NASHVILLE — A state comptroller's investigation of the Tennessee Association of Chiefs of Police has unearthed nearly $64,000 in what officials called "questionable" credit card purchases as well a potential conflict of interest involving the nonprofit group's then-executive director.
That same former executive director also doubled as a lobbyist for another nonprofit association controlled by city governments that provides low-cost liability insurance to municipalities.
Comptroller Jason Mumpower said Friday the findings have been referred to Davidson County District Attorney Glenn Funk for further possible action. Copies of the report were also forwarded to Gov. Bill Lee and State Attorney General Jonathan Skrmetti.
The examination looked at the association's expenditures under then-Executive Director Maggi Duncan from January 2017 through December 2021. Duncan, who was not mentioned by name in the report, was suspended in March 2022 and resigned later the same month. The association has been the public face for Tennessee's municipal police chiefs at the state Capitol for just over a half century.
Among other things, the report raises questions about whether government funds were used to purchase alcohol — investigators ultimately couldn't determine if the $13,400 in question was taxpayer-funded given what they described as spotty record keeping.
Thousands of dollars more were spent on association meetings and receptions as well as gift cards and personal gas purchases.
"TACP's executive board has a responsibility to provide adequate oversight of the organization and its staff," Mumpower said in his office's release of the investigation Friday. "The board should ensure the organization is following its policies concerning check signing and credit cards as well as revisit its official policy on the funding of hospitality suites."
The association's executive board issued a statement saying that upon discovering potential issues, board members took "swift and immediate action" by self-reporting their discoveries and also began reviewing operational and managerial functions and protocols. The board determined changes were needed to improve the association's compliance not just with its own bylaws, but also with federal, state and local reporting requirements.
The board said it also employed a CPA firm to conduct a "full audit" and hired a finance officer. An interim executive director began implementing recommended changes. Board members later hired a new full-time executive director who is continuing to execute recommended changes and develop new policies and processes.
Duncan was viewed in the lobbying community as an effective and aggressive advocate for hundreds of police chiefs across the state.
Still, she wasn't always successful, losing a 2020 battle over some provisions in a permitless gun-carry bill pressed by Gov. Bill Lee.
The Tennessee Association of Chiefs of Police is funded through federal and state grants, vendor fees, fees for testing and accreditation, donations and membership dues that are paid by members' respective governments. More than half of the association's funding is derived from governmental sources, according to auditors. The association has some 700 dues-paying members.
Comptroller investigators also said they determined the association co-mingled governmental funding sources with private funding in its accounting records. As a result, investigators could not always accurately determine if governmental funds or private funds were expended for certain purchases.
In 2022, the then-association President and then-Manchester Police Chief Mark Yother resigned from the association post, citing increased workload following Duncan's suspension. The board had said in a statement in March 2022 that it had had "growing concerns of financial accountability and personnel issues that warranted immediate action."
Major findings from the comptroller's report include:
UNAPPROVED BONUSES
The executive director's employment agreements, signed annually from 2017 through 2021, allowed the executive director to receive bonuses in the range of 20-25% of her salary as additional compensation, according to the comptroller's office. The employment agreements also provide that the exact amount of the bonus must be recommended by the association president and approved by the organization's executive board.
During the 2019 through 2021 employment years, "the executive director paid herself and collected a bonus in each of those years without any official record verifying a recommendation from the TACP president or approval from the TACP executive board," investigators wrote.
Duncan saw her salary rise from $92,000 in 2017 to $150,000 by 2021. She also received collective bonuses over the five-year period of $107,100. Auditors said they only found records of board approval for the bonuses for the years 2017 and 2018.
POTENTIAL CONFLICT
Investigators said Duncan had "unauthorized" secondary employment as a registered lobbyist.
"The executive director worked as a registered lobbyist for a nonprofit organization that provides liability, workers' compensation and property crime insurance coverage to Tennessee municipalities, while simultaneously serving as TACP's executive director," the report said. "The executive director claimed to have received executive board approval to work as a registered lobbyist for the nonprofit organization. However, in 2014, the executive board discovered that the executive director was working as a lobbyist for another entity and instructed her to stop."
The report said the executive board implemented new restrictions on outside employment unless approved by board members and also banned the use of association resources, equipment and staff in any such work. But comptroller staff members said they found the outside employment continued.
Duncan disclosed the outside work in her Tennessee Ethics Commission filings. While the comptroller's investigation makes no mention of the entity for which Duncan worked, her 2017 filing shows she was registered to lobby for the then-Tennessee Municipal League Risk Management Pool, a nonprofit liability insurance pool serving member cities with low-cost liability coverage. The name of the entity is now Public Entity Partners. Ethics Commission filings show Duncan registered to lobby for Public Entity Partners in 2018, 2019, 2020 and 2021.
CREDIT CARDS
The report said the association paid $63,900 in questionable disbursements charged to the organization's credit cards for alcohol, food, individual and group meals, gifts, gas purchases and other miscellaneous items. Vendor sponsorships were provided for association meetings to fund the hospitality suite with alcohol and food. Investigators said they were only provided with sponsorship payment receipts totaling $8,850 for the period, which was less than the totals spent on these items.
Investigators said they also found that documentation for many of these transactions lacked corresponding receipts and/or sufficient details justifying the charges, and many transactions lacked proper approvals. Many disbursements appeared to have no association-related purpose or were "clearly made in violation" of the association's purchasing policy, which states expenditure of association funds should always be for the purpose of the organization, and at all times these expenditures should be handled in a "professional manner" and not in a fashion that will "bring disfavor or embarrassment on the association."
ALCOHOL PURCHASES
The report said that for association board meetings and annual conferences, alcohol was purchased for hospitality suites. Government funds are not authorized to be used to purchase alcohol, and investigators found that $13,400 was used to purchase alcohol in conjunction with these meetings.
"There is no such restriction on the use of private funds, and TACP has a policy that addresses the funding of hospitality suites through vendor sponsorships by companies who sell products to the law enforcement community," investigators said. "However, the policy is unsigned and undated and does not provide adequate detail of how vendor payments of sponsorship fees are to be collected and spent."
As a result, investigators "could not determine if government funds were improperly used" to purchase alcohol, the report adds.
HOSPITALITY SUITES
For all association board meetings and annual conferences, food was purchased for hospitality suites. The amount totaled $10,300. Investigators questioned the use of government funds to purchase food for board meetings and annual conferences. The association has a policy that addresses the funding of hospitality suites through vendor sponsorships. However, investigators noted, the policy is unsigned, undated and does not provide adequate detail of how vendor payments of sponsorship fees are to be collected and spent."
Accounting records should segregate funding received from governments and vendor sponsorships, the report said.
MEAL PURCHASES
Association funds totaling $15,200 were used to purchase individual and group meals. Investigators said the executive director did not maintain adequate documentation of certain purchases with itemized receipts or invoices. No record of prior approval for any meal purchases was found. Investigators noted 243 occasions on which an association credit card was used to purchase either individual or group meals ranging from drive-through windows at fast food chains, such as Zaxby's and Hardee's, to upscale restaurants, including Jimmy Kelly's Steakhouse and Mere Bulles.
"As a result, investigators could not conclusively determine whether these purchases were exclusively for the benefit of the TACP," investigators said. "According to the executive director, all food purchases were made at her sole discretion."
GIFT CARDS
The association purchased gifts and gift cards totaling $14,400. Gifts were purchased from various retailers that primarily sell women's clothing and apparel, such as Tory Burch, Kate Spade and Bath and Body Works. Gift cards were purchased primarily from Kroger and Costco, as well as through online retailers, and included pre-paid cash gift cards, as well as gift cards for restaurants and department stores. These gifts and gift cards were generally given to association business office staff, investigators said.
"However, investigators could not determine the disposition of all gift purchases. The executive director did not maintain adequate documentation of gift and gift card purchases with itemized receipts or invoices," the report said.
OTHER PURCHASES
Association credit card purchases totaling $790 were used for the purchase of gasoline for personal vehicles. No documentation was on file justifying the purchase of gasoline for personal vehicles, according to investigators. Association credit card purchases totaling $9,700 were not supported with itemized receipts or invoices. Therefore, investigators said, they could not conclusively determine whether the purchases were exclusively for the benefit of the association.
A breakdown of spending by former Tennessee Association of Chiefs of Police Executive Director Maggi Duncan that has been questioned in a newly released state comptroller's report:
Alcohol: $13,426.16.
Food: $10,337.
Individual and group meals: $15,217.66.
Gifts and gift cards: $14,411.24.
Gas for personal vehicles: $796.57.
Miscellaneous: $9,734.53.
Total: $63,923.74.
Contact Andy Sher at asher@timesfreepress.com or 615-285-9480