State investigation: $1.67 million in "questionable payments" made to utility district manager, his companies

BRISTOL — A state investigation has revealed "questionable payments" of more than $1.67 million to a Bristol area utility district's manager and businesses he owns or has ownership in, according to a report released Thursday by Tennessee Comptroller of the Treasury Jason Mumpower.Sullivan County Mayor Richard Venable issued a statement Friday urging South Fork Utility District board members and the district's manager to resign immediately.South Fork Utility District, formed in 2020 by the merger of Holston Utility District and South Bristol-Weaver Pike Utility District, provides water service to about 3,400 customers in Sullivan County.The investigation covers the time period May 14, 2018, through June 30, 2021, and included examination of records from Holston, South Bristol and South Fork utility districts. and South ForkFork utility districts UD, SBWPUD, and SFUD.Details from the investigation released Thursday:HUD and SBWPUD hired a former HUD commissioner, who operated his own construction companies, as a contracted district manager in 2018. By September of that year both utility districts moved into the same office building, owned by the district manager, hired and shared employees, and used the district manager's construction companies for most repair and maintenance services.in April 2020 the district manager was hired as a full-time salaried employee.State law prohibits anyone whose duty it is to vote for, let out, overlook, or, in any manner to superintend any work or any contract in which any utility district is directly interested in any such contract.The results of the investigation outline, over 10 pages, included multiple findings.Among the findings: That between May 14, 2018 and June 30, 2021, the district manager, or companies in which he had an ownership interest were paid at least $1,672,875.47.That figure includes: $982,981.75 to one construction company; $318,742.59 to a second construction company; property lease, $51,554.20; gas station, $24,770.28; salary to the district manager, $159,000; consultant fees to the district manager, $62,450; reimbursements to the district manager $56,226.65; and payments of $17,150 directly to the district manager for "district projects."While the comptroller's office told the Times News no funds are missing, details in the report indicate documentation is lacking on at least some of the $1.67 million and what it funded.For example, of the $994,181.75 paid to the first construction company (in which the district manager is an owner) "investigators found no supporting documentation for $247,911 of these payments and insufficient detail of work performed on most invoices that were provided.Another example: investigators could not determine if reimbursements totaling at least $77,674.76 to the district manager and the second construction company were "appropriate" because invoices and receipts were not available. "Many of these reimbursements were originally paid by the district manager or his company by credit cards, and credit card statements were used as support fro the payment instead of invoices or receipts," the report notes.Other findings included:• HUD paid electric bills for the district manager's restaurant totaling nearly $10,000.• The districts did not bid new meter purchases. State law requires such purchases to be bid if the expenditure exceeds $25,000. The districts purchased 2,300 new meters without putting the purchase out to bid. "The lack of sealed bids for projects and purchases increases risks for fraud, waste, and abuse," the report states.The comptroller's office provided results of the investigation to the office of 2nd Judicial District Attorney General Barry Staubus.The entire report is available online on the state's website.