Mayor's top staff member arranges tax-exempt convention

A top member of the Knox County Mayor's Office made sure that when her sorority came to town, it could skip paying sales tax.

Community Services Director Cynthia Finch signed the checks for her sorority's bills when it came to town, but the questions is whether she should have.

"She brought a 3,100 person conference to this community," Mayor Mike Ragsdale explained when he last sat down with a 10News camera to talk about Cynthia Finch on July 23.

The Mayor justified Finch's travel expenses by repeatedly bringing up the benefits of her sorority's business.

"A 3,100 person, $3 million economic impact convention, that's coming back hopefully," Mayor Ragsdale pointed out.

But it turns out that 2,000, not 3,000, people showed up for Alpha Kappa Alpha's (AKA) 73rd South Eastern Regional Conference in April of 2005, for a $ 2 -- not $3 -- million dollar economic impact.

Records also show Finch, the group's director at the time, made sure AKA didn't directly contribute to Knox County's bottom line.

Just before the convention, TennCorp Community Services, a local non-profit group that relies on county tax money, partnered with the sorority.

In a letter, Finch's sister who runs TennCorp, explained it was lending AKA its tax-exempt status.

The General Manager of the Knoxville Convention Center explained that other groups have had similar partnerships, but she couldn't remember which ones or how many.

Susan Eaton said she would have staff look at the files for the past five years, which include more than 1,500 conferences.

Still, in the sorority's case, Finch wrote the checks out of AKA's bank account.

That's not how the TN Department of Revenue says it's supposed to work.

In such situations, the Deputy Director said the money should come directly out of the non-profit's account.

That means AKA got a break on its $144,00 bill at the convention center and another discount on a dinner at a downtown hotel.

Speaking on hypothetical terms, the state says the businesses could now be liable for paying the tax.

The General Manager for the Crowne Plaza (then the Radisson) said the AKA conference already cost it money, because the group used about 300 fewer rooms than it reserved.

The hotel says there's still a dispute over the final bill.

Nobody from AKA returned phone calls from 10News.

A spokesperson for the Mayor's Office said Mayor Ragsdale wasn't aware of the tax-exempt arrangement.

The TN Department of Revenue could not confirm whether it is investigating.

CLICK HERE for one of the checks Cynthia Finch wrote to cover conference expenses from the AKA account.

CLICK HERE for a banquet invoice showing AKA used tax-free status while in town.

CLICK HERE for the Department of Revenue certificate TennCorp Community Services provided to demonstrate tax-exempt status.