Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, December 19, 1993 TAG: 9312190082
SECTION: VIRGINIA PAGE: B1 EDITION: METRO
SOURCE: DAVID M. POOLE and KAREN BARNES STAFF WRITERS
DATELINE: LENGTH: Long
The delay means that those employees' paychecks don't clear until the next working day.
It's unclear why Wells does that. But until this past April, it paid dividends for him.
The longer the payroll - which was at least $125,000 a month - sat in his personal checking account, the more interest Wells earned.
Special prosecutor Eric Sisler of Rockbridge County has said he intends to finish his monthlong investigation into Wells' financial practices this week. Until April, Wells mixed personal and public money in his checking account in apparent violation of state law.
Sisler will recommend whether Wells, the chief law enforcement officer of Bedford County since 1974, should be charged with commingling funds, a misdemeanor.
The investigation also may determine if any laws were broken in the handling of interest - estimated to be at least $10,000 - the account has earned since 1982.
Sisler has declined to say whether he has asked specialists from the Virginia State Police to assist him in analyzing several boxes of financial records from the Bedford County Sheriff's Department.
Wells recently turned over records related to all bank accounts in his control, including the payroll account, according to his attorney, John Alford of Lynchburg.
The sheriff has admitted mixing personal and public funds in the account at Bedford Federal Savings Bank, but said he did so on the advice of a now-deceased state auditor.
In November, Wells said he operated under the assumption that he could keep any interest earned from his personal checking account.
Bank records from 1990-93 obtained under the Virginia Freedom of Information Act suggest that Wells took steps to maximize the interest.
One method was holding back paychecks.
While other Bedford County workers get paid early enough to deposit their checks the same day, Wells waits until after 2 p.m., the end of the banking day.
The delay meant the payroll - $125,000 to $180,000 a month - would earn interest in Wells' account for an extra day, and three days when payday fell on Friday.
Wells also would delay paying his department's contribution to the Virginia Supplemental Retirement System.
The VSRS requires local governments to pay their contribution by the 10th of each month. Wells often waited two weeks to send the VSRS check.
Bank records show that the payroll float - and not Wells' personal funds on deposit - was mainly responsible for the checking account earning more than $5,500 in interest during the three years that ended in June.
For example, Wells had no more than $4,676 of personal funds in the account on any given day in July 1990. Yet, the account had an average daily balance of $30,000.
The problem with commingling funds is that it makes it difficult to account for public money.
Walter Kucharski, the state's auditor of public accounts, said that Wells must return any interest earned from payroll money.
The account had a balance of $30,071 at the close of the fiscal year that ended June 30.
A Roanoke Times & World-News analysis found that $20,906 was Wells' personal funds; $5,515 was interest earned since July 1990; and $1,858 was a combination of Wells' personal funds and previous interest.
The newspaper could not account for the remaining $1,790.
The bank records show the funds were so mixed that Wells sometimes put money in his pocket before paychecks were issued.
In February 1990, Bedford County issued a check for $128,760 to cover the Sheriff's Department payroll. Wells deposited the check - minus $60 in cash - at Bedford Federal Savings Bank.
The bank records also suggest that Wells might have played favorites on payday.
A handful of paychecks cleared the Bedford Federal account before 2 p.m. each payday, suggesting that some deputies got their checks before everyone else.
Wells, who is not expected to seek re-election when his term expires at the end of 1995, has declined comment.
Wells' practice of using a personal checking account for his department's payroll was discovered during an audit this fall.
Wally Cox, the county's auditor, said the practice did not come to light sooner because Cox lacked the legal authorization to ask for Sheriff's Department records until this year.
Kucharski, however, says that many auditors had a different interpretation of the law.
Kucharski said that many auditors included sheriff's department accounts in their general county audit before this year, when a new law that explicitly spelled out that authority took effect.
The law was passed in reaction to the case of Bristol Sheriff Marshall Honaker, who committed suicide in January 1992, after it was disclosed that he embezzled nearly $745,000 paid to his department for housing federal prisoners.
A few months later, Kucharski's office issued a special alert directing counties to pay special attention to sheriff's accounts.
Bedford County Board of Supervisors Chairman Tony Ware said the Honaker scandal did not raise any concerns about Wells, because Bedford County does not house federal prisoners.
Last week, the supervisors voted to include all constitutional officers in the county's centralized payroll system.
by CNB