Three years ago, Knox County Criminal Court Clerk Joy McCroskey hired a private collection agency to go after some $18 million in outstanding fines, fees and restitution owed to the county.
The move, however, violated state law and county code because McCroskey didn't competitively bid out the service.
Now, local leaders are negotiating with a new company to oversee collections for her office, which includes Fourth Circuit Court, General Sessions and Criminal Court.
McCroskey said she didn't intentionally do anything wrong and that then-Law Director Bill Lockett, who would eventually resign in disgrace, told her it was OK to hire the firm.
"I felt like I did what I needed to do when I went to the law director," she said. "I had no idea that I had to do anything else. When the law director tells you that you can do it, then what else is there? He told me that since it only involved my office I could do it."
Lockett, who stepped down from his post in April 2010 and later pleaded guilty to a felony theft charge connected to taking money from his former law firm, did not return a call seeking comment.
State law says that criminal court clerks who use private firms to collect fines must ask the county purchasing department where they work to "utilize normal competitive bidding procedures applicable to the county to select and retain the agent."
County code says officials must award contracts that exceed $10,000 through competitive sealed bidding. Such contracts also must be approved by the law department and signed by the county mayor.
McCroskey, though, oversaw the process herself. She reached out only to Solutia Revenue Recovery, and agreed to a contract put together by the firm.
"It was only later that I found out it was wrong, but I acted in good faith," McCroskey said.
Laura Boyd, president of Solutia, agreed, adding that her firm was not aware of the violation at the time.
"I just recently got an email from Joy, but I didn't know anything about it," said Boyd, whose company is based out of Columbus, Tenn. "It happens, I guess, but usually, in most counties, most clerks across the state get to decide who does collections for them. This is the first time we've heard about something like this."
Knox County Deputy Law Director David Buuck said McCroskey isn't in trouble.
"There wasn't a conflict of interest as I understand it," he said. "(Solutia) is a legitimate company that does a lot of work for a lot of different agencies. But there was an oversight and Joy needed to go through the procurement process, which she has."
Buuck added that the company, since it did perform a service for the county, can keep any money it earned while under contract.
NEW FIRM ON BOARD SOON
McCroskey, long criticized for not taking a harder approach toward collecting outstanding debt, initially signed the contract with Solutia in late-October 2010. According to the contract, the county would pay the company $50 for each account it collected or 40 percent of the debt collected, whichever was cheaper.
Accounts, which are separated by individual criminal convictions, usually range from $50 to $2,000 each.
McCroskey said the firm came "highly recommended" from a number of her colleagues who also use it.
"They did a great job," she said, adding that she had no prior ties to the firm or its employees.
Earlier this year, officials in the county's law department learned that the contract wasn't put out for bid. They then informed the county's purchasing department, which started the advertising process.
In April, 10 companies submitted proposals. The county picked Austin, Texas-based Municipal Services Bureau, which ranked the highest, scoring 278 points out of a possible 280, during the final stages of the evaluation process.
Solutia scored sixth with 202 points.
The committee, which included a number of county officials, based the grades on qualifications, experience, costs, proposed services, and references.
The purchasing department is currently negotiating a contract with MSB and is expected to bring something before the Knox County Commission for final approval in October, according to county Purchasing Director Hugh Holt. He said MSB "has accounts across the country and is well-versed in Tennessee law."
In the meantime, Solutia will continue to collect old debt for the county until the contract is signed.
"The good news is that we caught it as soon as we did and we were able to go back through the proper channels and go through the proper process," said Knox County Mayor Tim Burchett.
The mayor, however, said the contract matter should have initially "triggered red flags" in the criminal court clerk's office and in the future "it will be something to keep an eye on."
LOOKING AT THE DEBT
Officials are still crunching numbers, but it appears that the county is owed roughly $18 million from as many as 200,000 accounts tied to Knox County's Fourth Circuit Court, General Sessions, and Criminal Court during the past 10 years, according to records.
The county turns over debt to a collection agency if it hasn't received a payment in six months.
The county, according to bid documents, expects a 20 percent to 25 percent collection rate. Officials, though, acknowledge that going after debt is tough, since many of the offenders either can't afford to pay the fines, have no intention of paying the fines, or are in jail.
McCroskey operates what the county calls a "fee office," meaning it's supposed to be self-sustaining. Any money it receives covers $494,000 in monthly payroll, including benefits, and the rest is turned over to the county's general fund to help maintain overall day-to-day operations.
While under contract, Solutia collected just over $1 million, and made what appears to be about $144,000, according to records and officials with the company.
Laura Boyd, president of Solutia, said her firm "collects at about an 18 percent recovery rate." The national average is currently about 14 percent, she said.
Solutia is still collecting fines for the county, but McCroskey said she quit submitting new accounts to the firm after the bidding process started. She added that Solutia also will turn over any remaining Knox County accounts to the new firm once it takes over.
McCroskey says she has collection clerks in the office that help, but an outside agency is crucial to her operation.
"They have the means that we don't have," she said. "We collect a lot but they do better and these companies have equipment that runs 24 hours a day, looking up addresses and phone numbers. And they have the computer programs to use that I just can't afford."