Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, November 21, 1993 TAG: 9311210085
SECTION: VIRGINIA PAGE: A-1 EDITION: METRO
SOURCE: DAVID M. POOLE STAFF WRITER
DATELINE: LENGTH: Medium
Mixing the two - commingling is the legal term - makes it hard to account for public funds.
The personal bank account that Bedford County Sheriff Carl Wells used to pay his employees illustrates the danger.
An analyst hired by the Roanoke Times & World-News says the account should have accumulated at least $6,000 in interest by July 1, 1990. Instead, there was a balance of just $1,858.
Wells was entitled to spend some of the money, but without a full audit, he couldn't have known how much of the interest was his and how much belonged to the county.
Wells has acknowledged that he combined public and private funds in a personal checking account at Bedford Federal Savings Bank.
But he has denied earning in-terest from county payroll funds - between $133,000 and $183,000 - that flowed through his account each month.
A special prosecutor appointed last week will determine if Wells should be charged with a misdemeanor violation of commingling funds.
The prosecutor, Rockbridge County Commonwealth's Attorney Eric Sisler, also may try to sort out who gets the $30,000 in the account.
Wells can keep interest earned from personal funds in the account. But interest from the payroll funds must be returned to Bedford County.
A full audit of records dating back to 1982 may be needed to figure out who gets what.
Records for the past three years are the only ones that have been made public, however. A Lynchburg judge ordered Wells to release those records to comply with a Virginia Freedom of Information Act inquiry by the newspaper.
Wells, citing an estimate by the bank, put the amount of interest earned from public funds at $5,626 for the entire 11 years the account drew interest.
That estimate appears low, according to the newspaper's analysis of the records released last week.
Wells' estimate is based on the assumption that the payroll funds would have cleared the account three days after they were deposited.
Records show that deputies often waited four to five days to cash their paychecks.
Some of the public funds would sit in Wells' account even longer. For example, Wells would wait two weeks before sending a check to the Virginia retirement system for his department's monthly contribution. The delay allowed the account to earn interest on about $15,000 for two weeks each month.
A certified public accountant hired by the newspaper to analyze Wells' bank account said the sheriff was practicing "good cash management."
"It maximizes your interest," said Susan Kaiser of McCloud & Co.
"The problem was that he was commingling funds. So whose interest did he maximize - his or the county's?"
The county funds flowing through the "Super Now" account help explain why it earned so much interest each month, Kaiser said.
For example, the account had an average daily balance of $30,000 in July 1990, even though Wells had no more than $4,676 in personal funds on deposit on any given day.
The account earned a total of $5,668 in interest during three years ending in June.
"A portion of that would be his, but I wouldn't think it would be half of it," Kaiser said.
Kaiser said it would be safe to assume that the account would have generated at least another $6,000 during the previous 7 1/2 years, from September 1982 to June 1990.
The bank statement for July 1990, however, shows a balance of $1,858.
There is no way to explain the discrepancy without a full audit dating back to 1982, when the account began earning interest, Kaiser said.
Wells said he set up the bank account in the early 1970s based on advice he said he received from the office of the state auditor of public accounts.
Wells has denied earning interest on public money. He also said there were many times when he advanced his own money to pay department expenses.
Any interest he might have earned from public money has been more than offset by interest he lost by advancing personal money to the county, he said.
Wells stopped writing personal checks on the account in April, soon after the General Assembly passed a law limiting the type of bank accounts that sheriffs control.
Earlier this month, an auditor recommended that the Sheriff's Office come under the county's centralized payroll system. The Bedford County Board of Supervisors then asked for an investigation into the sheriff's account.
Sisler was named special prosecutor after Bedford County Commonwealth's Attorney James Updike removed himself from the investigation because of his close ties to Wells.
by CNB