Audit: Officials in speed trap Texas town caught lining pockets

By Jon Cassidy | Watchdog.org

If you’ve ever gotten a ticket at a small town speed trap and suspected the money ended up in somebody’s pocket, you might have been right.

An audit obtained by Watchdog.org shows that a group of current and former officials in Huntington, Texas — population 2,118 — collected pay for thousands of hours they either didn’t work or weren’t supposed to. Even as they complained that the town’s coffers were running dry, they falsified traffic citation records to collect fines higher than those imposed by the court, according to court records.

One of those officials, former city secretary and treasurer Betsy Gregson, who was fired last year, announced last week she is running for mayor in the May election.

Gregson was one of four salaried officials who collected tens of thousands of dollars by cashing in months’ worth of vacation time and comp time year after year, despite city policy that capped those hours and established that they were only to be paid at retirement or termination.

The audit found nine salaried officials who collected unearned pay beyond their salaries, but the four who got the most money were the key figures at City Hall. These were Gregson, whose modest title belies her outsized influence; former City Administrator Bruce Milstead; Jack Carter, who signed the checks; and former Police Chief Steven Sifford, a hunting and fishing buddy of Milstead’s, until they had a falling out.

In all, the audit identified $165,293.43 paid to the nine employees above their salaries over five years. For a city with just more than a million dollars a year in annual revenue — 40 percent of that coming from traffic tickets — it’s a noticeable amount.

“We could have paved four miles of road with that,” said Councilman Frank Harris, who is running against Gregson for mayor.

Roads are a sore subject in Huntington, along with decrepit sewer plant and water infrastructure, said Councilwoman Ina Cardwell.

“You can’t even find me any streets you can almost drive on,” Cardwell said.

Despite some $1.5 million spent on streets during the past 15 years by the city’s Economic Development Corporation, administered for much of that time by Gregson, there isn’t much to show for it, Cardwell said.

“There’s a $40,000 bathroom and some new street signs,” she said.

Cardwell was elected in May 2013, part of a new council majority that has shaken things up. It had been the first contested election since 2007 on a cozy little council, where members usually were appointed after another resigned, Cardwell said.

The council provided little oversight, according to Cardwell.

“They just waited for Betsy (Gregson) or Bruce (Milstead) to explain how they were supposed to vote,” she said.

Milstead resigned the day after the new council members were sworn in, collecting some $17,000 in accrued sick time. Gregson submitted her resignation at the first meeting of the new council, but it was to be effective three months later.

The council soon figured that was her 15th anniversary, when she would become eligible to collect on 280 hours of accrued sick time, like Milstead.

The new council started demanding records and poring over the books, and it quickly found signs of trouble — credit cards used for groceries or nail salon appointments, administrators telling them that payroll records were private, vacation time cashed out by several employees in the form of separate checks.

Gregson was fired and the council brought in the firm of Alexander, Lankford & Hiers to audit the vacation cash-outs.

That audit was finished Sept. 12. The final report kept secret the identities of the officials involved, identifying them only by a code number.

“Our lawyer said we had to watch our step,” Harris said.

Not only had Gregson sued, but in December 2012 former court clerk Deadra Lynn Combs sued the city, alleging sexual harassment by Milstead.

Combs’ account is supported by affidavits from three former city employees, including Sifford, the former police chief, who swears that on the day Combs was hired, Milstead said, “I just hired a big titty girl to be the new Court Clerk.”

Combs was fired just six days after the city was notified of her complaint to the Equal Employment Opportunities Commission.

The city’s defense is that Combs filed the complaint because she knew she was about to be fired for poor performance, and it’s relying heavily on testimony by Gregson.

Milstead and Gregson “are the only witnesses for the city,” Councilwoman Cardwell said. “We have been manipulated real well.”

Just three months after she was fired, Gregson delivered an affidavit that was highly favorable to her former employer. The document was dated Sept. 12, the same day the audit was finalized without her name in it.

Earlier this month, the City Council was given a key to decode the audit. An anonymous source used Watchdog.org’s SecureDrop system to provide us with that decoder key, whose accuracy we confirmed with multiple sources.

Gregson said the practice of cashing in time off had been around since she was hired in 1999.

“Nothing was developed that wasn’t in place already,” she said.

Also, she had an understanding with former City Administrator Robert Walker that when she switched to a salaried position it would cover 50 hours, and that she would collect comp time for anything above that, she said.

But they were “always shorthanded,” she said, so she couldn’t take that time off. Instead, she took most of her vacation and comp time in the form of a check, despite city policies that prohibited it. From 2010 to 2012, this amounted to an extra six weeks’ pay per year, not counting the holiday pay and Christmas bonuses the audit also questioned.

City policy, however, is that salaried “employees are expected to render necessary and reasonable overtime services with no additional compensation,” other than “administrative paid leave” approved by the mayor, not the city administrator.

The city has a use-it-or-lose-it policy for vacation, which is capped at five weeks. There’s no provision for cashing it in, other than at separation.

Nevertheless, Walker, for example, managed to get paid for 395.8 hours of vacation in his final year running the city, despite that 200-hour cap. But he didn’t cash in any comp time. That practice bloomed after he left the city in 2008.

In fiscal 2008, only two weeks of bonus comp time was paid citywide, compared with 20 or more weeks in each of the next two years. The biggest beneficiary was Sifford, who racked up more than 34 weeks’ worth of extra pay in unused vacation, holiday and comp time in 2009 and 2010.

During the five years covered by the audit, Gregson made an extra $30,980.58 above her salary, Sifford made an extra $32,603, Milstead made an extra $30,093.12, and Carter made an extra $29,212.11, with Carter’s wife adding another $8,449.03.

Gregson wanted to emphasize that every check she received was signed off by Milstead and Carter.

Milstead declined to comment. He’s held two other city manager jobs since leaving Huntington 10 months ago. Sifford did not respond to a request for comment.

The audit also includes a police officer who cashed in a few hundred hours of comp and vacation time, and the new police chief, who, like the others received an off-budget Christmas bonus, which is illegal in the state.

As Huntington’s officials were padding their bank accounts, the city’s own accounts were running dry.

Gregson “would come in the office and she would say, ‘We need to get some more money in the bank. We need more money.’ That we were broke,” Combs, the former court clerk, said in a deposition. “I would tell her I had sent the (traffic citation) cards out. I stayed current on the cards, but she wanted letters sent out also,” telling violators to pay.

At some $400,000, traffic tickets are the city’s single biggest source of revenue — bigger than property tax, sales tax or profits from its utilities. The whole region is a hive of speed traps, with Zavala, Diboll, Mount Enterprise, and other towns in the Lufkin-Nacogdoches area regularly showing up on lists of the state’s worst offenders.

Despite a population of just 2,118, Huntington has seven police officers, who keep busy on Highway 69, nailing passersby at a speed trap just south of town.

But for Milstead, who was a municipal judge before he was city administrator, and Gregson, it wasn’t enough just to collect on fines the local court had actually imposed, according to an affidavit by Huntington’s former municipal judge, Gregory Denman.

According to Denman, both Milstead and Gregson ordered Combs “to change the amounts to be collected from the traffic violaters (sic) after I had rendered judgment … because the City needed the money.”

Denman confronted Milstead about the inflated collection notices “and I questioned their legality.” Milstead ultimately ordered the court clerk to “do what I say, not what the Judge says,” according to Denman, who ended up resigning over the issue.

Frank Harris, the councilman who pulled papers to run for mayor after Gregson pulled hers, says he’d prefer not to be running at all. At 70 years old,he said he’d rather be fishing and camping out with his grandson.

“When I got into it, I didn’t know what was going on,” he said. “But if I don’t run, it’s gonna get right back like it was.”

Contact Jon Cassidy at jon@watchdog.org or @jpcassidy000. If you would like to send him documents or messages anonymously, download the Tor browser and go to our SecureDrop submission page: http://5bygo7e2rpnrh5vo.onion

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