Louisville, Ky. – Mayor Jerry Abramson sought and accepted the resignations of two veteran employees in the former Neighborhoods Department as a result of information discovered by the city’s Internal Auditor and the State Auditor in reviews of financial transactions.
Melissa Mershon, former director of the Neighborhoods Department, and Carol Butler, a special assistant in the department, submitted their resignations Friday.
While working on a planned book on Louisville’s neighborhoods, Mershon failed to follow the city’s purchasing rules and Butler, who is part-owner of a book publishing company, did not comply with a city personnel policy that places restrictions on employees doing business with the city.
“I am surprised and disappointed by the actions of two people who have decades of public service to the community,” Abramson said. “I cannot accept such clear lapses of judgment and violations of rules.”
The city’s Internal Auditor Mike Norman began a review after receiving a tip that some invoices paid to vendors by the Neighborhoods Department had been created by the department using company letterhead rather than submitted directly by the companies.
He forwarded information to the Louisville Metro Police Department’s Public Integrity Unit and also shared information with the office of State Auditor Crit Luallen, who was completing a financial audit of the city for FY 2009.
Abramson was first made aware of the issue earlier this month in a draft audit finding by the State Auditor.
Responding immediately to the draft audit finding, Abramson asked members of his senior leadership team – Deputy Mayor Bill Summers, Legal Counsel Tina Heavrin and Chief Financial Officer Jane Driskell – to investigate the matter.
After gaining approval from the Internal Auditor and the LMPD Public Integrity Unit, the team questioned Mershon and Butler about the issues raised in the state audit finding regarding the invoices and the payments to Butler Books.
The review found that Mershon had approved three pre-payments to Butler Books over the past 2 ½ years totaling $14,900 for the neighborhoods book, which the department had planned to produce and sell.
Beginning in 2007, Mershon approved the pre-payments over the course of three fiscal years without a contract or competitive bidding. The city’s procurement code requires contracts for goods and services totaling more than $10,000. Because the total payments exceeded that threshold, the department should have used an approved purchasing method such as competitive bidding, negotiated bidding or professional service contract, according to the city’s purchasing rules.
Butler owned the book company with her husband, Bill, until his death last summer. The city’s personnel policy prohibits city employees from doing business over $25 with the city without competitive bidding.
The book was not completed and Butler repaid the money last week.
During the inquiry by the mayor’s leadership team, Mershon acknowledged she had created invoices for numerous vendors as a matter of practice, including Butler Books, rather than require the companies to submit invoices on their own.
The mayor’s leadership team presented the information to Abramson last Friday when he returned from a trip to Washington, D.C. Abramson made the decision to ask Mershon and Butler to resign.
In addition to the personnel actions, Abramson will take the following steps:
Ask the State Auditor and Internal Auditor to complete their reviews of the former Neighborhoods Department and to make recommendations for improvements in financial practices
Require directors and business managers to attend additional training sessions on procurement, personnel and ethics rules.
Mayor Abramson says the $14,900 paid to Butler for the book has been re-paid.
Police are investigating but the mayor says he does not think there will be any criminal charges.
The two women made statements concerning their resignations.
Carol Butler says:
"This book is a gift we want to give to the city of Louisville. I never considered it to be a conflict of interest despite my part-time employment with the city- because there is no financial gain to me or to the company in doing this book."
She went on to say she was giving the city a 50% discount on the books.
Melissa Mershon statement says:
“I have a spotless 30 year history of being honest- dedicated public servant, in hindsight I could have handled things differently.”