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Auditor: Fraud and waste found at Cosmetology, auctioneer boards

According to a pair of reports released by state Auditor Stacey Pickering's office Tuesday, investigators found several instances of fraud, waste and abuse at the state Board of Cosmetology and the state Auctioneer Commission.

For the Mississippi Auctioneer Commission, the report covered fiscal years 2015 through 2017. Investigators found excessive amounts of reimbursement for travel ($38,000 over a three-year period) and other expenses. They also criticized the commission for not exercising proper supervision of their lone employee, MAC executive director Kam Remsen. The report alleges that Remsen was reimbursed for travel expenses during the same time she advertised to be able to meet with clients for her personal business. Investigators also found several purchases with state funds to be of a personal nature.

According to the report, Remsen would use a signature stamp of commission chairman J. Marshall Riddick Jr. to approve her travel expenses when she submitted them to the Department of Finance and Administration. She told OSA investigators that she always called and spoke with the chairman to approve her travel and that he authorized the stamp. When they asked Riddick if he'd approved of her travel, he said he neither approved or reviewed it and was unaware that she was using the signature stamp.

Investigators also found that Remsen couldn't supply evidence of the business purpose for her travel other than to state she was visiting auctions to determine their legality. No action was taken in commission minutes of illegal auctioneers caught during these surprise inspections, including fines or other penalties.

Also, the auditor's office found that Remsen advertised on her Facebook page that she was conducting services for her personal business in Folsom, Louisiana the same day she claimed to have been conducting surprise inspections of auctions in Pontotoc, a 315-mile drive away from Folsom. Also, the director received reimbursement for "around-town travel" on July 2, 2015 and several Facebook posts indicated she was conducting personal business in Tunica on that date.

On March 8, 2016, Remsen advertised on her Facebook page that she'd be available for personal business from March 10 through 13. She received reimbursement for "around town travel" on March 10 and claimed mileage for a surprise inspection of an auction on March 11.

On May 22, 2016, Remsen said on her Facebook page that she'd be conducting personal business in Tunica starting May 26 and would be available through the Memorial Day weekend. The director received reimbursement for travel to Philadelphia, Mississippi on May 26, "around town travel" on May 27 and for a check of an auction in Edwards on May 28. Edwards is 191 miles away from Tunica while Philadelphia is 185 miles away.

Representatives from the auditor's office found that she hadn't recorded any leave over the three-year period they audited, even though they found several instances of where she advertised on her Facebook page that she was available for personal business services.

Investigators found that Remsen had spent more than $728 of the office's $14,225 budget (five percent of expenses ) for personal use, including more than $291 for purchases from the iTunes store. The director's personal email was used for the purchases and when questioned by auditors, she said the purchases were used to increase office efficiency. Remsen also bought 13 high-velocity oscillating fans with state funds, but auditors could find none of the fans present in the MAC's 750-square foot office.

The director's cell phone bill represented 31 percent of the office's expenditures, with no division between personal and business use of the phone. Also, irregularities such as $1,530 in purchases for paper products (toilet paper and paper towels) were found. Purchases were made for items at Walmart one day, with the same items bought at Office Depot only a few days later.

CASH MONEY: Some of the cash and checks for cosmetology licenses found by investigators from Office of the State Auditor. Photo by the Office of State Auditor

In the report on the cosmetology board which covered fiscal year 2016, investigators from the auditor's office found more than $368,000 in checks and payments for cosmetology licenses — some more than nine months old — unsecured in the board's office. Investigators also were unable to find any logs or record-keeping recording receipt of the funds, which were found stuffed into drawers and filing cabinets. Several checks were returned for insufficient funds, the auditor's report said, because of a delay between receipt and being deposited.

According to the report, when investigators asked why cash receipts had not been deposited, employees indicated that a new system was in place and that none of them knew how to enter the receipts in the system.

Investigators found a large backlog of license renewals and also discovered that the board's procurement card was used operating expenses and held a large balance, costing taxpayers interest and late fees.

The report also said that the board didn't exercise appropriate oversight over its employees, including travel by the board's executive director, who was later fired and replaced in 2016. Investigators also found that the board's travel expenses, more than $118,000, represented an overly large percentage, 18 percent, of its budget. The board also didn't sign and post minutes of its meetings online in compliance with state law.

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