GEFA internal audit report on LCRSWA

Editor’s note: On Sept. 14, The Herald Gazette learned of an internal audit of the Lamar County Regional Solid Waste Authority’s spending on its waste to fuel project by the Georgia Environmental Finance Authority. On Sept. 27, we received this reply which is published as received from GEFA public affairs director Shane Hix.

On August 28, 2023, Georgia Environmental Finance Authority (GEFA/the “lender”) received a formal complaint alleging fraud, waste, and abuse by Lamar County Regional Solid Waste Management Authority (LCRSWA/the “borrower”) loan/project number 2014L08SW. The nature of the complaint alleges questionable purchases by LCRSWA, specifically equipment purchases, not relating to the project scope or loan agreement. Subsequently, GEFA conducted an examination of the loan with the primary scope focusing on and testing all loan-draw disbursements under the subject contract.

This report communicates observations as it pertains to evidence or documentation that could be indicative of fraud, waste, and abuse identified by GEFA through the performance of this review. The professional standards promulgated by the ACFE prohibits Certified Fraud Examiners (CFEs) from expressing opinions regarding the guilt or innocence of any person or party. Therefore, GEFA does not render such opinions.

Our examination disclosed that all costs submitted to GEFA for reimbursement were eligible under O.C.G.A Section 50-23-4. Additionally, GEFA monitors construction and endorses payments in accordance with the loan agreement. However, there were various purchases made and approved by LCRSWA that could appear to be questionable in nature due to the relationship of parties involved such as:

• Paradigm Manufacturing, LLC invoice number 03010020113 dated February 1, 2013, totaling $24,250, described as a final invoice for Back-End Equipment Purchase. Invoice numbers 03010021712 and 03010042012 dated February 17 and April 20, 2012, were for Back-End Equipment Purchase with the April 20th invoice indicating final payment and acceptance of work.
• R. Seaborn Crosby, President at Paradigm Manufacturing, submitted monthly consulting services invoices from March 2012 through November 2014. totaling $105,000. This could be interpreted as a conflict due to Mr. Crosby’s affiliation with Paradigm Manufacturing, LLC, the sole source provider for this project.
• R & R Consulting, Inc. submitted three invoices totaling $136,599 for construction management services provided January 1, 2015 through September 30, 2015. This gives the appearance of impropriety as there is a pre-existing relationship between Johnny Poore and LCRSWA due to Mr. Poore being president of R & R Consulting and the Executive Director of LCRSWA.
• Akins Farm & Home invoice number 803276 dated January 3, 2018, totaling $819.90 was reimbursed in loan draw nine. A statement for John Deere Financial totaling $4,065.08 was reimbursed in loan draw ten. The statement included the Akins Farm & Home charge resulting in an overpayment of $819.90.
• Paradigm Manufacturing, LLC invoice number 030100020063015 dated June 30, 2015, totaling $239,500 included task seven as “detailed engineering” and billed at $152,500 with a notation stating, “initial phase (50% of contract).” The invoice also changed task four from engineering with a guaranteed maximum price (GMP) of $290,000 to preliminary engineering with an adjusted GMP of $174,000 and billed $87,000. However, the previous invoice number 03010002010915 dated January 9, 2015, totaling $1,090,500 did not list a task seven only tasks 1-6. Task seven has not appeared on any other task invoices since June 30, 2015.
• Unexpected anomalies were identified in labor costs for Paradigm Manufacturing, LLC.
• Invoices 03010005192021 and 030100006042021 billed $40,000 for FPS Installation labor for May and June 2021,
• Invoice 0301000071621 billed $48,000 for FPS Installation labor for July 2021,
• Invoice 0301000081921 billed $59,000 for FPS Installation labor for August 2021,
• Invoice 030100091521 billed $51,000 for FPS Installation labor for September 2021.
  The below information was detected in a prior review and $13, 693.30 was deducted from draw 17.
• Invoice number 0301000062816 for Paradigm Manufacturing, totaling $12,500 was reimbursed on loan draws five and ten.
• Invoice number 797226 for Akins Feed & Seed, totaling $628.50 was reimbursed on loan draws seven and eight.
• An invoice totaling $564.80 for coffee mugs purchased from C2Renew was reimbursed on loan draw eight. This cost should have been disallowed.
  If you have any questions regarding this communication, please contact me directly at 404-584-1170 or via email at cbrown@gefa.ga.gov.
  Respectfully submitted,
  Charlette Brown Helvy, CFE
  Senior Compliance Auditor