DA: Audit clears BoC in Ball Ground Recycling case
by Joshua Sharpe
April 28, 2014 12:13 PM | 4175 views | 8 8 comments | 17 17 recommendations | email to a friend | print
CANTON — District Attorney Shannon Wallace on Monday released the forensic audit into Cherokee County’s dealing with Ball Ground Recycling, saying it shows no illegal activity on the part of the Board of Commissioners.

However, the audit’s findings report raises questions about how the county handled its involvement with the now-shuttered operation.

Wallace said she turned the 7,345-page audit in to the Board of Commissioners, after being advised by law enforcement releasing the document wouldn’t compromise the ongoing investigation, which local, state and federal authorities are performing.

“I have been advised that it is the conclusion of state and local law enforcement that the audit does not reveal any evidence of criminal wrongdoing by the Board of Commissioners,” Wallace said in a statement. “I have reviewed the audit and agree with this conclusion.”

She added the audit speaks for itself on the county’s management of the deal with resident Jimmy Bobo to relocate his facility to its final spot on Highway 5.

The audit, turned into Wallace’s office in September, cost Cherokee County $500,000 and was meant to investigate the county’s 2006 deal to guarantee $18.1 million in debt to relocate Bobo’s business from Blalock Road and the process surrounding the situation.

Bobo was the operator of the business and also worked with his brother, David Bobo, with each of them having ownership in various companies involved in the operation in some fashion. The brothers and their companies are in the middle of a civil suit brought by the county, which accuses them of fraud.

Bobo’s attorney, Buddy Parker, however, said Tuesday his clients did nothing wrong.

“Let me make it very clear: Jimmy and David Bobo did not lie, cheat or steal any money from the county or from the bond proceeds. Period. End of story,” he said.

Because the criminal investigation is ongoing in some matters, Wallace said in her statement she could not discuss “the matter further at this time.”

The deal with Jimmy Bobo has become an issue since he went out of business and the county taxpayers were left to foot the bill for $100,000 a month in payments on the facility. The county has attempted to sell the facility without success.

In extensive detail, the auditor’s summary report shows how the county handled the high-dollar deal, apparently without reviewing invoices and without a contract to determine a purchase price for the 35 acres the plant sits on, a price which ended up being steep.

The report also alleges there is evidence of altered invoices used during the process of getting the plant up and running; equipment paid for by bond funds is missing from the site; and bond funds were used to pay non-county debts.

The entire audit wasn’t immediately available as of late Tuesday. County employees said they were uploading it to the county’s website. Once that is done, the audit will be viewable at www.cherokeega.com.

Cherokee Commission Chairman Buzz Ahrens said Monday he still needed time to review the entire audit, but the suggestions the process wasn’t handled well weren’t new. He did, however, expect some new information in the audit.

“Many people — including grand juries — have questioned some of the procedural aspects, some of the control aspects,” said Ahrens, who took office during the process of relocating Jimmy Bobo’s operation. “Those are fair concerns.”

Still, Ahrens said he was pleased by the district attorney’s statement the audit showed no criminal wrongdoing on the part of the commissioners.

“I think that says a lot,” he said. “She obviously can’t make that statement without substantiation.”

Commissioner Harry Johnston, who was on the board during the process, said while the management of the deal might have been flawed, he knew all along the audit would clear the commissioners of criminal actions.

“I knew that would happen; I knew that would be the outcome,” he said. “We knew and have acknowledged all along that the administration of the bond process was flawed, not handled as carefully as it should have been and that resulted in some apparent overpayments for the land and, to a smaller degree, some other things, too.”

A hurried process?

According to the 52-page summary report, the auditor, McClendon and Associates, found the process of issuing the bonds was rushed. As a result, the process lacked the normal controls to protect the county, the report says.

The speed of the process “may have resulted in money being paid in error” in the price of the land, the report notes, adding it couldn’t be determined how the price of $3.7 million Cherokee County paid for the land was reached, which one of Jimmy Bobo’s companies owned. The money went to pay off debt on the land.

Bobo had just bought a 61-acre tract, which included the 35 acres, for $3.5 million. The price of $3.7 million the county paid for a little more than half that land was the pay-off amount on a loan for the entire 61 acres, the report says.

The report says Bobo employed some of his own companies to get the facility running and that “it appears that there were no contracts used on this project, as a matter of course.”

There was also no contract for the land purchase.

The report notes “the importance of contracts cannot be overstated.”

Johsnton said, in hindsight, a traditional contract for the land buy could have been helpful, but “the pricing for the land was embedded in the overall contract, and it just said it would be like everything else ‘at Bobo’s cost.’”

Johnston said where the price the county paid actually came from had been the “No. 1” thing he hoped the audit to shed light on.

Parker, however, said it was known at the time the county was paying the pay-off amount for all of the 61 acres, even though it was only getting 35 acres.

“There was no concealing of any fact,” said Parker, an Atlanta-based attorney with Maloy, Jenkins, Parker, which specializes in white-collar criminal defense. “That was documented in all the papers that the bank pay-off would be this. There’s no effort by the Bobos to conceal anything.”

The audit also says there was no real estate closing statement for the purchase of the facility property and the then-county attorney was not involved in the Oct. 5, 2007, closing. The report says no evidence was found that any representative of the county was at that closing, though Johnston said he remembered bond attorney Earle Taylor being there on behalf of the county. Johnston said commissioners and the county manager typically don’t attend such hearings.

Johnston also said he knew of no rushing on the county’s part to get the deal done.

“I think what caused the flaw in the process, at least my impression, was not related to rushing; it was really related to (former County Attorney) Mark Mahler’s sudden departure from the county’s employment. This was his project,” Johnston said.

Mahler left the county in November 2006 just after the Board of Commissioners created the Resource Recovery Development Authority to facilitate the Bobo deal. He said Tuesday he couldn’t speak to what troubles his departure caused the county, but before he left, “the commissioners were certainly all well-informed about everything that was going on; they were integral in everything that was going on with Mr. Bobo.”

After Mahler left, Johnston says the county made a “critical error” in allowing the county’s then-finance director, Amy Davis, to be the lead financial person on the project. Johnston said Davis was put into the role, though she might not have been qualified. Johnston said it was his understanding County Manager Jerry Cooper gave Davis the assignment. Cooper couldn’t be reached for comment Tuesday.

It wasn’t immediately clear how to contact Davis on Tuesday. She resigned from Cherokee County in 2010.

Where the money, equipment went

The bond funds were dispersed in 15 different draws, according to the report. But there is question about when the county received the invoices for how the money was spent.

Cooper told the auditors multiple times the county never received the invoices until Jan. 31, 2012, according to the report. Cooper also told the auditors at the time of the draws, there was no system to verify that a person had delivered an invoice or when.

Bobo, though, told the auditors he did give the invoices to the county, but he didn’t recall when.

Davis told the auditors she didn’t know if she’d seen the invoices or not.

“At one point during the telephone interview, she remarked that she had confused this bond issuance with another bond issuance,” the report added.

Among the invoices gathered by McClendon and Associates, the report says some appear to be irregular or altered.

In some invoices, “the logo was missing or different, margins were different, or other cosmetic issues appeared different.”

One “apparently altered” invoice was from McPherson Systems, dated Oct. 13, 2006.

The owner of the company, Dan McPherson, told the auditors one of Bobo’s employees had questioned whether they had to pay Georgia sales tax.

“There were two invoices produced, one which included Georgia sales tax, and one which did not,” the audit report says. “McPherson explained that he was quite troubled when he saw the altered invoice from his own company. He related that in comparing the two, he saw many issues: the fonts were different, the margins were off and the amount was changed.”

Asked about the allegedly altered invoices, Bobo’s attorney said he couldn’t comment, though his client had cooperated with law enforcement when asked about the same issue.

“Until those investigations have concluded, we’re not publicly disclosing what our responses are, but we had no problem in responding to those issues,” Parker said.

According to the report, there is also evidence some equipment paid for by bond funds is missing from the site.

Johnston, who previously believed all the equipment paid for by bond funds was on the site, said he now needs to try to verify the McClendon and Associates report.

Bobo’s attorney said the assertion that equipment is missing is “absolutely incorrect.”

“Ms. McClendon’s just wrong,” Parker said.

And on the whole, Parker said Bobo, and brother and business partner David Bobo, would dispute anyone who claimed they had defrauded the county, as a pending lawsuit the county filed asserts.

Comments-icon Post a Comment
May 01, 2014
The actions of the Board may not have been "criminal", but it was the height of poor judgment and discretion and smacks of the unethical. It's time to show the remaining Commissioner from that time period to the door. He claims to be "great for Cherokee," but this Bobo deal demonstrates just the opposite. No one who participates in this type of malfeasance and misfeasance should be allowed to keep their jobs--not in the public sector or the private sector. I seriously doubt that any private employer would allow an employee to get away with a $18 million boondoggle like this. Johnston says that the process resulted in some "apparent over payments"--really? What a sorry way to apologize. A little honesty and integrity would go a long way. Apparently that is too much to ask for out of this crew.
April 29, 2014
I read the 50 or so pages on the county website but there are still some 7290 pages that include exhibits and attorney George C. Rosenzweigs seperate bound report that deals with the issues of civil and criminal fraud as well as negligence that are not available at the site. It is astounding that there were no contracts, or controls,oversight, invoices,purchase orders and the county attorney was still paid $140K and didn't even attend the closing although Commissioner Ahrens did attend.
Cherokee Local
April 29, 2014
How can Wallace say "BOC cleared" when in the next sentence she says the investigation from law enforcement is still ongoing? Yeah the fix is on you can bet! Cherokee please wake up and smell the coffee, they gave away $18 million against professional advice, they should be fired!
May 02, 2014
It amazes me that of the dozens of people involved in this you only question the BOC. If the BOC is cleared, then perhaps the ongoing investigation involves the other people involved.
H.T. Bradford
April 29, 2014
Were there no records kept? Were there records destroyed? We will never know. A paper trail did not exist. The total lack of normal financial controls is astonishing. No one representing Cherokee County at the closing? Where were the checks and balances? Can we find someone to lead us out of this incompetence and embarrassment? There is only one place available to us to prevent future fiascos like this, the ballot box. What ever happens, happens. Thank you.
Porque No
April 28, 2014
So there was not any criminal wrong doing by the Board of Commissioners? Then they are just incompetent!!!
April 28, 2014
How convenient,

Just before elections

After two years and $600,000 the commission clears itself leaving unanswered innuendo to continue to damage others.


Unbiased lady
April 28, 2014
The commission didn't "clear themselves". A joint investigation, one agency being the GBI, cleared them.
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