Judge: Beaumont ISD auditor punished too harshly by state

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beaumont isd

After a harsh assessment of the abilities of former Beaumont ISD auditor Gayle Botley by the state, a judge has recommended a lesser penalty.

In opposing the Texas State Board of Public Accountancy, administrative law judge Michael O’Malley recommended a two-year suspension of Botley’s license, according to a Hearst Newspapers story, rather than the revocation urged by the state agency.

Two former Beaumont district employees, Chief Financial Officer Devin McCraney and District Comptroller Sharika Allison, embezzled $4 million between 2011 and 2013, when Botley was in charge of auditing the district’s finances.

“[Botley’s] three failed audits had a crippling effect on both the District and the Beaumont community,” an accountancy board agency said in a public hearing last year. “The School District was left in a financial crisis and the Texas Education Agency replaced the District’s School Board with the equivalent of a receivership. Teacher jobs were lost and a school had to be closed. It also cost the school district millions of dollars to clean up the financial mess [Botley] left behind.”

O’Malley said in a 67-page report released last week that the state board did not prove that Botley acted “as a result of conscious indifference to the consequences…”, according to the news agency, citing the report.

“The evidence does not show that Respondents [Botley] are to blame for the actions of Mr. McCraney and Ms. Allison,” O’Malley wrote. Adding, “it is not apparent from the evidence that the embezzlement would have been discovered,” and that blaming Botley for the embezzlement is  “irresponsible.”

The state accounting board can respond to the proposed ruling before it is finalized.

Bill Treacy, executive director of the board, could not be reached for comment. Botley’s lawyer, Frank McElroy, declined to comment.

Botley was hired to conduct annual audits of the district from 2009 to 2013, the period in which the two former officials stole the cash.

They pleaded guilty in federal court to embezzling more than $4 million from Beaumont ISD. McCraney was sentenced to five and-a-half years in prison. Allison was sentenced to 46 months.

An investigation by the Texas Education Agency found numerous defects in the audits conducted by Botley and Associates, the firm operated by Botley.

The district sued Botley for negligence and breach of contract after the report was completed and settled for $750,000 last year.

A forensic audit found that the district paid Botley $308,730 from bond funds without authorization and that “Botley did not issue any reports…”

The state accountancy board asked that Botley pay a fine of $254,049 in administrative costs as part of his penalty, including the costs of two expert witnesses and their travel expenses.

O’Malley set the amount at $91,890. According to the news story from Heart, O’Malley’s report said the board “did not meet much of its burden of proof, despite spending considerable fund (sic),” and “did not investigate and prosecute this case in the most efficient manner.”

Records show Botley has been licensed as a CPA since 1990 and has no disciplinary history.

Steve Miller can be reached at [email protected].

13 COMMENTS

  1. an example of failed annual audits by a third-party CPA firm; important to note CPA annual audits are required to consider fraud in the design of their Audit Approach Plan, but are not known for their success in uncovering financial malfeasance.

  2. Criminals and incompetents walked into a bar… I wonder what the accounting firm was paid to look the other way. A small slice of $4 million buys a lot of silence.

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