State Auditor Reveals Results of Lucas Investigative Audit

Clayton Lucas

former Sallisaw City Manager

The state auditor and inspector’s office has released its audit of operations during Clayton Lucas 31-month tenure as Sallisaw’s city manager.

The report, released Oct. 9, reveals that Lucas used his city-issued credit card for $55,052.73 in purchases while employed by the city. Of those purchases, the audit found that $11,861.67 in charges were unallowable because the transactions appeared to be for personal benefit and were not a proper use of city funds. In addition, $6,589.97 in expenses were deemed questionable because they were not supported by itemized receipts or invoices. 

The report also found that “Lucas consistently ignored, changed or eliminated purchasing and travel policies. His credit card expenditures were subjected to very little to no oversight by the Board of City Commissioners and he continually ‘pushed the envelope,’ exhibiting a pattern of behavior that showed a blatant disregard for the proper use of public funds.”

The report went on to say, “Lucas also created an environment where he utilized City resources to provide a personal benefit that would not have otherwise been available to the public."

During his 31 months as city manager, Lucas allegedly traveled excessively, using the city’s credit card and vehicle for his personal use, the report states. Lucas’ travel expenses were called into question when he began to change administrative policy, according to the report.

The policy changes Lucas made appeared to increase allowed travel costs, limit the transparency of credit card transactions and promote the personal use of city property, the report states.

Some of those changes included:

*Not requiring employees to submit detailed credit card receipts for expenses incurred

*Removing restrictions that prohibited employees from transporting children in city vehicles

*Not requiring employees to select single-occupancy hotel rooms without special accommodations such as suites or other higher-cost arrangements

*Allowing employees to drive their personal vehicles while in travel status, even if driving was not the cheapest mode of travel

*Not requiring employees to pay camping fees at the city-owned Brushy Lake and 

*Allowing employees to fish and hunt on city-owned property.

The audit found no authority for Lucas to change the policy without the approval of the city commissioners.

The report states that according to Lucas’ initial employment agreement with the City of Sallisaw, the city agreed to “pay all authorized expenses of the City Manager” and furnish Lucas “a vehicle for use on City business within and outside the City of Sallisaw and pay all expenses related thereto.” The agreement also reflected that a vehicle would be provided for the “City Manager’s personal use as well as business use within Sequoyah County.”

The report goes on to detail that on May 9, 2016, 52 days before his 2015-2016 employment agreement expired, Lucas presented a modified version of that agreement for renewal as his 2016-2017 contract. The new contract now allowed for personal use of the City vehicle outside of Sequoyah County. Lucas submitted the revisions to the board in an attachment to the meeting agenda. 

The board approved those changes at its May 9, 2016 meeting.

A review by the state auditor of previous Sallisaw city manager employment agreements provided for a city vehicle for business use outside the city but did not allow for any personal use of a city vehicle.

According to Lucas, as stated in the report, the board of commissioners discussed the proposed changes giving him direction on what to add to, or what to remove from, the 2016-2017 contract during the city’s annual budget retreat. But minutes from the board’s May 9, 2017, meeting reflect that the retreat was not held until May 17 of that year, after the employment agreement was renewed. Auditors found no evidence that commissioners reviewed, advised or discussed the agreement changes with Lucas before they approved them.

The findings also show that Lucas’ change in policy allowed him to travel to Utah on vacation, towing his own personal RV camper with the city’s Ford Expedition.

The investigation’s look into Lucas’ travel expenses revealed several trips that incurred $2,399.90 in unallowable credit card charges related to out-of-town travel. Those charges included costs that exceeded lodging expenditure policy limits and included purchases made for personal benefit. 

The report states that during a conference in June 2016, Lucas and his family stayed at the Embassy Suites. A receipt, which was shown in the audit report, shows that two adults and four children stayed in the hotel suite at a rate of $355.32 per night. Lucas and family arrived at the hotel three days before the conference began, the audit shows.

Lucas’ total lodging costs for the conference were $2,074.26. He incurred an additional $1,257.60 in costs by traveling to the event early with his family and staying in a hotel that exceeded the cost of the host hotel by $182.32 per night.

The audit report listed several other questionable travel expenses by Lucas, including 31 restaurant charges with no receipt or itemized statement provided for payment. Without the receipts, auditors could not determine whether the $1,504.89 in charges were for a municipal purpose or if the additional meals were for personal benefit.

Among other expenses the audit called into question were charges for equipment and supplies that had no apparent public purpose and were determined unallowable expenses.

The report also found that Lucas made three purchases totaling $114.52 while he was on leave or during personal time, which appeared to be for his own benefit. Those costs were also deemed unallowable. Findings also show that Lucas incurred a total of $8,532.24 in personal expenses on the city’s credit card while he was on vacation and without board authorizations. Of that amount, $1,238.17 was never paid back to the city. 

The audit showed that Lucas attached the following memo to his expense report for those charges:

“As a result of losing my wallet during the collision I was forced to make several transactions from June 27, 2016, to July 5, 2016, using the (city credit card). I have requested and anticipate that the city will be directly reimbursed by Liberty Mutual Insurance for $6,712.90. I have attached check number 213 for direct reimbursement to the city for the remaining $1,747.75. I will also pay any outstanding balance not paid by Liberty Mutual Insurance, if any, after all funds have been reimbursed.”

Findings show that in contrast to the memo, Liberty Mutual paid Lucas directly as part of a personal injury settlement and did not pay the city for any personally incurred credit card charges. The city received two direct reimbursements from the company as a result of the traffic accident. The first payment was issued July 19, 2016, in the amount of $9,316.90 for damage to the city’s Ford Expedition. The second payment was issued Aug. 9 of that year in the amount of $1,237.16 for the city’s Microsoft Surface Pro computer that was in Lucas’ possession at the time of the crash. No additional payments were issued from Liberty Mutual to the city, resulting in Lucas owing the city for all $8,532.24 in personal charges made during the trip.

Lucas paid the city $1,745.75 on July 20, 2016, when he wrote the memo. He made a second payment on Aug. 23 that year of $5,548.32, for a total of $7,294.07. The remaining balance of $1,238.17 owed to the city was never repaid, according to the audit report.

Lucas also admitted to hunting at the city landfill and other city-owned properties, the report states. He also said he allowed city employees to hunt on the property. Lucas confirmed he owned a tree stand on the property and used it to hunt in 2015 and 2016.

Throughout the investigation, the report concludes, “The weaknesses noted in the controls governing credit card use and expenditures were discussed with current City officials.”

District Attorney Jack Thorp said Thursday that he was “not surprised” by the audit’s findings based on his own inquiries into the case.

Thorp said the next step in the process is waiting for the Oklahoma State Bureau of Investigation to release its findings in the case. "Once that report is released," Thorp said, "the decision will be made whether or not criminal charges will be filed on Lucas."

Lucas resigned as city manager in Dec. 2017 after city commissioners voted to offer him a contract buy-out which he accepted in exchange for his resignation.

The complete City of Sallisaw Investigative Audit report can be viewed at
https://www.sai.ok.gov/Search%20Reports/database/Sallisaw%20City%20of%20Web%20Final%20.pdf.

Laura Brown, KXMX Staff Writer

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