NewsWest 9
FORT STOCKTON - A major shakeup in Fort Stockton. One million dollars in mis-appropriated funds. Now the IRS is involved.
The discrepancy was found a few weeks ago and city officials are taking action.
"I think it's troubling that someone would do this to our town so we're pretty mad," Mayor Bill Lannom, said.
Mad and left to clean up the mess that someone else left behind.
A few weeks ago, Fort Stockton city auditors found money mis-used by former City Manager Rafael Castillo and former Interim Finance Director Roger Carlisle.
According to statement from Mayor Lannom, $1.4 million dollars were moved from the city's certificate of deposit accounts into the general fund account back in 2008.
That money was supposed to be used for infrastructure improvements but was instead used to pay city bills.
"This voids the tax exempt status of the interest from that money borrowed from Wells Fargo and its investors and it violates federal tax law," Mayor Lannom said.
The former officials risked the bank pulling the loan altogether and even the IRS shutting the city down.
Lannom believes Castillo and Carlisle knew what they were doing was illegal.
"They thought they could borrow the million, pay it back and nobody would notice," Lannom said. "Unfortunately that didn't happen."
The city is owning up but now they face the IRS. They've hired an attorney to represent them.
"They may just levy the fines and penalties and monitor our progress," Mayor Lannom said. "Obviously they may go further, we don't know."
Another hurdle will be getting that money back and it's going to fall on the taxpayers.
"We have to raise the taxes by 15 cents for this 12-month period," Mayor Lannom said. "We're trying to be good boy scouts and do the right thing. Myself and the Council are committed to turn this boat around."
Of that $ 1.4 million, $400,000 was identified as funding authorized for projects.
