A Hamilton County employee who ran a private business using his county computer received a formal written warning for failure to follow county employment policies.
"That's the only thing we can do other than fire him or suspend him," Public Works Administrator Dan Wade said of employee Alan Knowles. "It's just a failure to follow procedure."
Knowles, the son of Hamilton County Clerk Bill Knowles, earns $64,555 a year as superintendent of support services for the Public Works Department. IRS records show he also earned $157,345 as president of a private non-profit company since 2007.
Knowles acknowledged Tuesday he handled business for Dove Ministries Inc., doing business as DMI Concerts, during county work hours. The nonprofit company books Christian concerts for Chattanooga.
He said Wednesday he would have no further comment.
But e-mails he provided show the extent to which Knowles used his county computer to communicate with others, including his brother and sister, about the business.
One series of e-mails shows that Knowles and DMI paid more than $8,000 in penalties after an IRS audit but company board members felt "it could have been worse."
On Tuesday, county Human Resources Director Rebecca Hunter said policy prohibits employees from outside work that affects their county employment or creates a conflict of interest.
E-mails show Knowles answered DMI e-mails sent to his county e-mail account at all hours, both during and after work. In other instances, he received DMI-related messages on a private e-mail account and copied them to his work account.
He sent company messages to his brother Finley, who is an unpaid member of the DMI board and chief administrator in the County Clerk's Office.
Finley Knowles also received a few DMI-related e-mails in 2009 at his county e-mail address and on at least one occasion responded to one during county work hours.
Their sister, Reba Kunselman, a secretary for DMI's board of directors, also received e-mails from Alan Knowles and sent e-mails to him on his county computer. They concerned invoices, graphics and logos for DMI concerts and catering arrangements for Christian musical acts.
Several e-mails concern an IRS audit in 2008 of DMI's 2006 tax filing. The tax filing itself was unavailable to the Times Free Press.
One e-mail was by Scott Kennedy, whom Kunselman said is a DMI board member as well as an IRS criminal investigator. Kennedy did not return phone calls or an e-mail Wednesday.
On July 29, 2009, Kennedy sent an e-mail to other board members saying the audit was over and said it "could have been much worse." His e-mail was copied to Alan Knowles' and Finley Knowles' county e-mail accounts.
Alan Knowles described the audit in an e-mail he sent after hours on July 26 from a personal e-mail account to other board members and to his and his brother's county e-mail accounts.
"The audit was completed on May 14, 2009 with only one finding - tax liabilities on the DMI vehicles ...," Knowles wrote. "While Reba, Scott and I had discussed it after a November 2005 board meeting, I failed to follow-up with Reba in the implementation on what we discussed. Taxes and interest paid were $4,846.35 (Alan) and $3,701.33 (DMI)."
Knowles also wrote that Kennedy's "knowledge and insight were invaluable."
Kennedy's e-mail gave credit for surviving the audit to Kunselman, but acknowledged "having an insider that knew how the IRS works also helped."
He told board members they had faced penalties because of a "law that I was not familiar with that taxes every Board member with a substantial penalty for anything determined to be abusive by the IRS in the way of fringe benefits."
It's not clear whether he was referring to the DMI vehicles that Knowles referenced.
"We barely escaped this huge penalty (by the skin of our teeth as they say) for all Board members and need to make sure that we are all aware of this and take all steps to avoid any future problems," Kennedy wrote.
He said the IRS also said the DMI board should be more diverse because many of its members are related. Alan Knowles' wife, Tina, also served on the board at one point, IRS records show.
Kennedy ended his e-mail by saying the auditor was impressed with the nonprofit, but cautioned that once a company has been audited its chances to be audited again "increase substantially." He said he suspected the nonprofit would be audited again.
On Aug. 19, 2009, Alan Knowles used the county e-mail system to gather votes on new DMI board members as recommended by the IRS.
He sent the initial e-mail after work hours using a personal account, but copied them to his and his brother's county e-mails.
Finley Knowles voted for the new board members on Aug. 24, 2009, at 2:56 p.m. using his county work e-mail.
As part of his duties in the clerk's office, Finley Knowles handles personnel issues. He said the clerk's office policy prohibits such communications if they are "more than incidental."
He said he considered e-mail exchanges where the company voted on new board members to be "incidental" communications.
"I've never done an instantaneous kind of board meeting (via e-mail)," Finley Knowles said in an interview Wednesday. "I would vigorously protest [an allegation that] I've been in a board meeting on county time."
Another County Clerk employee, Records and Archive Clerk Michael Clark, also communicated with Alan Knowles about DMI work during county time in 2009, according to e-mail exchanges.
Clark said he put together a banner for the company after work hours and was not paid for his work. At 2:11 p.m. March 6, 2009, Clark sent an e-mail to Alan Knowles' county e-mail account about his quick e-mail replies.
"Don't reply back so fast next time," Clark said. "I'll think you aren't doing any work over there!"
Clark said in an interview Wednesday he was making a joke about the speed of the county's e-mail system, and was not saying Alan Knowles did not pay enough attention to his duties at the county.
Most of the e-mails sent and received by Alan Knowles on his county e-mail account dealt with the day-to-day issues of running a concert business.
In a typical example sent at 3:46 p.m. Oct. 9, 2009, Knowles discussed plans with a caterer for breakfast for a Casting Crowns concert. He sent the message to the caterer from his county work account.
"Heinz brand ketchup has been requested," Knowles wrote. "Any problems fulfilling the special request?"
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