Public accusations of financial fraud taking place at the Lee County Sheriff’s Office have kicked off concerns about upcoming audits, both for the county and the sheriff’s office itself, newly released public records show.
And at least one meeting resulted in “passionate disagreements” between the sheriff’s office representative and the auditor conducting the audit.
Lee County Clerk of Courts Kevin Karnes sent a letter to County Manager Dave Harner Oct. 29, warning Harner that this year’s financial audit faced significant complications because of allegations of “financial fraud” taking place inside the Lee County Sheriff’s Office. The letter did not go into detail about what constituted the alleged financial fraud.
The letter from Karnes recapped conversations and meetings that took place between Oct. 15 and 17, and said that the county’s external auditor, Chris Kessler of international accounting firm CliftonLarsonAllen, planned to schedule meetings with each commissioner to warn them of the “complexities.”
The letter specifically recapped a tense meeting between Karnes, Vice Chairman of the Commissioners Kevin Ruane, Assistant County Manager Pete Winton, County Attorney Richard Wesch, Lee County Sheriff’s Office Undersheriff John Holloway, Clerk of Courts General Counsel Michael Healy and Kessler, the auditor.
During said meeting, Karnes wrote, as Kessler raised concerns about the state of both the county’s audit and an audit of the sheriff’s office, Holloway “expressed passionate disagreements.”
“However, all parties did agree that the allegations of fraud would likely be difficult to prove or disprove without access to non-government private records,” Karnes concluded.
The Lee County Sheriff’s Office did not respond to requests for comment by publication.
Karnes urged the county to take Kessler’s concerns seriously “to preserve the financial interest of the taxpayers we all serve.”
“In a separate letter to the full board, I will provide a more detailed perspective of the financial risks ahead if no action is taken to address the external auditor’s concerns,” Karnes wrote.
In an interview with The News-Press / Naples Daily News Wednesday afternoon, Karnes described Kessler as “reasonable and responsible,” noting that Kessler, who is the external auditor for all the county constitutional officers, is supposed to issue an opinion on the county financial statement. At the moment, he said, Kessler is working on his routine end-of-fiscal year audit for the county.
Neither Karnes nor Kessler has requested documents from the sheriff, Karnes said.
Karnes said he believed he had the authority to audit the sheriff’s office but added that he believed the decision should be joint with the county commissioners.
Still, he said, he hoped the commissioners heeded Kessler’s warnings. “When he has a concern, I trust him,” Karnes said.
Karnes stressed that the standards Kessler uses to audit the county’s agencies are standard nationwide.
“These did not pop out of thin air,” Karnes said. “When the word ‘fraud’ is mentioned and it’s about taxpayer dollars, it should be a team effort to look into it.”
If Kessler is not satisfied with the results of the audits, Karnes added, that could limit the county’s ability to tap into federal funding, such as monies from agencies such as FEMA.
A subpoena for Marceno’s home address
The News-Press / Naples Daily News reported earlier this week that Lee County had been subpoenaed by a federal grand jury in an FBI investigation Nov. 16 that involves Lee County Sheriff Carmine Marceno.
A partial copy of the subpoena, dated Nov. 16 and issued by the Tampa-based U.S. District Court, Middle District of Florida, was reviewed by The News-Press / Naples Daily News.
It directs a representative of the Lee County Building & Permitting Services office to testify before a grand jury at the U.S. District Court on Dec. 3, regarding two addresses: the Lee County Sheriff’s Office and the sheriff’s Fort Myers home.
The subpoena directs the representative to produce electronic copies of permit applications, supporting documents, information about contractors, payment information, and more related to those addresses.
The other Fort Myers address listed on the subpoena has been cross-referenced by The News-Press/Naples Daily News with other documents to confirm it is Marceno’s residence.
The FBI declined to confirm the existence of an investigation Tuesday.
“The FBI does not confirm the existence or status of any investigative work,” Andrea Aprea, with the FBI Tampa field office’s public affairs team, said in an email.
Marceno has not been charged with a crime and has called accusations of money laundering levied against him “baseless” and “politically motivated.”
‘Error, fraud, abuse and waste can all look the same’
Since Marceno was appointed sheriff, his office’s annual budget has increased about 70%. The general fund budget for fiscal year 2018-19 stood at $183.5 million.
“Our budget has increased, however, it appears rapid as in years past it did not keep up with population growth,” Marceno said in a candidate Q&A that ran in advance of the election.
State law requires the county conduct an annual financial review and submit it to the Florida Auditor General. CliftonLarsonAllen, a national accounting firm with an office in Fort Myers, has conducted the Lee audit for at least the last five fiscal years.
CliftonLarsonAllen Managing Director of PR and Internal Communications Cameron Potts declined to comment on behalf of the firm as Lee County is a client with ongoing work.
If significant fraud were found in an audit, the information would be passed on to authorities, Florida Auditor General’s office Manager of Local Government Reviews and Special Audits Derek Noonan told a reporter for The News-Press / Naples Daily News earlier this fall.
Either the Florida Department of Law Enforcement, the local state’s attorney, or the FBI’s corruption department would investigate or prosecute from there, he added.
When asked about detecting funds transferred in cash, similar to what a former sheriff’s office contractor has accused Marceno of, Noonan said that was more difficult to pinpoint.
“A financial audit wouldn’t necessarily pick that up,” Noonan said. “The only way an auditor would find kickbacks would be if someone said something.
“Errors, fraud, abuse and waste can all look the same at first,” Noonan said.
Accusations of money laundering, cash changing hands
Marceno’s political rival for sheriff in the November election, Mike Hollow, released a recording earlier this year of a former sheriff’s department contractor accusing the sheriff of laundering money through him.
Hollow told a News-Press reporter in September the FBI was investigating Marceno based on the contractor’s claims of laundering taxpayer money, and that he was cooperating with the investigation.
Ken Romano, .l He told Hollow in the recording that he had passed $1,700 in cash to Marceno’s father on a monthly basis in 2022.
Marceno won reelection Nov. 5 with 90% of the vote in his favor.