Over a nearly five-year period, a married couple who worked for Yell County Emergency Medical Services received $680,175 in unauthorized or undocumented payments, according to an investigative report released Thursday by Arkansas Legislative Audit.
Director Sidney Ward was overpaid $528,646 from Jan. 1, 2010, through Aug. 7, 2015, the report states. His wife, bookkeeper Donna Ward, received $119,686 in overpayments, according to the report.
Her dependents also improperly received $31,843 worth of health insurance premiums, the report states.
"We were very surprised. This was an individual that I called my friend for 25 years," said Jerry Woods, chairman of the Yell County Emergency Medical Services board of directors. "He was well known in the community. There were people who served on my boards who had literally known him since they were small children."
State auditors forwarded their report to Tom Tatum, prosecuting attorney for the 15th Judicial Circuit, and the IRS. Of the salary Donna Ward received, auditors said more than $16,000 was not reported to the IRS.
Woods said the board is fully cooperating with Tatum. No money has yet been recovered.
Tatum did not respond to a request for comment Thursday afternoon.
Woods said the board started looking into the EMS unit's finances in late July. Employees had complained that they weren't receiving health insurance payments or matching retirement contributions.
"That led to some questions," he said. "The whole time, we were getting answers from our director. Finally, we began to look a little deeper -- beyond reports we reviewed monthly."
The Wards were suspended on Aug. 7 and subsequently terminated on Oct. 27.
According to a computer forensics analysis on Donna Ward's computer, auditors said salary records were altered on Aug. 3 and Aug. 4. Sidney Ward's salary was decreased by $24,292 below what he was actually paid. Other employees' salaries were increased by $15,161 above what they were actually paid.
"It was like we had been mistreated by almost a family member," Woods said.
"Certainly, we were shocked and very disappointed."
State auditors said limited internal controls and an unquestioning board of directors allowed the Wards to pay themselves far more than the board intended.
Woods said the board has already made changes to prevent future wrongdoing.
Actions include revising the personnel manual, requiring multiple signatures for disbursements, reviewing every transaction at board meetings and implementing an independent fiscal review process.
Based on available records, it appears that the EMS unit has never received a financial audit, the report states. It is run as a private nonprofit, but it has never filed a tax return with the IRS.
Auditors recommended that the board obtain documentation from the IRS to support its tax status, file appropriate tax returns and attempt to recoup improper Social Security and Medicaid taxes paid on behalf of the Wards.
Woods said the EMS unit will determine its appropriate tax status and file returns in the future. It has already contacted the IRS to attempt to recoup the improperly paid taxes.
Operation and maintenance costs associated with the EMS unit are funded primarily by ambulance fees paid by insurance companies, Medicare, Medicaid and individuals, according to state auditors.
Woods, who was traveling late Thursday, didn't have access to the organization's total budget.
Metro on 01/22/2016