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(WBIR-Jellico) A state comptroller investigation showed a former Jellico city recorder, who had told 10News she was a victim when employees didn't get a paycheck, had stolen nearly $100,000 in public funds.

In October of 2012, all 21 city employees didn't get paid. The mayor, Les Stiers, had told 10News the city's money issues were an internal error.

The former city recorder, Linda Douglas, had said it was stressful to tell her coworkers they wouldn't be getting paid that week.

"I was in tears. I went to the doctor yesterday morning because my nerves were so frayed," Douglas said to 10News. "I didn't get a paycheck, and I'm just like the others. I live paycheck to paycheck. I know how they feel."

But after cash seized in a drug arrest disappeared, the state comptroller launched an investigation, looking into records from January 1, 2011, to December 31, 2011. It found the former recorder, Linda Douglas, misspent the town's money.

"If you're stealing from your employer and you're hurting fellow employees, it kind of tugs on your heart a little bit. And then when you're lying about the whole situation, then it gets more tearful," said Stiers.

The state comptroller investigation showed Douglas had pocketed over $70,000 in cash, and misspent public funds on a variety of ways over the two-year period, including travel, gas, groceries, and gift cards.

"It's a damning report, not only for the city of Jellico but to the previous city recorder we had here," said Stiers.

Stiers said the final red flag came when six of the city's checks bounced.

"Bills and vendors hadn't been paid. Hospitalization insurance hadn't been paid. Workman's comp. So there's a plethora of a lot of issues that's domino down to this," said Stiers.

The investigation also documented over $16,000 in "questionable expenses" made by various employees.

"Every penny that's been taken, my job is to make sure that it's been returned to the city and the citizens. Because enough is enough," said Stiers. "People need to understand that while I'm here, things will be done and people will be held accountable."

The state comptroller findings noted several additional deficiencies in Jellico, including an out of date audit. Per state law, every municipal government should have an audit every two years, but an annual audit of the City of Jellico has not been published since the fiscal year ended June 30, 2011, according to the investigation.

"We should have been more attentive," said Stiers. "But, we're in better shape today."

Jellico hired a new city recorder, Jennifer Wilson, in August of 2013. She is set to finish training in July.

10News reached out to Douglas' attorney, but did not get a returned phone call for comment.

To view the full state comptroller investigation, click here.

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