A Clerk of Court audit released Monday details failures and possible violations of state law in Lee County government’s effort to promote private business and create jobs through its Economic Development Office.
Clerk of Court auditors concluded that a recently resigned county employee, former Marketing Director Jennifer Berg, apparently violated state law by routing contracts for marketing to her husband’s company, according to the draft audit. Auditors also criticized the county’s handling of VR Laboratories, which collected a $5 million job creation grant.
The audit was a draft version because Lee’s Economic Development Director Jim Moore has yet to write a response.
Chief Auditor Chuck Short said he talked to Moore throughout the audit and sent him a copy of the draft version about two weeks ago. Short said the initial plan was to release the final audit after commissioners returned from summer break Aug. 1.
“Most of the stuff we’ve got in there is just fact and information we’ve obtained from the paperwork,” Short said.
Commissioner Larry Kiker said he can’t say when he expects a response.
“I understand that staff has had this for a couple weeks, and I’m looking forward to their response,” Kiker said.
Auditors took aim at Lee County’s lack of documentation, asserting county officials did not disclose documents indicating that they checked into VR Labs financial background.
VR Labs was formed one week before it applied for Lee County’s grant with an application that used financial information from an unrelated company. Lee has paid out just less than $4.7 million, but only eight jobs have been reported, and the company’s proposed bottling plant sits unfinished and empty.
Information also was deleted from records, according to auditor’s interviews with county employees.
“Records were removed from the desk of the employee who takes minutes of IDA (Industrial Development Authority) meetings. Weeks later, the records were returned with several minutes deleted. Other confidential records were also removed from the employee’s desk,” according to the audit.
County Manager Roger Desjarlais, who recently became Lee’s top staffer, said he needs time to investigate the claims. The Clerk’s audit did not name employees who were interviewed — a standard practice.
Desjarlais said steps are already being taken to prevent future lapses. Among measures in the works, economic development workers will be required to go through a checklist before paying companies to ensure contract requirements are met. Commissioners will be asked to vote on policies within the next few months, he said.
“It’s not like the program’s bad, it just needed to be adjusted to provide more accountability and that’s what we’ll be doing,” Desjarlais said.
Additionally, Desjarlais said Lee County will send the audit to the Florida Commission on Ethics. Auditors write that Berg apparently violated state law after her husband’s business received a $75,000 loan and collected dollars to perform marketing work.
“We will have zero tolerance for it,” Desjarlais said. “That’s the message that’s being sent today.”
Additionally, Interim County Attorney Andrea Fraser stated the final audit will be forwarded to law enforcement officials who will determine whether there was any criminal wrongdoing.
The Industrial Development Authority, partially funded by Lee County and staffed by county employees, along with the Horizon Council, a public-private partnership that advises the commission, contracted an Orlando-based company, Chisano Marketing Group.
About $1.5 million was paid to the firm over the past three years, according to the audit.
A company owned by Berg’s husband, BB Direct, received contracts through Chisano, according to the audit.
Berg did not immediately return calls to her cellphone Monday.
BB Direct also received a $75,000 loan through a program that is managed by the Economic Development Office and uses IDA funds for collateral on loans, according to the audit.
The loan went delinquent. Its $50,000 balance was paid off in the past few days, Short said.
In a written statement, Moore defended the loan.
“The loan met the criteria of the program — allow small business to grow, created additional jobs,” Moore wrote. “The transaction was a success for all parties. There were no county funds involved, only IDA Funds.”
Moore publicly praised Berg when she abruptly resigned last month, noting that “she did a great job while she was here.”
When asked why Berg was allowed to resign in lieu of being fired, Moore declined to comment.
There were no records of a competitive bidding process for Chisano’s contract, according to the Clerk’s Office. Auditors note that the Economic Development Office agreed to start running contracts through the procurement department — a standard channel for Lee’s contracts.
Chisano President Joseph Bouch did not immediately return calls for comment Monday.
The following topics came up in interviews between auditors and employees:
• Lee County paid the company $240,000 for a marketing website without receiving a single phone call in response to its online promotion.
• Exorbitant prices paid for services and products that were never used. Lee County paid $22,000 for notebook folders that can be purchased online for $2,000.
• The company sent county employees Christmas presents at their homes and offices, according to the audit.
• Little detail was provided on invoices. In 2012, the company collected $482,245, including monthly service charges amounting to $147, 604, according to the audit.
Pointing out the marketing website that netted few results, Kiker said he expects an explanation.
“How does that happen? I want to know what a happened,” Kiker said. “I’m sure there’s a perfectly good reason, and I can’t wait to hear it.”