Hoover Council President John Lyda describes “financial disarray” and notes fraud possible
A month ago, Alabama Today submitted a formal public records request to the City of Hoover, copying City Councilors John Lyda and Curt Posey on that email. While City Clerk Wendy Dickerson acknowledged receipt of the request, so far, the city has failed to produce a single record, return a phone call, or give a status update about it. An email exclusively obtained by Alabama Today sheds light on some of what the city is hiding by withholding the requested public documents. Lyda emailed the rest of the council on April 9, 2024, with the subject line “Hoover Forensic Audit- Kroll Proposal.” Good afternoon, Wallace Jordan has researched several options and vetted various individuals and firms for the completion of a forensic audit on city finances. Attached is a proposal from Kroll Investigative Analytics. I know there is a shared desire to get moving on this ASAP so that we can get assurance that the recent discovery of financial disarray is due to human error or carelessness rather than fraud. The cost is estimated to be between $145k and $177k and is expected to take between 60 and 90 days. Please let me know ASAP if you believe there’s sufficient reason not to move forward on this. Phillip will also be happy to provide any info on other firms and individuals they spoke with in finding the right fit for our needs. Thank you! John According to Lyda’s email, the forensic audit was expected to take 60-90 days. That was 92 days ago. Two sources tell Alabama Today that the forensic audit includes an investigation into unconfirmed reports of documents protected by the state document retention laws intentionally deleted by a former city staffer. Attorney General Steve Marshall’s office has a Special Prosecutions Division that has prosecuted ethics violations by city officials in recent years. Their website states, “This division prosecutes mainly public corruption and complex economic crimes. The special prosecutions division works with federal and state agencies to conduct joint investigations and prosecutions. In addition, the division assists various commissions and agencies with prosecutions.” It is unclear if the City of Hoover has yet been in contact with investigators for the state about Lyda’s concerns. As reported first in 1819 News, City Councilwoman Khristi Driver revealed the forensic audit publically for the first time in sworn testimony during the hearings contesting the Certificate of Need that the Hoover City Healthcare Authority has asked the state for. On May 30, Driver testified, “My understanding of the purpose of the audit would be to take a look at all of our financials to make sure that everything is in order and to follow up on some of the observations that were made in our most recent audit from our regular auditor.” According to the Hoover Sun, the last audit report for fiscal 2022 noted “some material weaknesses and significant deficiencies in the city’s internal controls. The material weaknesses included insufficient segregation of duties over financial reporting by an outsourced contractor at the Hoover Metropolitan Complex and errors and problems related to implementing a new business software system. The significant deficiencies dealt with the recording of accounts receivable transactions and the holding of checks for vendors.” An examination of publicly available records by a financial expert indicated that internal control weaknesses were found rather than material weaknesses, as described by Hoover Sun. Despite the concerns in the audit report, the Sun reported at the time that Hoover Mayor Frank Brocato “was not alarmed.” City officials have not publicly addressed the forensic audit, how it is being paid for, or how it impacts the timing and delivery of yearly annual audit from the city’s longtime auditor Barfield, Murphy, Shank & Smith (BMSS) Advisors and CPA. Earlier this year, the City of Homewood announced that it retained an independent forensic certified public accounting firm to investigate the theft of city funds and notified the Jefferson County district attorney and the FBI. A city employee was then arrested and charged with misappropriating city funds for allegedly stealing over six figures.