Tourism commission files lawsuit against insurance company

By DAVID GUSTAFSON AND HASKEL BURNS,

In an effort to take matters into their own hands, members of the Hattiesburg Tourism Commission filed a lawsuit against their own insurance company this week in hopes of recovering some $423,000 that newly-appointed Mississippi State Auditor Shad White says should be returned to taxpayers.

Ironically, a majority of the funds  – including more than $250,000 in bonuses paid to former tourism commissioner executive Rick Taylor and other employees – were authorized by the same commission members behind the lawsuit.

In addition to the bonuses, White said taxpayers should be reimbursed for interest on the moneies as well as investigative costs.

The tourism commission’s complaint, which was filed Tuesday in Hinds County Chancery Court, seeks relief against the insurance company itself and “damages for the actions of their insurance company in attempting to use threats of denial of coverage for reasons having no legitimate or even arguable basis in fact or law.”

The complaint names current and former tourism commission members Marshall Bell, Sandra Foster, Frank James, Catherine Price, Chris Rowell and Bonnie Warren as plaintiffs.

On Tuesday, White said the issue has been sent to Attorney General Jim Hood’s office.

“We don’t have the power to take anything to court,” said White. “What we have the power to do is investigate something and build a file, and then we have to forward that file either to the Attorney General’s office or to federal lawyers or a local district attorney.

“At that point, the negotiations about how the money is paid back and the time frame and that sort of thing, typically revolve around the folks who have received the demands and the attorney who is moving the case forward. So in this case, we forwarded our findings to the AG’s office, and it’s my understanding that they’re dealing with the folks who were given the demands.”

At the time the bonuses were paid, Taylor served as executive director of both the Hattiesburg Tourism Commission – and the Hattiesburg Convention Commission, which have always been two separate entities with separate board members responsible for oversight.

The Tourism Commission is funded primarily through a 2 percent tax on Hattiesburg hotel rooms. The Convention Commission is funded primarily through a 2 percent sales tax on food and beverage.

Taylor resigned his duties as executive director of the Hattiesburg Tourism Commission in June 2017 when he officially retired with full state benefits, but kept his six-figure salary and now only serves as executive director of the Hattiesburg Convention Commission.

Marlo Dorsey was named executive director of the Hattiesburg Tourism Commission last October.

According to Dorsey, the funds in question were used for “unauthorized employee bonuses and retroactive payroll payments” to Taylor and six others made from 2008 through 2013.

In court documents, commission members contend Taylor and the others were deserving of the additional bonuses because of their work performance. Furthermore, commissioners claim Taylor’s annual compensation was often compared to compensation packages for similar positions in similar markets in order to “achieve a total compensation amount that included, by practice, a one-time annual payment that was occassionally called a ‘bonus’ even though it was in fact a planned part of the total compensation package for the executive director.”

As the job responsibilities of the executive director grew, so did the compensation package offered each year.

“The Hattiesburg Tourism Commission discontinued this type of payroll practice in 2014 and, in 2016, retained legal counsel for inclusion at its commission meetings and for overall compliance of its internal processes,” said Dorsey.

When asked about the matter, Taylor said he has no authority to comment on behalf of the tourism comission or the individual commissioners because he is no longer a tourism commission employee.

Dorsey pointed out that members of the Hattiesburg Tourism Commission are unpaid volunteers and that the State Auditor does not allege any “intentional wrongdoing” by commission members – nor have they been the recipient of any improper funds themselves.

The purpose of the lawsuit – which also names White as a defendant is to get the funds returned to the tourism commission as soon as possible, said Dorsey.

In a statement sent to The Hattiesburg Post from the state auditor’s office, a spokesman said that it’s not uncommon for public officials to be sued in their official capacity.

“Our office has to routinely work with public officials to make sure they comply with the law,” the statement read. “In this particular case, it seems the commission members are hoping this suit against their insurance provider, with the auditor listed as a co-defendant in his official capacity, will force the insurer to pay the money that was misspent.”

Regardless of who previails in the lawsuit, the spokesman said the auditor’s office, in conjunction with the Attorney General’s office, will “continue to work to ensure that the taxpayers are repaid.”

Earlier this month, White issued the state auditor’s annual report detailing more than 40 formal demands for reimbursement – including more than $94 million due in Forrest and Lamar counties.

A bulk of that amount – nearly $93 million – is being sought from Stion Corporation for failure to meet the terms of an economic development deal that helped bring them to Forrest County.

Other local demands for reimbursement included:

n $157,385 from the Mississippi Military Department for embezzlement on the part of Jerry Howard, former manager of the MS Youth Challenge Dining Facility. Howard pleaded guilty to the charge in December of that year and was sentenced to 10 years in custody of the Mississippi Department of Corrections with eight years to serve and five years of post-release supervision.

In August 2016, Howard was ordered to pay $100,461.96 in restitution to the Camp Shelby Youth Challenge Program and $56,923.44 to the state auditor’s office.  This fiscal year, Howard has repaid just $125.

n $4,763 from Hattiesburg Public Schools, specifically N.R. Burger Middle School,  for misuse of public funds by former bookkeeper Sheva Bland.

The case was transmitted to Attorney General Jim Hood’s office on March 5.

n $30,552 from former Lamar County deputy tax collector Susie Dobson for misappropriation of funds.

Dobson pleaded guilty to embezzlement in September 2016 and was sentenced to serve three years in jail with all three years suspended. She also was ordered to pay $22,300.44 in restitution. This fiscal year, Dobson repaid just $900.

n $40,694 from the Oloh Fire Department for misappropriation of funds on the part of former secretary Michelle Barefoot. This fiscal year, nearly $23,000 was received from an insurance company, leaving a balance of $17,700.

n $1,369 from the University of Southern Mississippi Foundation for repayment for the cost of missing equipment.

n $59.40 from Kate Howard, assistant vice president for enrollment and Dean of Admissions at the University of Southern Mississippi for repayment of the cost of missing equipment.

n $19.02 from Terry Puckett, an employee at the University of Southern Mississippi for repayment of the cost of missing equipment.

For the full Audit Exceptions Report, visit https://bit.ly/2N0HxAJ.