The review comes on the heels of the board's Dec. 30 decision to terminate Papaleoni after 11 years and Great Lake Allatoona Cleanup coordinator Erin Chavda after one year.
"We just want to get everything reconciled, and to stress that this was a review and not an audit," LAPA Chairman and Interim General Manager Robert Morrison said. "This is absolutely not an attack on Ron. No one has accused him of anything, and we're not the type of body to do that. We just did this review because we need things explained. I don't question that he feels wounded, though."
The review, performed by Moore & Cubbedge, traced financial records from FY08 to this July, the first month of FY10. The review states that Papaleoni was paid thousands of dollars more than allotted, that LAPA's expenditures were not adequately maintained by Papaleoni, that the financial statements presented to the board by Papaleoni each month and the organization's QuickBooks file kept by Papaleoni differed and that the board's financial statements and the cleared bank statements were also inconsistent with each other. Also, the accounting records suggest LAPA expenditures did not conform to the budgets approved by the board, according to the review.
Papaleoni was in charge of bookkeeping and presenting the budget to the board at its monthly meetings. He was authorized to handle checks coming to and from the organization's fund, according to Morrison. Treasurer Jimmy Durham presents the final budget to the board once a year and has direct oversight of the budget and bookkeeping.
"I made sure the budgets were presented properly, but at the same time, the treasurer has them and has the opportunity to review them each month," Papaleoni said. "If I was doing something wrong, let me know. I'm not an accountant. If there's something happening that is not what should happen in regards to bookkeeping and budgets, or something that they think is questionable, come to me. Provide me some direction. But that never happened. I'm not pointing fingers, but there were mistakes made all the way."
Durham, who has been treasurer for two years, said he does oversee the operation of the books and the budget, but that the position of treasurer is more of a formality than a hands-on position. Durham said Papaleoni typically would present the board with the budget at each monthly meeting, but the board asked Papaleoni to issue the budgets prior to the meetings beginning in September, and would not comment on why the change in operation occurred.
Morrison said Greg Patton served as the original treasurer and continued in his position for several years until he moved to Memphis for his job in 2007. Morrison said Patton worked very closely with the budget initially, but due to constant work-related traveling and responsibilities in his last year or two as treasurer, Patton stopped attending meetings and did not have the time to thoroughly review bookkeeping records.
The review of FY08 states that Papaleoni was paid $17,633 more than was allotted in the approved budget, and that total cost of professional fees went over budget by $43,413.88, while project expenses came up under budget by $26,712.53. General manager fees from FY09 went over budget by $24,328, while professional fees went over budget by a total of $13,606, but project expenses for educational projects came under budget by $121,748, and the year's totals came under budget by $89,679.42. The first month of FY10 was shown to be adequate and consistent with the approved budget.
Payments for the FY08 budget's general manager expenses, issued to both Papaleoni and his now-defunct consulting firm, Premier Management Team, exceeded the board-approved contract amount allotted to the general manager by a total of $72,650. The review states that no invoices or other supporting documentation for these expenditures were approved.
Two checks that were recorded in QuickBooks as being written to another vender in FY09 were actually written to Papaleoni and his non-profit group, the Joy Foundation, as a copy of the checks shows. Papaleoni said the $5,000 given to the Joy Foundation was authorized, but Morrison said he has no recollection that anything was authorized to go to the foundation.
Only 12 of the 85 checks written in FY08 contained documentation, and only 17 of the 96 checks written in FY09 were supported by related invoices, according to the review.
The review states that LAPA has never issued 1099 MISC Forms to non-employees who were compensated, which includes Papaleoni, and that this is in violation of IRS regulations. But Morrison said the lack of documentation does not mean they were not filed and LAPA will be working with the state to find out if they were.
Morrison said the termination of Chavda and Papaleoni's contracts are mainly due to the organization's dwindling funds. LAPA was created in April 1999 through House Bill 508 and was signed by then-Governor Roy Barnes. This created a public corporation deemed as a political subdivision of the state of Georgia to protect Lake Allatoona, and therefore, the state includes LAPA in its budget. Morrison said the organization also receives funding from outside donors, but Governor Sonny Perdue announced Friday that LAPA's budget would be cut by 50 percent and is not currently included in the next fiscal year's budget. LAPA's fiscal year runs from June to July.
Morrison said Chavda and Papaleoni's positions will not be replaced, and that any work that needs to be done will most likely occur on a project-by-project basis with outside contractors.
"It leaves a lot of things that still need to be gathered, and we had a lot of questions as we were trying to get everything, and Ron has very open and cooperative with giving us information," Morrison said. "He even continues to remind me of things coming up that I'm sometimes not aware of. I think we all would be very happy if we could just get things explained and settled and that's the end of it."
Papaleoni said he agrees that the financial statements needed to be reviewed, but disagrees with the process the board took in his and Chavda's terminations. The board's Dec. 30 meeting was a special-called meeting, and both Morrison and Papaleoni said nothing was discussed in executive session, but rather in public forum, along with the motions to terminate their contracts. Papaleoni said Chavda was probably let go because some board members have accused her of receiving checks from him illegally, something he denies. He also said Chavda has not received payment for her final two weeks of employment with LAPA.
Morrison said any civil or criminal charges that would be brought forth would come from the state and not LAPA. He added that state officials have contacted him regarding the financial discrepancies, but no charges have been filed yet, and that he is not aware of any that will come in the future.
"I hope any mistakes that were made were not intentional, and I have no reason to think otherwise," Morrison said.
Papaleoni said, "My heart just felt like it would stop when I began reading the report. I have worked hard for the benefit of the lake and the community, free for a year and a half, through years of low budgets, education programs and our resource center. There are certainly things that could have been misapplied that should have gone to somewhere else or listed that they were going to somewhere else, but not knowing enough about accounting means I'm sure I made mistakes. I'm far from perfect. But I don't believe I ever did anything to intentionally hurt the authority."
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