By 10News' Mike Donila
John Duncan III's short but rocky political career as Knox County's top tax collector ended Tuesday, after he pleaded guilty to official misconduct, a felony charge connected to bonuses he paid out to himself and a number of employees for educational studies they never completed.
A member of one of the area's most politically powerful families, Duncan was still in his first term of office and a little more than a year away from seeking re-election. He officially stepped down shortly after he was sentenced by Criminal Court Judge Mary Beth Leibowitz to up to a year of unsupervised probation.
He will be eligible for judicial diversion, meaning he can ask that the offense be expunged. Leibowitz will take up the matter during an Aug. 15 hearing.
Duncan, the son of long-time U.S. Rep John J. Duncan Jr. and nephew of state Sen. Becky Duncan Massey, declined to comment after the brief hearing. His attorney, Jeff Hagood, also declined to speak with reporters Tuesday.
His father, who accompanied him to the courtroom, said that he and his wife "love our son very much and are very proud of him."
He said that Duncan did a good job as Trustee, adding: "We can rely on our faith to get on with our future."
During Tuesday's hearing, the former trustee spoke little, only acknowledging to the judge that he understood the sentencing and the charge, and that he would enter a "plea by information," meaning he agreed to skip a grand jury review of the charge.
He also said little in his letter of resignation that he submitted to the county's law department.
"Serving in this capacity has truly been an honor and I will always be grateful to the people of Knox County for giving me the opportunity," he wrote.
Kristin Phillips, who has worked in the office for roughly two decades, will fill in as interim trustee until the Knox County Commission appoints someone to serve out the remainder of the term, which ends Aug. 31 next year.
In a statement, Phillips said, "This is an unfortunate situation, however I have great confidence in our staff and we will continue to serve the citizens of Knox County as we move forward."
Commission Chairman Tony Norman, who accepted Duncan's resignation, said in the next week or so he expects to call a special board meeting to talk about how to go about filling the position. He said the county will probably then start taking resumes.
Knox County Mayor Tim Burchett called the controversy surrounding Duncan "certainly unfortunate."
"As Knox County moves forward, our finance department will work with our external auditors, and will also offer any assistance necessary to the Trustee's Office in order to ensure that taxpayer business continues properly," the mayor added.
Duncan, 32, is the third member of his administration to plead guilty in a bonus scandal that's tarnished his administration almost from the get go. In late December, his ex-chief of staff, Joshua Burnett, and the office's former delinquent tax attorney, Chad Tindell, each pleaded guilty to facilitation of official misconduct, a misdemeanor. Both were sentenced to 11 months, 29 days probation and paid more than $600 in fines. Each was granted judicial diversion.
Shortly after taking office in September 2010, Duncan, a Republican, gave himself and five other employees each a $3,000 bonus that was supposed to go only to those who attain the designation of "certified public administration."
None of them had. The following year, he again doled out the same bonuses, and by then a few of them were certified. Duncan, however, was not.
Prosecutor Bill Bright said in court Tuesday that Duncan told the Tennessee Bureau of Investigation that "nobody at the time of either payment told me that it was improper to make the incentive payments prior to achieving certification."
Bright, though, told the court that was not true and that a number of employees specifically told Duncan it was improper.
In the end, the former Trustee paid out more than $50,000 in bonuses during the two years combined, although almost everyone eventually returned the money. And prosecutors only targeted the payments made in his first year.
Whether the state goes after anyone else remains to be seen, although, as part of his plea, Duncan agreed to participate in any further investigation of his employees who received the payments.
State code allows for an annual incentive up to $3,000 for those who receive the certification. And, it's not uncommon for the county's other fee offices, like the register of deeds or the court clerks, to provide the bonuses, but they only do so to those who have graduated from the program.
The certification is administered by the University of Tennessee County Technical Assistance Services, or CTAS, and includes 60 hours of courses and several exams designed to teach officials the fundamentals of serving the public.
Officials must complete 16 hours of training each year to remain
Duncan has never been clear about why he paid out the money, and at times changed his story. He and his staff paid back the money after the public and other elected local leaders complained vigorously to the media.
However, he long maintained that the initial payments were legal, since he included them in one of his annual salary suits, a lawsuit that fee officers file in Knox County Chancery Court that outlines much of the departments' financial needs.
Investigators took notice after media reports in late 2011 and early 2012 started detailing the payments. At that time, officials also said they suspected that Zach Brezina, an analyst in the department and longtime Duncan friend, had taken the CTAS computers tests for his co-workers.
Brezina, who cooperated with authorities, was never charged in the scandal.
Tuesday's plea possibly marks the end of what many local politicos felt was a promising political career for the young Duncan, a former credit administration officer for BankEast and the likely successor to his father's seat in Congress.
Duncan took office with relative ease in September 2010 because incumbent Fred Sisk pulled out of the Republican primary before it really began. At the time he said he was going to put "the 'trust' back in 'trustee,' cut jobs and save money.
Soon after, he hired 14 new people, all either connected to his family or the Republican party. He also gave a number of other employees raises at a time when other county officeholders said they wouldn't support such increases.
Duncan, though, did cut some $65,000 annually in office travel allowances and required that his employees file for mileage reimbursements.
He also struck a partnership with three of the area's biggest banks, which essentially created more than 50 satellite offices, since the businesses agreed to accept tax payments at their branches.
Critics, though, also took issue with what was perceived as a lackadaisical work habit. Employees say he was frequently out of the office and a regular at national and local political and sporting events.
At one point in 2011 his absence came to a head when the county's then-external auditor KPMG discovered a $6 million accounting error, and claimed that the Trustee's Office took four weeks too long to put together much needed information.
The mistake was corrected, but the additional work cost taxpayers an extra $12,500.
Knox County Commission R. Larry Smith, a vocal opponent of the bonus payments, suggested that Duncan - after his staffers resigned - should also have stepped down, rather than "collected $2,100 a week since December," when they all knew he would eventually leave."
"No. 1, I hate it for Knox County, but the Trustee department will still carry on because there are a lot of good people who work there," he said. "There's enough checks and balances in place."
Knox County Trustee John Duncan, III, has pleaded guilty to official misconduct in a Knox County courtroom Tuesday morning.
In December 2011, Duncan gave bonuses to himself and five other employees for finishing an online training course, even when they failed to complete the course.
After the story was reported, the county finance department confirmed all the employees who accepted the $3,000 bonuses, including Duncan, paid back a total of $39,000.
He has resigned from his post and will apply for judicial diversion.
Duncan's father, Congressman John H. Duncan, Jr., was in the courtroom with his son.
Knox County Trustee John Duncan, III is on the criminal court docket this morning.
The Trustee's Office has been at the center of an on-going criminal investigation.
10News has crews in court right now. We'll keep you posted.