Finances of Isaacson Municipal Utility in El Campo raising eyebrows

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ByTed Oberg via KTRK logo
Wednesday, December 9, 2015
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Audits have unearthed years of problems. Residents think there's big money missing and much more to investigate but they have nowhere to go.

EL CAMPO, TX (KTRK) -- It's far from the city lights, but a municipal water district near El Campo, an hour or so south of Houston, is causing some fireworks.

There are charges of missing money, a misused credit card and many residents in the area think there is big money missing and much more to investigate.

And they say they have nowhere to go.

Welcome to the IMUD. It's the Isaacson Municipal Utility District, just outside El Campo. It's not big water district, serving about 240 homes and businesses and has a single paid employee.

It has board members who are a volunteer bunch. They meet in a trailer that can squeeze in about a couple of dozen folks at best.

Another thing about the district, according to Floyd Fisher, who is a former board member of the MUD: "Money has been going missing."

"There is money missing," Fisher said. "When I left in '08, there was about $186,000 in the bank. And a few months ago, three months ago, there was $13,000 in the bank and $13,000 worth of bills, which means zero."

The residents and the board members disagree on how much money is missing. But even the board's own accountant concedes the money drained out of the district for years.

A recent audit details nearly $70,000 worth of losses going back at least four years.

Another curiosity: In the auditor's statements the IMUD reported residents being billed 13,721,200 gallons in 2014. The same amount -- to the gallon -- in 2013. The exact same amount again in 2012. And again in 2011.

An independent auditor hired by board earlier this year found that the MUD's books had not been reconciled and found there were discrepancies in credit card statements. The manager of the MUD earlier this year quit soon after after a packed meeting of residents demanding her resignation.

Board President John Francis said that the employee was being questioned about the credit card by sheriff's deputies.

An independent auditor also raised red flags.

"My staff and I have found errors in the bookkeeping system," auditor Julie Pfeil wrote to to the board in an Oct. 8, letter. "These errors started occurring at the time that the bookkeeping was no longer being outsourced to an accounting firm but prepared internally."

And a number of residents believe there has been mismanagement and missing money.

"When you find out there's no money there to do anything, where did all this money go all this time?" asked resident Evelyn Novak.

Her words were echoed by IMUD property owner Marc Welfel.

"That's what everyone in the district would like to know, where all the money went to," Welfel said. "There was a hole in the bucket somewhere."

It's something even board president Francis concedes may have happened.

"We're not all professional accountants or managers," Francis said. "We maybe didn't look at things as closely as we should have."

Pfeil, the independent auditor, suggested that an auditing firm specializing in forensic audits.

"She also said that would cost anywhere from $25,000 to $30,000," Francis said. "That's money we don't have at this time."

And without a forensic audit -- or criminal charges -- Francis said he won't ask the Wharton County District Attorney to investigate.

These leads to a problem the IMUD residents are complaining about. here is nowhere for these residents to turn. While the MUD's independent auditor found lots of errors in the books, she's since resigned.

"We're looking for someone to come in here and investigate," Fisher said. "We're asking the district attorney, the Texas Rangers, we're asking somebody to come in here."

There are 2,300 special districts in Texas, not counting school systems. Those special districts range from the very large -- such as the agency that manages Houston's two major safety-net hospitals for the poor and uninsured, which collects $530 million in property taxes a year -- to small districts like the IMUD, which brings in about $200,000 a year.

It seems there is no central place where people can go if they believe they have found fraud.

"There has to be somewhere to get help, because there's something here that need to be done something about," IMUD resident Colette Popp said.