Pubdate: Sun, 26 Sep 2004
Source: Tyler Morning Telegraph (TX)
Copyright: 2004 T.B. Butler Publishing Company, Inc.
Contact:  http://www.tylerpaper.com/
Details: http://www.mapinc.org/media/1669
Authors: Jacque Hilburn And Roy Maynard, Staff Writers

HALF A MILLION DOLLARS FLOWED INTO K-9 FUND

[Telegraph] Editor's Note: First in a two-part series examining 
transactions found within Sheriff J.B. Smith's unaudited K-9 and Livestock 
Fund.

Over the past 10 years, Smith County sheriff's officials have deposited 
more than a half-million dollars into the K-9 and Livestock Fund, including 
$46,900 from the county's longtime and current jail commissary vendors, 
bank records show.

For months, the newspaper has studied account records after obtaining the 
documents through the Open Records Act.

Sheriff J.B. Smith has said the K-9 and Livestock bank account has been a 
fund used primarily to support horses and bloodhounds for search and rescue 
operations, but a review of account activity by the Tyler 
Courier-Times--Telegraph shows money went for more than feed, vet bills, 
horseshoes and saddles.

Money from the drug forfeiture account and other audited county funds has 
been deposited into this account, records show and officials confirmed. By 
law, drug forfeiture money must remain in a separate audited account.

Other money generated from the sale and upkeep of stray livestock was moved 
from an audited county account into this unaudited sheriff's fund.

Beginning in October, the sheriff said this account will be closed and its 
functions routed through the county's regular, audited ledgers.

"It's a good thing, which is the way it should have been the whole time," 
he said in June.

Although Smith characterized the fund as non-profit, agency officials never 
sought a 501(c)(3) status through the Internal Revenue Service, which 
grants tax exemptions to qualified non-profit organizations.

Smith confirmed the fund does not have its own tax number.

Instead, agency officials monitoring the account borrowed the county's tax 
ID number to start it.

The bulk of the account records that have been provided so far by the 
department are the checks and deposits, which show the agency spent 
$512,135.09 of the $520,560.43 in checks and cash received from February 
1994 through March of this year.

The bank records were released only after a Jan. 23 request was made 
through the Open Records Act by the Morning Telegraph, resulting in a Feb. 
25 Texas Attorney General's decision (OR2004-1394) that the account was public.

HUNDREDS OF DONORS

After the newspaper received copies of the bank records, Smith agreed in 
June to answer questions about its use and purpose.

He said the idea to establish a K-9 fund arose in the late 1980s, 
immediately following a search and rescue operation because there was no 
money to buy food or relief supplies for inmates and officers involved in 
the efforts.

Sheriff's officers initially collected donations from a few private 
individuals, but later expanded the solicitation efforts, generating 
thousands of dollars by holding gospel concerts, fish frys, raffles and 
other fund-raisers.

In spite of its name, the number of animals now supported by the K-9 fund - 
at one time showing a monthly balance high of $32,729.21 - has dwindled to 
three dogs and three horses, including a geriatric equine named "Eddie."

At one time, as many as a dozen dogs and several horses were supported by 
the fund, the sheriff said.

The newspaper's review of thousands of account transactions reveals the K-9 
fund has benefited from hundreds of donors, ranging from a few dollars in 
pocket change collected by schoolchildren to awards from large foundations.

"Time Out," a topless club, donated $100 to the sheriff's 1998-gospel 
fund-raiser.

"Doohickey Ferrett L.L.C.," doing business as "Outlaws," contributed in 
1995, 1999 and 2001 a total of $950. Outlaws is a nightclub located between 
Tyler and Whitehouse.

Even public entities wrote checks to this account, such as $800 received 
from the 9-1-1 Network of East Texas from 1996 through 1999. The 9-1-1 
Network is funded in part by tax dollars generated from user fees on 
telephone bills.

The city of Tyler issued five checks to the fund for $2,850 between 1995 
and 1998, but officials said they were unable to indicate the purpose of 
those payments due to the age of the transactions.

"I still get donations," the sheriff said, displaying a $500 check from 
Greenbriar Nursing Home.

Bank employees who copied the records noted some of the account 
transactions in 1994 and 1999 could not be retrieved due to damaged 
microfilm, resulting in a loss of records for $74,515.32, identified only 
through bank statements.

Records show 111 different cash deposits made for a total of $58,784.89 - 
some amounting to more than $10,000 - with no mention of where the money 
came from or why it was given.

Some of the older microfilm transactions are illegible.

VENDOR WAS TOP

CONTRIBUTOR

Smith initially declined to release records of his K-9 fund, saying some of 
the donors wished to remain private, but he later relented after the Texas 
Attorney General determined the contents were public.

A review of those records shows the largest identifiable contributor to 
that account was Hurst-based Mid-States Services, which provides Smith 
County Jail inmates with meals and supplies.

Smith selected Mid-States to handle the county's jail commissary business, 
an arrangement that grossed the firm an estimated $500,000 per year 
providing meals and supplies to inmates.

Over a period of five years, Mid-States gave $46,900 in donations to the 
K-9 fund, records show.

Jack Madera, the former head and founder of Mid-States, was indicted in 
January by a Dallas County grand jury for falsifying government documents 
to obtain a Kaufman County jail contract.

The charges against Madera, as well as charges sought against Dallas County 
Sheriff Jim Bowles for accepting cash and favors from the vendor, were 
dropped in March.

Evidence gathered by investigators, including copies of the Smith County 
sheriff's K-9 account, were passed on to federal authorities.

Madera sold the company to a group of investors in the late 1990s, but he 
stayed on as a consultant until February 2002.

John F. Sammons Jr., is the current chairman and CEO of Mid-States.

In interviews with the newspaper, Smith had earlier denied receiving 
anything but meals from Madera.

But after the K-9 account was deemed public, he acknowledged Madera 
contributed to the K-9 fund.

Records obtained by the newspaper show that Madera's firm began giving 
contributions to Smith's K-9 fund in 1996, starting with $10,000 divided 
into two payments.

Subsequent donations were made in January and April 1997 when Mid-States 
contributed another $6,000, plus another $10,900 the following year.

In 1999, the year Mid-States changed hands, there were still more 
donations. Two checks totaling $10,000 were donated to the K-9 fund.

The last known donation came in March 2001 with a single check for $10,000, 
for a total of $46,900 in contributions. Sammons' signature appears on that 
check.

Mid-States did not contribute any money in 2002, the year Madera left.

Also in 2002, Smith County's new purchasing agent, Jacque Powelson, took 
over the bidding process. She recommended cutting ties with Madera and 
putting the county's commissary contract out for bid.

Ms. Powelson said no contracts were found documenting Smith's earlier 
agreements with Mid-States.

Two years later, Smith County continues to do business with Mid-States, now 
under Sammons' ownership.

"We still use Mid-States," Smith said, even though Madera sold the company. 
"Jack Madera has made contributions for years - he still comes down here."

Authorities in Dallas said the grand jury probe into Madera's dealings with 
several Texas lawmen was halted in March after it was learned the Federal 
Bureau of Investigations was conducting its own statewide investigation.

Questions posed by the newspaper in May about exactly where that 
investigation stands were referred to the U.S. Attorney's Office.

"Normally we can't answer questions about our investigations," said Davilyn 
Brackin, spokesperson for the U.S. Attorney's Office in Beaumont. "We can't 
deny there is an investigation, we can't confirm one. We're just not able 
to comment."

But Special Agent Lori Bailey, a spokesperson for the FBI, has gone on 
record confirming the investigation.

"Our investigation has been ongoing for quite some time now," she said, as 
quoted by the Dallas Morning News in April. "It has been independent and it 
is going to remain that way."

Records show Madera's company was not the only entity to make sizeable 
contributions to the K-9 fund, though none are listed as vendors for the 
county.

Records show other large donations came from Tyler charitable foundations, 
including the Watson W. Wise Foundation, which donated on six occasions 
from November 1994 to June 2002, for a total of $31,000. The Bob Herd 
Foundation made four donations, totaling $18,000, from January 2000 to 
November 2001.

Two other deposits in 2002 and 2003 for $4,000 each were entered as "Bob 
Herd" and "Heard" on the deposit slips.

Wise Foundation board member Will Knight said last week the concept of a 
dog and horse patrol is beneficial to the community and should be supported.

"I know the county doesn't pay for it," Knight said. "They need private 
contributions, I guess, for them to do it. From what I've seen, I think 
they (dog and horse patrol) do a good job, assuming there is no 
misapplication of funds. It's my understanding there's been no question of 
that. What we think we're contributing to is the horse and dog patrol for 
the sheriff's department.

"We're assuming the money is going to the dog food and the horse food and 
to keep the animals up, and the veterinary bills and stuff like that ... I 
will trust that's where it's going, but I don't have any way of knowing 
that," Knight said. "That (dog and horse patrol) is the only thing that 
compels me to donate - I always want to know how the money is being spent."

CASH FOR FLASH

Numerous transactions show some people with signature authority on the 
account wrote checks to themselves. Most of these checks featured a 
notation of "cash" with no explanation made of a specific fund or purpose.

Records show SCSO Lt. Deal Folmar wrote checks totaling $2,749 to himself. 
Three checks, totaling $89.79, were labeled "reimbursement" for 
expenditures, but the records don't show what he was reimbursing himself 
for. One $200 check written by Folmar to himself had the notation "bowling 
tournament."

Now-retired Capt. Marvin Wintters, who also had the authority to sign 
checks, received a total of $7,200 from the K-9 account.

A 2002 check for $420 was written by Lt. Craig Shelton to Wintters for 18 
rolls of hay.

Wintters wrote three checks worth $700 for cash, and six checks worth 
$6,080 to himself, including a $300 check with a notation of "TJA Conference."

One $5,000 check written in 1999 by Wintters to himself had a notation of 
"F/M." A $5,000 cash deposit was noted a few days after Wintters' check was 
written.

Smith said most of the checks for cash were used for "flash money" in 
undercover drug operations and later re-deposited into the K-9 fund.

He said narcotics officers were allowed to cash checks for flash money for 
their controlled drug buys. Requesting cash through the county could mean a 
one or even two-day turnaround time, the sheriff said, adding, "sometimes 
they needed the money right then."

Examination of records could neither confirm nor refute the sheriff's 
assertion that the flash money was redeposited.

SEIZED MONEY MIXED IN

Although the law requires drug forfeiture and seizure money to remain 
separate, Smith County's treasurer's office issued $9,855.89 in checks from 
an audited drug forfeiture account to the non-audited K-9 account.

Two of those transactions were made to purchase vehicles, the sheriff 
acknowledged.

One was a $3,300 check written in 1997 by former Chief Deputy Johnny 
Beddingfield to pay off a lien on a 1988 Jaguar, which was seized from a 
drug suspect and later sold for $5,440, allowing a profit to be earned.

Also in 1997, the agency spent $5,701 to purchase a seized used Chevrolet 
pickup, which was sold for a profit of $1,311.

In those instances, the sheriff's office purchased these vehicles through 
the K-9 account and then was reimbursed by the Smith County treasurer from 
the agency's drug forfeiture account.

Department officials said proceeds were deposited into the drug forfeiture 
account.

Law agencies can legally seize a vehicle linked to drug offenses and then 
pursue a civil judgment, allowing them to purchase vehicles for the amount 
of money owed. Vehicles in good condition can be resold for a profit or 
used by narcotics officers to develop new cases, officials said.

But drug forfeiture and seizure money must be maintained in a separate 
audited account, Texas law states.

Chapter 59, the "Forfeiture of Contraband" section of the Texas Code of 
Criminal Procedures, strictly forbids mixing drug or seizure money with 
other revenue.

Such money must be audited annually by the commissioner's court and the 
findings later reported to the Texas Attorney General's office.

"The budget must be detailed and clearly list and define the categories of 
expenditures..." the provisions states.

Further, the funds must be "used solely for law enforcement purposes, such 
as salaries and overtime pay for officers, officer training, specialized 
investigative equipment and supplies, and items used by officers in direct 
law enforcement duties."

Smith has maintained his agency is so cash-strapped deputies are forced to 
pay for their own training and equipment.

He referenced their hardships during a February newspaper editorial board 
meeting, saying, "These deputies are so dedicated to their jobs, they spent 
money out of their own pockets to pay for their schools and their equipment 
and gun. They never even had bulletproof vests on the budget until last 
year because the county wouldn't buy them. We had to go to the Lions Club 
and beg for funds for equipment ... that's sad."

BONDSMEN DONATE

Some Tyler bail bondsmen are also among those making donations to Smith's 
K-9 account.

Of those, bondsman Earl Nix contributed $450 in 1997, 1999 and 2000; EZ Out 
gave $1,000 in 1999; and Fast Action Bail Bonds gave $100 in 1997.

The largest and most frequent donations came from Strike 3 Bond Service, 
which gave six donations totaling $4,500 between 1995 and 1999.

Strike 3 owner Bill Bobbitt, SCSO Chief Deputy Bobby Garmon and the sheriff 
were sued unsuccessfully last year in federal court by competitors Angelo 
Clark, Terry Henson, Malvin Mills, Robert Courson Jr. and Harold Dean for 
an alleged monopoly in the bonding business.

The plaintiffs claimed the sheriff's office allegedly gave preferential 
treatment to Bobbitt in exchange for personal favors and gifts.

It is unlawful for law enforcement officials to recommend or promote 
bonding companies.

The sheriff and Strike 3 won the suit.

FIREARMS PURCHASED

The issue that initially brought the K-9 account into the public realm was 
the purchase of 340 Remington shotguns from the Texas Adjutant General's 
Office.

After the sheriff advised Smith County commissioners they should continue 
to house federal prisoners or lose the ability to obtain valuable 
government surplus, the newspaper attempted to determine exactly how much 
property was at issue.

Records were obtained from the Adjutant General's Office and U.S. Marshal's 
office to resolve that question. During a review of those records, the 
newspaper found that the sheriff's department had purchased 340 new and 
used weapons using money from the K-9 fund.

It wasn't until the Texas Attorney General ordered the sheriff to release 
the fund records that details of the shotgun purchases were revealed.

Bank records include the names of law enforcement officers and federal 
agents, who pooled their money to buy the weapons for about $150 each.

Acting much like a broker, the sheriff's office issued checks totaling 
$37,260 within a six-month period to buy 340 Wingmaster models of the 
Remington 870 shotguns, which retail for around $600 each.

Checks of $3,000 and $4,500 were written in September 1997 to the Adjutant 
General's Office to purchase the weapons, which were deemed surplus and 
offered for sale to Texas lawmen. Two other checks for shotguns - one for 
$27,000 and another for $2,760 - followed in December.

Although the weapons were intended for law enforcement use only, some of 
the 340 guns were sold to former County Judge Larry Craig, a certified 
peace officer; and former County Commissioner Andrew Melontree, according 
to Smith.

Four weapons went to the district attorney's office and two went to area 
police chiefs, with the remaining guns sold to various law enforcement 
officers and agencies, including former Tyler police detective and 
commissioner-elect Bobby Van Ness, Tyler Police Chief Gary Swindle and 
former FBI special agent Jim Wilkins, now police chief in Marshall.

The city of Tyler paid the sheriff's office $2,250 to purchase 15 weapons 
for its inventory.

Agents with Alcohol, Tobacco and Firearms, who investigated the 
appropriateness of those sales earlier this year, have now concluded their 
probe.

ATF special agent Bill Neuell said in May the federal agency later advised 
Smith in writing the transactions did not comply with the required 
provisions on sales and purchases.

Federal authorities said a firearms license is required to conduct repeated 
sales.

"Basically, it was a note to the sheriff, saying that should he want to do 
it again, he should first contact the ATF," Neuell said. "It was an 
advisement."

No penalties were assessed, the agent said, noting the statute of 
limitations expired.

Sheriff's officials did not comply with a request by the Morning Telegraph 
for serial numbers of those weapons, claiming the records were incomplete.

ACCOUNT TO DISSOLVE

Smith County sheriff's officials have pledged to abide by an attorney 
general's opinion released in August requiring the agency to deposit all 
collected funds into audited county accounts.

This ruling was issued in response to questions of whether the sheriff's 
department can collect and dispose of government surplus, but the directive 
mirrors the earlier opinion on what should happen with the sheriff's K-9 fund.

The quest for a complete inventory list began last fall after the state 
ordered Smith County to immediately reduce its jail population or farm out 
inmates to other counties.

Commissioners asked in November whether the county should rethink its 
contract with the U.S. Marshals Service to house up to 50 federal prisoners.

Smith urged them to keep the contract, saying otherwise the county would be 
forced to relinquish about $1 million in "valuable" surplus property.

He later described the surplus as mostly "trash" when the commissioners 
asked for a complete listing.

Smith in late December delivered 500 pages of assorted documents to the 
commissioners court and to the newspaper, but no inventory list.

The Morning Telegraph ultimately obtained 400 pages of inventory from the 
USMS, which stated the sheriff's office took possession of 69,107 different 
items valued at more than $2 million.

An audit conducted by the county auditor shows some of those items remain 
unaccounted for, records show.

The second part of the series will appear in Monday's paper.

Roy Maynard covers local government.

Jacque Hilburn covers police, fire, and public safety organizations.
- ---
MAP posted-by: Jo-D