Audit by Auditor Galloway finds more than $115,000 taken from city of Parma through fraud, official records falsified

During investigation of whistleblower complaints, fires at city hall and former mayor’s home destroyed computers and records; Auditor’s Office is working with federal, state and local law enforcement about what audit discovered

Jefferson City, MO (STL.News) More than $115,000 was taken fraudulently over a four-year period from the Missouri Bootheel city of Parma (pop. 713) through payroll overpayments and improper payments and purchases, an audit from State Auditor Nicole Galloway has determined.  The audit also found that the officials primarily responsible for Parma’s financial matters — the former mayor and city clerk — falsified meeting minutes and financial reports to conceal the fraud.

The report gave the city a rating of “poor,” the lowest possible. Auditor Galloway said her office’s Public Corruption and Fraud Division has been working with federal, state and local law enforcement agencies for several months about what was discovered during the audit.

“Our audit discovered that for almost the entire time the former mayor and former city clerk were in office, there was a pattern of blatant corruption and cover-up that cost the citizens of Parma more than $115,000,” Auditor Galloway said.  “This was a betrayal of the public trust that requires accountability, and my office will continue our partnership with law enforcement to pursue justice for local taxpayers.”

In late 2018, the Auditor’s Whistleblower Hotline received complaints about the operations and finances of Parma.  As part of the initial investigation, the Auditor’s Office requested records from then-Mayor Tyus Byrd, who was elected in 2015.  While some records were provided, auditor staff had to make additional efforts to obtain the remaining records requested.

On April 16, 2019, a new mayor and two new aldermen were sworn into office in Parma. That night, there were fires at city hall and at the former mayor’s home, during which some city records and computers were destroyed.  The New Madrid County Sheriff’s Department is conducting ongoing investigations into the fires.  Shortly after the fires, the Parma Board of Aldermen passed an ordinance formally requesting an audit.

The audit found that from April 14, 2015 through April 16, 2019, at least $115,582 was taken fraudulently from the city.  The fraud included payroll overpayments and/or improper payments to the mayor, the city clerk, and to city officials and others who were related to the mayor or the city clerk.  The mayor and city clerk made improper purchases using prepaid debit cards and the city’s Walmart credit card, including gift cards, appliances, furniture and electronic equipment.

The audit also estimated more than $7,000 in improperly recorded utility payments and adjustments to utility bills on the accounts of the mayor, water supervisor, the alderman who is the mayor’s father, an alderwoman, and a church.  The city’s electronic utility system was destroyed in the city hall fire, but auditors were able to compile information for the audit from paper reports, bank statements and other documents.

The mayor and city clerk also falsified Board of Aldermen meeting minutes and financial reports.  The city clerk falsified cash balances of some bank accounts on financial reports; most of the inaccurate financial reports prepared for the board were reviewed and signed by the mayor.  The city clerk also did not timely file and remit various payroll taxes. As a result, the city was assessed over $114,000 in past due taxes, interest and penalties.

A complete copy of the Parma audit can be found here.  Because of the poor rating, the State Auditor’s Office will conduct a follow-up review to assess the city’s progress on the audit’s recommendations.