, goods, property or
services by means of fraudulent pretenses, representations or promises shall be
guilty of the larceny thereof.

W.Va. Code §61-3-24d (in part).


The important distinction to be remembered is that a purchasing card is nothing
more than a mechanism of payment. By using the card, they are expending public monies
to which they have been entrusted as a public employee or official. Hence, criminal
prohibitions governing misuse of public monies are applicable to the conduct of an
employee or official utilizing a purchase card to make a purchase or expenditure. 81

81
While not specified above, provisions of the Ethics Act also apply to the expenditure of public monies using the
purchasing card. For example, W.Va. Code § 6B-2-5(b) prohibits public employees and officials from using their
public position or public resources for their own private gain or the private gain of another.

149
FINDING #9: The City of Richwood failed to adhere to any effective
administration or level of oversight of the City’s use of purchasing cards.

During the course of our investigation into the City of Richwood’s finances, it
became readily apparent that the City of Richwood failed to adhere to the P-card policies
and procedures it had formally adopted. In particular, the City had minimal (at best)
documentation supporting payments; it had no segregation of duties during
reconciliation; and it had little to no oversight of the p-card purchases. 82
Each of these deficiencies clearly violated the requirements of the P&P, which set
forth minimal standards to be adhered by the City. Some of the more notable provisions
that were violated were the following:

2.4 Internal Controls

Sufficient internal controls should be in place at each Entity to ensure compliance


with applicable laws, rules and regulations, P-Card Policies and Procedures, and
other governing instruments. It is recommended that each Entity develop and
document internal control procedures that ensure P-Card usage is consistent with
this manual as well as any applicable governing instruments and to develop
guidelines for distribution to cardholders.

Local Government Purchasing Card Policies and Procedures adopted by the City of Richwood,
(in part). 83

The City did not appear to have any formal internal control procedures governing the
use of the City’s p-cards. Rather, the informal practice was to make expenditures (often
without pre-approval), and return an invoice to Abby McClung (an employee working
for the City). We were not provided, nor did we discover, any written policy in place
governing the use of the card by City officials outside of the Auditor’s P&P. More

82
As referenced in Finding #1 of this report, the City Council and officials had very minimal oversight of the
finances as a whole, not just the purchasing card.
83
A copy of the P&P is attached as EXHIBIT #21

150
importantly, there was no enforcement or penalties specified for those failing to submit
the required documentation or who failed to adhere to the P&P.

2.4.1 Segregation of Duties

The Entity P-Card Coordinator(s) should not handle all aspects of the P-Card
process. Sufficient internal controls should be established and implemented to
ensure that when a P-Card Coordinator is also a cardholder, some other
knowledgeable individual such as a direct supervisor or a different Coordinator
reviews and approves transactions appearing on the Coordinator’s P-Card. The
reconciliation process should include a knowledgeable and independent review
of documentation, receipts, and transaction reports.

Local Government Purchasing Card Policies and Procedures adopted by the City of
Richwood

This was one of the more disregarded provisions of the P&P. The City entrusted all
oversight, reconciliation, and payment of the City’s p-card to one person, Abby McClung.
While the payments by Ms. McClung should have been reviewed by the City Council’s
Finance Committee and/or the Recorder, this did not appear to have occurred. (See
Finding #1 herein).
Even more problematic was that Ms. McClung was the named cardholder on at
least four (4) master p-card accounts, and no other individual was designated to review
her purchases. Instead, Ms. McClung was authorized to purchase something with a card,
reconcile her own documentation, and then pay for her own purchases without anyone
double checking or reviewing her activity.
While this lack of segregation is generally seen in smaller municipalities with only
a few employees, there were several other employees and officials in place at Richwood
that should have been authorized and directed to review her work.

2.4.2 Proper Oversight

The Entity’s Coordinator must ensure proper oversight of P-Card use within his
or her Entity. This includes developing internal controls and operating procedures
151
that ensure a thorough review of the Entity’s P-Card transactions and assurance
that each transaction is for official business.

Local Government Purchasing Card Policies and Procedures adopted by the City of
Richwood

As with the City’s finances, there was no oversight of the p-card purchases. Rather, the
City Council and City officials merely deferred any fiscal oversight to employee Abby
McClung. While the City Council ultimately exercised some oversight over Mayor
Baber’s p-card purchases, this occurred nearly a year into his term. Ironically, some of
the same City officials and employees that criticized Mayor Baber for his poor
recordkeeping and expenses with the p-card, were also at fault for similar failures (e.g.
Chris Drennen).
Further, the only person tasked with the oversight (Abby McClung) failed to
properly oversee the p-card program. She failed to enforce documentation requirements.
She appeared to often approve items without written support, and failed to make
reasonable inquiry when some of the purchases even appeared suspect. This was typical
for purchases made by Mayor Baber (her supervisor). She rarely questioned his
purchases, and often times appeared to simply accept a verbal statement about the basis
for a purchase in lieu of any documentation. In failing to institute their own oversight
(e.g. Finance Committee), the Council allowed the Mayor to be in a position to intimidate
the only person designated with reviewing his p-card purchases.

2.4.3 Physical Controls

Physical controls should be present to ensure security of cards and records.


Records should be stored in a secure location to which only authorized individuals
have access.

Local Government Purchasing Card Policies and Procedures adopted by the City of Richwood

While the Mayor’s absence of documentation and receipts for his purchases initiated the
inquiry into City’s finances, he was by no means an anomaly. Rather, at the early outset

152
of our investigation, we were concerned and disturbed by the limited amount of
documentation maintained by the City for the p-card purchases. The record retention set
forth in the P&P states, in relevant part:

For P-Card inspection and post-audit review purposes, it is recommended that


Entities keep all documentation relating to the P-Card Program (cardholder
applications, agreements, maintenance forms and training certificates) as long as
the P-Card is active or for two (2) years from the end of the fiscal year in which the
last transaction was completed, whichever is longer. Additionally, all transaction
documentation should be kept until a post-audit review has been completed by
either the State Auditor’s Office Chief Inspector Division or a firm approved by
the Chief Inspector.

§6.2, Local Government Purchasing Card Policies and Procedures adopted by the City of
Richwood
Upon inquiry for the records, we were directed by Ms. McClung to a few binders
that she maintained that presumably contained the full extent of the supporting
documentation of the p-card purchases. Further investigation did not reveal other
locations or sources of documentation (e.g. invoices, purchase orders, receipts, etc.) at
City Hall. 84 Hence, a significant portion of our investigation was spent trying to obtain
invoices and receipts from the original vendors, as well as purchase orders or directives
from Council to support a payment.
Of the nine (9) primary p-cards in use by the City, zero (0) cards had complete
documentation. Rather, the cards had an average of 34% documentation for purchases,
with some having significantly less.

84
During the course of our investigation, we conducted interviews with various individuals and raised with them
the absence of supporting documentation for their purchases. While they often were able to verbally explain a
basis for the purchase, most were unable to produce further documentation. A few individuals did subsequently
produce documentation purporting to support some of their purchases. However, this documentation was not
ever located in the City’s records.

153
Percentage
Source
Number of Documents
Number of Source per Number of
Cardholder: Card Number Ending: Date Range Active: Transactions: Documents: Transactions:
Jack Massey 4545 2/19/17 - 9/21/17 99 66 67%
Chris Drennen 2671 11/4/16 - 5/8/17 21 4 19%
Lloyd Cogar 3308 7/5/15 - 11/1/16 27 5 19%
Lloyd Cogar 7606 10/16/16 - 8/20/17 44 11 25%
Abigail McClung 6889 1/5/16 - 8/11/16 79 47 59%
Abigail McClung 9055 6/28/16 - 11/22/16 87 0 0%
Abigail McClung 3562 12/14/16 - 8/9/17 111 61 55%
Abigail McClung 9577 8/27/17 - 9/20/17 10 4 40%
Bob Henry Baber 4537 2/19/17 - 8/11/17 86 17 20%

While the absence of records doesn’t necessarily mean the purchase is fraudulent, the
lack of enforcement or oversight of such documentation fosters an atmosphere for fraud
to be able to take place. If no one is appropriately reviewing purchases nor requiring
supporting documentation, then any potential obstacle to an employee making a
fraudulent purchase is removed.
Overall, the City failed to institute any meaningful or effective administration or
oversight of the City’s use of p-cards. As with the other finances of the City, a head-in-
the-sand approach fostered an atmosphere of non-compliance and only minimal review
of purchases. City employees and officials were unable to clearly articulate their own
standards, and could not provide a copy of their
policies and procedures upon request.
While the absence of records doesn’t
Notwithstanding their adoption of the P&P, City necessarily mean the purchase is
Council allowed the purchasing card program to fraudulent, the lack of enforcement or
oversight of such documentation
function without adherence to these standards fosters an atmosphere for fraud to be
which resulted in multiple unauthorized able to take place.

purchases, potential personal purchases and lack


of supporting documents. While our investigation revealed multiple questionable
purchases by various individuals, the absence of documentation or contemporaneous

154
review by City officials prevented us from being able to quantify the full extent of
potential fraudulent purchases made on the City’s purchasing cards.

FINDING #10: Mayor Bob Henry Baber misused the purchasing card on multiple
occasions in contravention of state law and the purchasing card agreement.

The Mayor’s misuse of a purchasing card is what gave rise to the overall
investigation of the City of Richwood finances. During the course of our investigation,
we identified that Mayor Baber utilized his issued purchasing card for 86 transactions
totaling $6,245.17. Upon inquiry to management, it was determined that many of these
transactions were not pre-approved or at Council directive. Of these 86 transactions,
there were 24 transactions for which no receipt or invoice was provided to substantiate
the claim, and at least 33 of which appear to have been personal in nature. Even more
disturbing, is that Mayor Baber admitted giving his purchasing card at least 19 times to
someone else to make purchases.
Each of these acts all appear to violate the City P&P as well as state law governing
the use of the purchasing card. Surprisingly, the Mayor has admitted these misuses, and
has even made known publically his misuses on social media and self-initiated press
conferences.
During the course of our investigation, multiple individuals highlighted the
Mayor’s attraction to the media spotlight. Often times, this was raised in the context of
the flood recovery and the school consolidation battle. But, the Mayor’s demand for
media attention was prevalent during our investigation. The Mayor often initiated press
conferences outside of the Auditor’s office, and commented on his social media. While a
politician’s attraction to media attention is typically not noteworthy, Mayor Baber’s self-
initiated publicity is significant in that he oftentimes made admissions against his own
self-interest. Indeed, some of his statements could be construed as admissions of criminal
conduct.

155
While this Report does not attempt to ascribe a motive behind the Mayor’s desired
publicity, his comments nonetheless reflect admissions of misuse of the p-card. His
public admissions, however, minimized the overall misuse that we discovered during the
course of our investigation.

SUB-FINDING # 10.1: Mayor Baber repeatedly gave his card to unauthorized users

While Mayor Baber admitted in his public comments that he gave his card to other
people to use, our investigation revealed that the Mayor regularly allowed unauthorized
users to use his p-card. Specifically, of the 86 transactions processed on Mayor Baber’s
purchasing card, at least 19 purchases appear to have been conducted by someone other
than the Mayor.
During an investigative interview of Mayor Baber under oath, Mayor Baber was
asked about each p-card purchase. According to his sworn testimony, Mayor Baber
admitted that on at least 19 purchases he gave his card to someone else to make these
purchases.
Of significance with these unauthorized uses, each of Baber’s admitted 19 misuses
constitutes a potential crime.
It is unlawful for any person to knowingly or intentionally possess with the intent
to use a purchasing card without authorization pursuant to section two-a of this
article or the rules promulgated pursuant to that section.

W.Va. Code §6-9-2c(b)


Further, the P&P adopted by the City of Richwood expressly prohibits the
delegation of a p-card to another individual.

3.4 P-Card Delegation


P-Card delegation is prohibited. P-Card delegation is the practice of allowing an
individual other than the cardholder whose name appears on the front of the P-
Card to have access to the P-Card or P- Card number to initiate or complete a
transaction. P-Card delegation increases the risk of fraud and cardholder liability.
P-Card delegation includes allowing an individual other than the cardholder to:

156
have physical possession of the P-Card to make payments to point-of-sale
vendors;
have access to the P-Card number and expiration date to make payments
via telephone, internet, or in person;
have access to receipts or invoices that display the P-Card number and
expiration date.
P-Cards are issued in an individual’s name. Only that person named on the P-Card
is the authorized user.

Local Government Purchasing Card Policies and Procedures adopted by the City of
Richwood

Finally, the Purchasing Card Agreement signed by Mayor Baber expressly

provides: 85

4. I understand that the Purchasing Card is issued in my name and I am


responsible for maintaining the security of the card and for all charges made by or
authorized by me against it. I understand and agree that I will not give the card
bearing my name to any other person to use either on my behalf or someone else's.

Based upon our examination, including the admissions of Mayor Baber, it appears that

the Mayor Baber allowed more than $2,022.68 (19 purchases; including those he had

stated he had not known, but could have been another employee “Cara”) in purchases to

be made by unauthorized users in violation of law. In addition to the amount listed

above, Mayor Baber was uncertain if he, or another, had made 14 purchases amounting

to $977.32.

SUB-FINDING #10.2: Mayor Baber made multiple questionable/improper


purchases with his purchasing card

85
A copy of Mayor Baber’s signed Purchasing Card Agreement is attached as EXHIBIT # 22

157
During the course of our review, we determined that there were a total of 86
transactions made with Mayor Baber’s card from the time period of February 16, 2017 to
August 11, 2017. While all of these purchases were not personally made by the Mayor
(See Sub-Finding #10.1), those that he did make were routinely done without Council
approval.
In fact, during the course of our investigation, we had difficulty finding any
purchase by Mayor Baber that was pre-approved by the Richwood City Council. Further,
no verification could be found within the Council minutes that any charge was pre-
approved or was related to official municipal business. In addition, the purchasing card
invoice payments do not appear to have presented to or approved by council. Rather, it
appeared that these purchasing card invoices were continually paid without direct
authorization from the council.
While the absence of pre-approval is problematic, our investigation uncovered
multiple questionable purchases, many of which appear to be personal in nature.
Pursuant to W.Va. Code § 6-9-2c,
(a) It is unlawful for any person to use a local government purchasing card, issued
in accordance with the provisions of section two-a of this article, to make any
purchase of goods or services in a manner which is contrary to the provisions of
section two-a of this article or the rules promulgated pursuant to that section.

In total, it appears Mayor Baber made 33 separate charges totaling $1,526.95 for personal
trips or occasions without any oversight or express documented approval from City
Council. Some of these questionable expenditures include the following:

A. Trip to Ridgeway, Pennsylvania for woodcutting event

During the course of the investigation, we discovered that Mayor Baber took a personal
trip to Ridgeway, Pennsylvania and used his p-card for personal charges. Upon inquiry
of Mayor Baber, he stated that he attended a chainsaw woodcutting competition with

158
another individual who was purportedly a local chainsaw artist. During this trip, Mayor
Baber made six separate charges on his p-card, totaling to $308.24 for the benefit of he
and his traveling companion.
When inquired about these expenditures, Mayor Baber stated:
(Pg. 92)
23 Q. What was this purchase for?
24 A. This was food for myself and Mark Johnson, who
(Pg. 93)
1 were going to a chain saw festival in Pennsylvania.
2 Q. And who was with you?
3 A. Mark Lynn Johnson, chain saw artist.
4 Q. When was this purchase made?
5 A. March 17th, 2017.
6 Q. Tab No. 15. I'm sorry, 14. Do you recognize
7 this receipt?
8 A. I do.
9 Q. Who was the vendor?
10 A. Summit Manor Motel.
11 Q. And did you put this charge on your P-card?
12 A. Yes, sir.
13 Q. And what was this charge for?
14 A. Rooms for Mark Lynn Johnson and myself at the
15 chain saw festival in Ridgway, Pennsylvania.
16 Q. What was the date?
17 A. 8/18 or 3/18--excuse me --2017.
***
(Pg. 95)
3 Q. Mr. Baber, do you recognize this transaction --
4 A. Yes, I do.
5 Q. --on Tab 17?
6 A. Uh-huh.
7 Q. Who is the vendor?
8 A. Sheetz, Brockway, Pennsylvania.
9 Q. Did you make that purchase?
10 A. I did.
11 Q. Was it on your purchasing card?
12 A. Yes, sir.
13 Q. And what was it for?
14 A. Food. And drinks.
15 Q. Was the food just for you or was someone with
16 you?

159
17 A. This was still with Mark Lynn Johnson, the
18 chain saw artist.
19 Q. It was food for both of you?
20 A. Yes, sir.
21 Q. And Tab No. 18. Do you recognize this receipt?
22 A. Yes, sir.
23 Q. Who is the vendor?
24 A. Sheetz, Connellsville, Pennsylvania.
(Pg, 96)
1 Q. Did you make that purchase?
2 A. I did.
3 Q. With your purchasing card?
4 A. Yes, sir.
5 Q. What was this purchase for?
6 A. This was for gasoline for Mark Lynn Johnson's
7 Jeep.
8 Q. And the amount?
9 A. 29.34.

[Examination Under Oath Bob Baber, Dec. 14, 2017, excerpts from pgs. 92 -96]
Notwithstanding Mayor Baber’s stated basis for the trip, this trip was unable to be
confirmed as being for official purposes or for legitimate business for the City of
Richwood.

B. Trip to Philadelphia and New York for personal event and school consolidation

During the course of the investigation, we discovered that Mayor Baber took
another personal trip to Philadelphia, Pennsylvania and New York, New York in which
he used his p-card for personal charges. During the course of this trip, he made 19
separate charges totaling $736.69 on this trip. Of the charges, 12 amounting to $669.53
had support documentation; seven charges totaling $67.16 were missing source
documentation.

160
Charges with source documentation present:
Posting
Tran Date Account Supplier Amount
Date
5/4/2017 5/2/2017 XXXX-XXXX-XXXX-4537 United $ 36.60
5/4/2017 5/2/2017 XXXX-XXXX-XXXX-4537 United $ 36.60
5/4/2017 5/2/2017 XXXX-XXXX-XXXX-4537 Amtrak Agenc $ 73.00
5/4/2017 5/3/2017 XXXX-XXXX-XXXX-4537 Uber US May03 Dgmov $ 33.67
5/4/2017 5/3/2017 XXXX-XXXX-XXXX-4537 Uber Technologies Inc $ 34.32
5/4/2017 5/3/2017 XXXX-XXXX-XXXX-4537 Uber Technologies Inc $ 44.99
5/5/2017 5/3/2017 XXXX-XXXX-XXXX-4537 Go Mart #53 $ 28.00
5/5/2017 5/4/2017 XXXX-XXXX-XXXX-4537 Uber US May04 Oagbq $ 23.56
5/8/2017 5/6/2017 XXXX-XXXX-XXXX-4537 The New Yorker Hotel $ 240.59
5/8/2017 5/7/2017 XXXX-XXXX-XXXX-4537 United $ 36.60
5/8/2017 5/7/2017 XXXX-XXXX-XXXX-4537 United $ 36.60
5/9/2017 5/7/2017 XXXX-XXXX-XXXX-4537 Yeager Airport Parking $ 45.00
$ 669.53

Charges missing support documentation:


Posting
Tran Date Account Supplier Amount
Date
5/4/2017 5/3/2017 XXXX-XXXX-XXXX-4537 Uber US May03 Tlyg7 $ 9.52
5/7/2017 5/4/2017 XXXX-XXXX-XXXX-4537 Taxi Svc Woodside $ 4.30
5/7/2017 5/5/2017 XXXX-XXXX-XXXX-4537 Lirr:on Board Tim $ 16.00
5/8/2017 5/6/2017 XXXX-XXXX-XXXX-4537 Starbucks Store 07425 $ 8.15
5/9/2017 5/7/2017 XXXX-XXXX-XXXX-4537 Nuts On Clark - Ohare $ 4.20
5/9/2017 5/7/2017 XXXX-XXXX-XXXX-4537 Starbucks B05 20251609 $ 11.99
5/9/2017 5/7/2017 XXXX-XXXX-XXXX-4537 Subway 00517193 $ 13.00
$ 67.16

When asked about this trip, Mayor Baber indicated that it related to attendance at a
conference he was interested in (Forgiveness Project), as well as meeting with an attorney
about a school consolidation matter in New Jersey.

161
(Pg. 109)
22 Q. And where were these trips to and from? Or from
23 and to, I guess.
24 A. From Richwood to Philadelphia was the first leg.
(Pg. 110)
1 Q. What was the ultimate destination?
2 A. That was one ultimate destination. And then I
3 went onto Long Beach, Long Island.
4 Q. New York?
5 A. Yes, sir.
6 Q. What was this trip for?
7 A. This trip had three purposes: One was to attend
8 a forgiveness conference at Bryn Mawr. The other was to
9 visit FEMA in Philadelphia and discuss with them our
10 unhappiness with them about our school situation. That
11 was the first leg.
12 Q. All right. The second leg?
13 A. The second leg was to go on to Long Beach, Long
14 Island to meet with a lawyer there that was fighting FEMA
15 on a consolidation that was taking place there.
16 Q. And did you travel alone on these trips?
17 A. Sir?
18 Q. Did you travel alone?
19 A. I did.
20 Q. Did City Council approve this trip?
21 A. The City Council was -- they didn't approve it,
22 but they knew I was going. I reported to them I was.
***

(Pg. 112)
1 Q. Okay. With that said, was City Council aware of
2 any of these purchases; especially, specifically, this
3 one with the airline flights?
4 A. I don't think they were specifically aware of
5 how I was going, but they knew that I was going to
6 Philadelphia and New York.
7 Q. Did City Council approve the expenditure prior
8 to you taking the trip?
9 A. I didn't ask them, and they didn't approve or
10 disapprove.

[Examination Under Oath Bob Baber, Dec. 14, 2017, excerpts from pgs. 92 -96]

162
As with the other expenditures by Mayor Baber, this trip itself, as well as required
funding, were not approved by Richwood City Council.

C. Party at Cherry Hill Country Club

During the course of the investigation, we discovered that Mayor Baber used his
purchasing card to host a party at the Cherry Hill Country Club. Based upon our review,
there were eight separate charges totaling $482.03 relating to the party, including
purchases at a local liquor store and convenience store of liquor and wine, respectively.

Posting Transaction
Account Supplier Amount
Date Date
5/25/2017 5/24/2017 XXXX-XXXX-XXXX-4537 King Cut Rate Tobaccos $ 34.05
5/25/2017 5/24/2017 XXXX-XXXX-XXXX-4537 Wm Supercenter #1477 $ 161.57
5/26/2017 5/25/2017 XXXX-XXXX-XXXX-4537 Wm Supercenter #1477 $ 5.96
5/26/2017 5/25/2017 XXXX-XXXX-XXXX-4537 Mountaineer Mart 32pc $ 10.20
5/28/2017 5/25/2017 XXXX-XXXX-XXXX-4537 Dollar General #18064 $ 20.18
5/28/2017 5/25/2017 XXXX-XXXX-XXXX-4537 Donaldson Greenhouse & La $ 24.91
5/28/2017 5/25/2017 XXXX-XXXX-XXXX-4537 Cherry Hill Country Club $ 76.16
5/28/2017 5/25/2017 XXXX-XXXX-XXXX-4537 Cherry Hill Country Club $ 148.99
Total $ 482.02

When inquiry was made of Mayor Baber about these payments, he admitted that he gave
his card to other people to buy the alcohol and other supplies. As for the purpose of the
event, Mayor Baber indicated that it was to host VIPs, including Francis McQuade,
pertaining to the school consolidation issue.

163
D. Other Questionable purchases

In addition to the above examples, there were other purchases on Mayor Baber’s p-card
that were questioned during the course of our review. Some of these questionable
purchases were as follows:

(1) Directing employee to purchase various wooden momentos

During our review of the City’s p-card, we identified a purchase by Abby


McClung from a local business known as Richwood Creations. Upon inquiry, we were
made aware that the purchase was made on behalf of Mayor Baber. Specifically, Mayor
Baber had custom wooden keys emblazoned with the City emblem. Upon information
and belief, the Mayor would give these wooden keys to individuals who had volunteered
after the flood.
Ms. McClung additionally indicated that she used the City’s Purchasing Card to
buy wooden plaques with a poem that Mayor Baber wrote inscribed on them. In total,
the keys and plaques total $945.00. These items appear to have been purchased without
the approval of City Council, and did not have any supporting documentation attached
to them to explain their purpose.

(2) Mayor Baber directed purchase of personal business cards for non-employee

During the course of our investigation, we heard the name Paul Contin made
several times in reference to Mayor Baber. Based upon our review of records, Mr. Contin
was not an employee or contractor for the City. Rather, it appears that Mr. Contin is a
personal friend of Mayor Baber whom he used public monies to assist. For example,
Mayor Baber gave his p-card to Cara Perkins (his assistant and purported step-daughter)
to make business cards for herself and Mr. Contin.

164
(Pg. 99)
2 Q. Tab 21. Mr. Baber, who was the vendor on this
3 purchase?
4 A. Vista Print.
5 Q. Did you make this purchase?
6 A. No, Caroline Perkins did.
7 Q. What was this purchase for?
8 A. Business cards for her and for Paul Contin.
9 Q. And was this purchase made on your purchasing
10 card?
11 A. Yes, sir.
12 Q. And what is the amount?
13 A. $90.99.
14 Q. What is his last name?
15 A. Contin.
16 Q. Who was Paul Contin, Mr. Baber?
17 A. Paul Contin was a man who came to me through the
18 donations of Sherwin-Williams of paint. His name was
19 mentioned to me that he was a window dresser, costume
20 designer, had done a lot of work in New York City, done a
21 lot of work with theater, and so I recruited him to come
22 to Richwood. And we got him some business cards made.
23 Q. Why would you -- I mean, was he a city employee?
24 A. I wanted him to be a city employee, but the city

(Pg. 100)
1 employ— the city would not hire him. The card was
2 purchased before the city was asked that.
3 Q. So when these business cards were purchased, he
4 was not a city employee?
5 A. No, sir.

[Examination Under Oath Bob Baber, Dec. 14, 2017, excerpts from pgs. 99-100]

While Mr. Baber’s generosity to assist his friend is noteworthy, his generosity
cannot be based on the taxpayer’s money. Throughout our review of Mayor Baber’s
expenditures and treatment of his p-card, it is very clear that Mayor Baber has minimal
appreciation that the City’s funds are not his personal checking account. He had minimal

165
receipts or documentation, and took personal trips without council approval under the
guise that he was trying to help Richwood. What he fails to appreciate or acknowledge,
however, is that (1) this is not his personal money and (2) the City was in financial distress
and unable to pay its bills.

FINDING #11: Police Chief Lloyd Cogar misused the purchasing card in
contravention of state law and the purchasing card agreement.

As part of our review of the p-card expenses by City of Richwood employees, our
investigation discovered numerous questionable purchases by Richwood Police Chief
Lloyd Cogar, including several thousand dollars to a private business that he owned.

A. Allen’s Discount Tire store

While many of these questionable purchases appeared personal nature (e.g. meals), our
review identified multiple purchases and expenditures of money to a business
purportedly owned by Lloyd Cogar.86 In particular, we identified the following on
purchases on his p-card: 87

86
During an interview with Mr. Cogar, he admitted that that he had been the owner of Allen’s Discount Tire.
87
Chief Cogar was issued two purchasing cards during the time period under our review (one ending in 3308 and
another ending in7606). He utilized both cards at his repair shop on multiple occasions. Transactions on cards
ending 3308 and 7606 amounted to $921.81 and $1,084.00, respectively

166
Posting Transaction
Account Supplier Amount
Date Date
7/27/2015 7/24/2015 XXXX-XXXX-XXXX-3308 Allens Discount Tire $ 30.83
9/23/2015 9/21/2015 XXXX-XXXX-XXXX-3308 Allens Discount Tire $ 135.98
7/8/2016 7/6/2016 XXXX-XXXX-XXXX-3308 Allens Discount Tire $ 455.00
7/18/2016 7/15/2016 XXXX-XXXX-XXXX-3308 Allens Discount Tire $ 150.00
7/18/2016 7/15/2016 XXXX-XXXX-XXXX-3308 Allens Discount Tire $ 150.00
Total $ 921.81

Posting
Tran Date Account Supplier Amount
Date
12/25/2016 12/23/2016 XXXX-XXXX-XXXX-7606 Allens Discount Tire $ 32.00
3/24/2017 3/23/2017 XXXX-XXXX-XXXX-7606 Allens Discount Tire $ 420.00
3/29/2017 3/28/2017 XXXX-XXXX-XXXX-7606 Allens Discount Tire $ 294.00
6/15/2017 6/13/2017 XXXX-XXXX-XXXX-7606 Allens Discount Tire $ 338.00
Total $ 1,084.00

In addition to purchases on his own p-card, at least one additional purchase was
made by a subordinate officer at Allen’s Discount Tire.

2/2/17 Allen’s Discount Tires $ 50.00

In addition to expenditures on the purchasing cards, multiple checks from Richwood’s


General Fund were written to Allen’s Discount Tires. The check numbers, dates, and
amounts are as follows:

Check #123945 10/26/16 Allen’s Discount Tire $ 345.33


Check #125445 11/2/17 Allen’s Discount Tire $ 59.95
Check #120 3/14/18 Allen’s Discount Tire $ 572.50

In total, $3,033.59 was expended by the City of Richwood to Allen’s Discount Tires,
of which $2,005.81 was directly related to Chief Lloyd Cogar’s issued purchasing cards.88

88
As a final note on this issue, during his interview Mr. Cogar admitted that he charges the City for his time
working on the City vehicles.

167
B. Questionable/Personal purchases

In addition to the aforementioned purchases made by Chief Cogar, several other


transactions on the purchasing card ending in 3308 were noted. There were two
transactions at Mumsey’s Iron Skillet on August 27, 2015, for $25.10 and $157.87. There
was a failure to return affidavit to confirm compromised card transactions amounting to
$212.96. Also, there were two transactions to Rough Country on July 14, 2016, for $573.80
and on August 15, 2016, for $143.90. No source documentation related to the above p-
card transactions was found during the examination.
Chief Cogar’s purchasing card ending in 7606 had undocumented charges on it as
well. The business, date of transaction, and amount are as follows:

Paypal – November 28, 2016 – $119.99


Paypal – December 7, 2016 – $80.85
Cb’s Hole in the Wall – January 30, 2017 – $15.87
Cb’s Hole in the Wall – April 6, 2017 – $12.71
Cb’s Hole in the Wall – May 6, 2017 – $34.95
Cb’s Hole in the Wall – July 7, 2017 – $25.96
Oakford Diner – January 31, 2017 – $33.71
Little Caesar’s – May 7, 2017 – $20.14

In total, the above charges for Chief Cogar’s purchasing cards ending in 3308 and
7606, for which there were no supporting documentation, totaled $1,457.81, excluding the
transactions at Allen’s Discount Tires. These appear to be personal purchases. Please note
that the total included $212.96 in compromised card transactions in which the City failed
to return an affidavit declaring the card as compromised.

168
C. Town of Cowen expenses

In addition to his full-time police chief position with the City of Richwood and his
private business, Mr. Cogar was also the single police officer for the Town of Cowen.89
During the course of our review, we identified several purchases on the City of Richwood
p-card that were actually Town of Cowen expenses. During an interview with Mr. Cogar
about these purchases, he acknowledged that these were for the Town of Cowen.
While these are the only ones made known by Mr. Cogar, we do have concern over
the dual employment and use of City Of Richwood resources in furtherance of Mr.
Cogar’s other public employment. See W.Va. Code § 6B-2-5 (Ethics Act provisions
concerning use of public resources for private gain as well as being paid for working
same public work hours).

D. Purchases for Jeep


In examining purchasing cards of the Municipality, specifically, those related to
Abigail McClung, Chief Cogar, and another employee of the police department, it was
noted that a potential $7,351.17 were expended for excessive vehicle modifications and
upgrades to the Police Department Jeep Wrangler.
While nearly half of this expense ($3,402.06) appears to have occurred prior to the
flood, the multiple expenses for modifications and cosmetics after the flood were
noteworthy during a time of financial distress for the City. Also noteworthy was that
Jeep appears to have been primarily ceremonial in nature (e.g. parades). However,
during the course of our investigation, we did discover that the Recorder (Chris Drennen)
subsequently had been using the vehicle on a regular basis, presumably for work related
matters.

89
While not pertinent to our finding, Mr. Cogar stated that he was “unpaid” for his work as police chief. However,
upon inquiry with the Town of Cowen, it was discovered that some sort of “agreement” existed whereby Mr. Cogar
would not have to pay B&O taxes or other fees relating to his private business in exchange for his work as police
chief.

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Notwithstanding, the expenses (of which there may be more than were
discovered) identified during our investigation were noteworthy given the financial
status of the City at the time of the purchases and the intended benefit to be derived to
the City.

FINDING #12: Employee Jack Massey misused the purchasing card in


contravention of state law and the purchasing card agreement.

In examining the purchasing card transactions of Jack Massey, it was noted that
$129.96 in lunches were purchased outside of what appeared to be overnight-stay work
trips. No support documentation was found for March 27, 2017. Hand-written on the
source documents available for the transactions ranging from April 10, 2017 to April 14,
2017 stated “DRC Workers’ Lunch” or “DRC Lunch”. A source document was retained
for the May 17, 2017 and on the document was a handwritten note stating “Paint Trip”.

Posting Transaction
Account Supplier Amount
Date Date
3/28/2017 3/27/2017 XXXX-XXXX-XXXX-4545 Dairy Queen #13773 $ 15.90
4/11/2017 4/10/2017 XXXX-XXXX-XXXX-4545 Dairy Queen #13773 $ 42.40
4/12/2017 4/11/2017 XXXX-XXXX-XXXX-4545 Dairy Queen #13773 $ 37.10
4/13/2017 4/12/2017 XXXX-XXXX-XXXX-4545 Dairy Queen #13773 $ 10.60
4/16/2017 4/14/2017 XXXX-XXXX-XXXX-4545 Dairy Queen #13773 $ 15.90
5/19/2017 5/17/2017 XXXX-XXXX-XXXX-4545 Subway 00517193 $ 8.06
Total $ 129.96

In addition to the potential personal transactions above, Jack Massey’s purchasing


card, ending in 4545, incurred two separate charges for alcohol. The charges totaled $8.44,
plus state sales tax. The purchases were made in Ripley, West Virginia, where Massey,
the former Street Department Superintendent for the City of Richwood, had attended a
conference at Cedar Lakes Conference Center. The first instance, $1.69 plus state sales tax
took place at Speedway, Ripley, WV. The second instance, $6.75, plus state sales tax, took
place at Fairplain Yacht Club, Ripley, WV.

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FINDING #13: Recorder Chris Drennen failed to maintain appropriate records for
her p-card purchases.

During the time period ranging from November 4, 2016, to May 8, 2017, Drennen
made 21 purchases with her issued purchasing card ending in numbers 3884. Of the 21
purchases, she possessed only five receipts for purchases made with the card. Notably
the Purchasing Card Agreements require each cardholder to maintain receipts for all
purchases made on a p-card.

13. I understand it is my responsibility to save all receipts for transactions posting


to my Local Government Purchasing Card and that United Bank does NOT have
copies of those receipts.
[Local Government Purchasing Card Agreement] 90

Upon review of her p-card purchase history, the 21 purchases made with the card
included two computers, a printer, and a Greenbrier banquet. The card was also used to
make purchases at a Dollar General, Lowe’s, and Mountaineer Mart. Additionally, there
were purchases at the Charleston Marriot and Flatwoods Hotel & Conference Center.

90
A copy of Drenenn’s signed P-Card Agreement is attached as EXHIBIT # 23

171
Posting Transaction
Account Supplier Amount
Date Date
11/4/2016 11/3/2016 XXXX-XXXX-XXXX-2671 Dropbox*znp23zzmq4wm $ 99.00
11/6/2016 11/4/2016 XXXX-XXXX-XXXX-2671 Inkcartridges $ 39.98
11/8/2016 11/7/2016 XXXX-XXXX-XXXX-2671 Dropbox*qsk6dvp7g244 $ 9.99
11/15/2016 11/14/2016 XXXX-XXXX-XXXX-2671 Rite Aid Store - 0284 $ 12.38
11/16/2016 11/14/2016 XXXX-XXXX-XXXX-2671 Dollar General #18064 $ 5.83
11/16/2016 11/15/2016 XXXX-XXXX-XXXX-2671 Hp *hp Home Store $ 710.17
12/8/2016 12/7/2016 XXXX-XXXX-XXXX-2671 Dropbox*r3dcr3fcvqbz $ 9.99
12/15/2016 12/14/2016 XXXX-XXXX-XXXX-2671 Lowes #01040 $ 198.08
1/8/2017 1/7/2017 XXXX-XXXX-XXXX-2671 Dropbox*npwgj4zlv1fx $ 9.99
1/17/2017 1/16/2017 XXXX-XXXX-XXXX-2671 Greenbrier Banquet $ 28.00
1/17/2017 1/16/2017 XXXX-XXXX-XXXX-2671 Greenbrier Banquet $ 34.00
2/8/2017 2/7/2017 XXXX-XXXX-XXXX-2671 Dropbox*33kvndylbpgs $ 9.99
2/23/2017 2/22/2017 XXXX-XXXX-XXXX-2671 Mountaineer Mart 32pc $ 5.24
2/23/2017 2/22/2017 XXXX-XXXX-XXXX-2671 Marriott Charleston $ 272.44
2/24/2017 2/22/2017 XXXX-XXXX-XXXX-2671 Go Mart #19 $ 7.62
3/8/2017 3/7/2017 XXXX-XXXX-XXXX-2671 Dropbox*k29p4vbfc1rn $ 9.99
3/19/2017 3/16/2017 XXXX-XXXX-XXXX-2671 Flatwoods Hotel & Confere $ 269.97
3/19/2017 3/17/2017 XXXX-XXXX-XXXX-2671 Flatwoods Hotel & Confere $ 359.96
4/2/2017 3/30/2017 XXXX-XXXX-XXXX-2671 Flatwoods Hotel & Confere $ 267.00
4/9/2017 4/7/2017 XXXX-XXXX-XXXX-2671 Dropbox*w6x9z6jfyzdd $ 9.99
5/8/2017 5/7/2017 XXXX-XXXX-XXXX-2671 Dropbox*287vm9717hxz $ 9.99
Total $ 2,379.60

With respect to these purchases, Ms. Drennen testified that the Dropbox was for
the city’s use, specifically for FEMA items. She did not recall the purposes for purchases
made at the Dollar General, Lowe’s, and Mountaineer Mart. She also stated that she did
not recall the purpose of the Greenbrier banquet purchase. Finally, Drennen testified that
the Charleston Marriot purchase was for municipal training and the Flatwoods Hotel &
Conference Center purchase was for hazard mitigation training seminars.

While some concerns exist with respect to several of these purchases, the absence
of appropriate documentation precluded our ability to determine whether they were
legitimate purchases on behalf of the City or were personal in nature.

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FINDING #14: Employee Abby McClung failed to maintain appropriate records or
oversight of p-card purchases.

As the designated Purchasing Card Coordinator for the City of Richwood, Abby
McClung was entrusted with the authority to oversee compliance with all of the City’s
Cards. In such capacity, she was also charged with reviewing and reconciling other
employee’s purchases. While her position demanded attention to detail and careful
review, our investigation found failures in both oversight and recordkeeping. Even more
troubling was that Ms. McClung own use of p-cards assigned to her were deficient for
recordkeeping and contained multiple questionable purchases.

As reflected in Finding #13 (relating to Recorder Drennen) the failure to maintain


or save receipts is a violation of the Purchasing Card Agreement that she signed. 91

While significant concerns exist with respect to several of the purchases made by
and/or on Ms. McClung’s designated p-cards, the absence of appropriate documentation
precluded our ability to determine whether they were legitimate purchases on behalf of
the City or were personal in nature.

91
A copy of the Purchasing Card Agreement signed by Ms. McClung is attached as EXHIBIT # 24

173
V.
CONCLUSION/RECOMMENDATIONS

The foregoing Findings and Sub-Findings were the result of an 18-month


investigation conducted by the Auditor’s Public Integrity and Fraud Unit. While the
conduct and action of officials within the City of Richwood were largely self-inflicted,
they can serve as teachable moments for the State as a whole. Various counties and
municipalities in this State have faced situations similar to Richwood, and blindly rely
upon promises of outside consultants and public officials. The only way to combat this
is transparency, engagement, and recommendations for change.
In light of the conduct and actions reflected in this this Report, the following
Recommendations are suggested.

Recommendation #1: The West Virginia Department of Military Affairs and


Public Safety/DHSEM must evaluate the manner in which FEMA monies are received
and projects closed out to ensure timely payments. DMAPS must also review and
consider instituting new and better oversight of sub-recipient counties and municipalities
that receive FEMA monies.

Recommendation #2: Instead of forcing sub-recipient to hire outside consultants,


the State of West Virginia (by and through multiple agencies) should establish a
guidebook and mandate annual training for counties and municipalities relating to the
management of public monies in the aftermath of an emergency.

Recommendation #3: The City must take immediate steps to set up and make
timely payments to the CPRB, IRS, and state Tax Department, and must begin budgeting
and repaying the Community Disaster Loan.

Recommendation #4: To the extent any individual from the ICS team is still on
the payroll, Council should review whether such individual is necessary, and formally
decide whether to retain such individual as a paid employee.

Recommendation #5: The City of Richwood should institute or utilize a different


accounting software program and/or hire individuals competent to handle the existing
software.
174
Recommendation #6: The City of Richwood should consider retention of legal
counsel to examine whether any monies paid to ICS team members, vendors, employees
and/or consultants are recoverable by City.

Recommendation #7: An investigation by the FEMA Inspector General should


be undertaken to ascertain whether any regulations or laws were violated in the handling
of the FEMA monies received by the City of Richwood.

Further, a copy of this Report and related evidence has been made to the West
Virginia State Police, the Nicholas County Prosecuting Attorney and the United States
Attorney for the Southern District for consideration of criminal charges relating to
matters raised in this Report.

In conclusion, the impetus for this Report is to ensure the residents of Richwood
and the public as a whole have access to accurate and reliable information impacting their
town. Equally, the elected officials must be engaged in their civic responsibilities and be
good stewards of the public’s money. Richwood forgot this message. Hopefully their
mistakes and misdeeds will serve as a reminder to other local governments.

175
VI.
TABLE OF EXHIBITS

Exhibit General Description

1. City of Richwood FY 2017 submitted Budget (WVSAO formatted)


2. City of Richwood FY 2018 submitted Budget (WVSAO formatted)
3. WVSAO summary of Tax Payments
4. WVSAO summary of CPRB payment data
5. WVSAO summary of Deposits in Richwood FEMA account
6. WVASO summary of Expenditures from Richwood FEMA account
7. WVSAO summary of PW funds (obligated/received)
8. WVSAO summary of Transfers between FEMA account and General Fund
9. WVSAO summary of FEMA Expenditures not applicable to approved PW
10. Richwood City Council meeting minutes for Nov. 15, 2012
11. Richwood City Council meeting minutes for July 15, 2016
12. Richwood City Council meeting minutes for July 18, 2016
13. Richwood Finance Committee meeting minutes for Aug. 16, 2016
14. Richwood City Council meeting minutes for Aug. 18, 2016
15. Richwood City Council meeting minutes for Sept. 15, 2016
16. Richwood City Council meeting minutes for Oct. 13, 2016
17. Richwood City Council meeting minutes for Nov. 2, 2016
18. Richwood City Council meeting minutes for May 11, 2017
19. Richwood Finance Committee meeting minutes for Aug. 10, 2017
20. Richwood Personnel Policies and Procedures Manual (effective date 3/16/05)
21. City of Richwood’s P-Card P&P
22. Bob Henry Baber signed P-Card Agreement
23. Chris Drennen signed P-Card Agreement
24. Abby McClung signed P-Card Agreement

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25. Lloyd Cogar signed P-Card Agreement
26. Richwood Request for Public Assistance
27. Spreadsheet of Richwood PWs (HC Spencer provided)
28. AEMS (Bill Hines) contract agreement
29. Simmons Consulting contract agreement
30. Simmons Consulting contract modification
31. Simmons Consulting 2nd contract modification
32. Simmons Consulting Report
33. Simmons Consulting (2nd Report)
34. ICS Organization Chart
35. ICS Salary Breakdown
36. PW TAMB001 Employee Payroll Data
37. PW TAMB001 EOC payroll Summary
38. Attorney Stollings letter to Baber
39. Bill Hines Email to ICS leaders dated Nov. 17, 2016
40. Tiffany Washington Email to Toussieng dated May 20, 2017
41. JC Roman Construction contract/terms (Handwritten)
42. JC Roman Construction contract (typed)
43. MD Russell contract/terms (Handwritten)
44. MD Russell contract (typed)
45. Stacy Raffo resignation letter
46. Order Ruling Upon Resolution for Removal of Bob Henry Baber
47. Petition filed by Mayor Baber against Auditor, et al
48. Richwood CDL (signature page of Baber)

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