Kiawah audit finds $125K in unauthorized payments

Kiawah Island Mayor Charles Lipuma

Former Town of Kiawah Island Administrator Tumiko Rucker and former Treasurer Kenneth Gunnells received about $125,000 in town funds and took steps to cover up the payments, according to a forensic audit.

The alleged unauthorized payments happened between May 2013 and 2015, Mayor Charles Lipuma said as he read a statement to Town Council on Thursday outlining the issue.

Tim Kulp, an attorney for Gunnells, strongly disagreed.

“The Town of Kiawah Island should be careful and cautious when making accusations of any misconduct on the part of Mr. Gunnells,” Kulp said.

“Several town employees benefited from pay advances which were mostly repaid. The mayor concedes this in his remarks Thursday. The town continues to employ some of these persons and is accepting their repayments,” Kulp said.

Lauren Williams, an attorney for Rucker, said, “At this point, any comment would be premature, as we have not been provided with the audit report or any supporting documentation despite multiple requests.”

Neither Rucker nor Gunnells is charged with a crime.

Alleged unauthorized payments totaling $77,812 to Gunnells and $47,211 to Rucker were documented, the auditing firm Dixon Hughes Goodman said in its report.

The audit also showed that four salaried employees received excess pay totaling $80,000 in 2013 and 2014 but found no evidence they were involved.

“We have met with each one and we will be working with them to recover the payments,” Lipuma said.

The audit concluded:

“To the extent that any of the excess compensation paid to Rucker and Gunnells was intended to be a loan, the transactions were not recorded as such on the books and records of the Town. In addition, no disclosure of these transactions was provided in the Town’s annual audited financial statements.”

“In addition to not disclosing the additional payments, steps were taken to conceal and omit those payments from various State and Federal filings. Additionally, no disclosure was provided on the Statement of Economic Interest Report filed by Rucker and Gunnells with the ..... State Ethics Commission.”

Kulp described Gunnells as a hard-working, devoted town employee who operated under the direction of a town administrator who reported to council.

Gunnells tried to bring the pay-advance system to the attention of the mayor and his three predecessors only to be referred to the administrator, Kulp said.

“Mr. Gunnells did not violate any town policy or rule and had no intent to steal anything when, as did others, he participated in the advance pay and repayment process. Surely the town auditors were aware of this documented advance system and voiced no complaints to anyone after their careful review of the town’s financial records over the years. When the town provides all the records we will be requesting, we will be able to clearly document this position,” he said.

Resident Fran Wermuth, who attended the council meeting Thursday, said questions were not allowed after Lipuma read his 11-page statement to a large crowd. She said the audit should look at town records beyond 2013.

“I think they didn’t go far enough,” she said.

On April 15, Lipuma met with Rucker to tell her that the town would not be renewing her employment contract when it expired in September. A week later, Rucker informed the town that she would resign on June 20, the mayor said in his statement.

In mid-May, an unidentified town staffer told a council member about apparent financial improprieties. A week later, Lipuma met with the employee to discuss the allegations. At the time, the staffer advised looking into the town’s finances, including the payroll system.

The staffer previously had not come forward for fear of losing their job, Lipuma said.

In response, council moved swiftly to secure its online systems and hire a forensic accountant, he said.

“As we move beyond today, I want all members of our community to know that we will work with the U.S. attorney to make sure that any warranted criminal charges are prosecuted to the full extent of the law,” he said. A spokesman for the U.S. attorney said the office could not comment.

The town said in early June that it had suspended Rucker with pay while it conducted an audit of its finances.

During her 10 years with the town, Rucker first worked as treasurer and then as administrator.

Rucker’s salary was $94,000 and Gunnells’ annual town income was $93,839, according to their 2014 filings with the State Ethics Commission.

Reach Prentiss Findlay at 937-5711 or Twitter.com/prentissfindlay.