BROOKSVILLE — The former third-in-command at the Hernando County Sheriff's Office has filed a complaint, alleging that Sheriff Al Nienhuis intentionally hid from the County Commission $1.3 million in revenue he collected from housing federal inmates last year.
In a fraud, waste and abuse report filed with the Clerk of the Circuit Court's Office on Monday, former sheriff's Major of Operations James Terry stated that he attended a meeting several months ago during which Nienhuis and his comptroller, Terri McClanahan, discussed the federal inmate revenue.
"The Sheriff said he did not want the county to know about it or to turn it over,'' Terry wrote. "The comptroller recommended moving it into an account, stating the county would not see it there. The Sheriff agreed.''
Terry went on to report that he expressed concern about this to Col. Mike Maurer more than once after the meeting, and Terry concluded, "The money was purposely hidden from the County Commission.''
Sheriff's officials say Terry is a disgruntled former employee who was facing internal investigation.
The Sheriff's Office provided the Tampa Bay Times with pages of memos from current sheriff's officials detailing issues with Terry, ranging from micromanagement and a lack of professionalism to profanity and horseplay with his subordinates. Each of the dozen memos was dated on or immediately after the date that Nienhuis placed Terry on administrative leave with pay, April 4.
The revenue from the federal inmates housed at the Hernando County Detention Center — a pot of money that has now grown to $2.2 million — has become a bone of contention with county commissioners. Over the last several years, commissioners have butted heads with Nienhuis over his budgets. Last year, they refused to give him a $1.7 million increase he requested, and he appealed to the state.
But at the same time he was appealing, he had more than $1 million sitting in the bank from having housed the federal prisoners, money he admitted to the commission under questioning recently could have been used to offset the cost of operations of his department.
Terry had questioned that decision. And just days after he raised the issue at the Sheriff's Office, Terry told the Times, Nienhuis called him in to tell him he didn't fit with his team anymore and that he was being suspended with pay. That suspension lasted until the end of May, when Terry retired.
Nienhuis said he was "extremely disappointed'' to hear of Terry's allegations and noted that he was "offered the opportunity to resign from his position at the Sheriff's Office when numerous complaints as to his unprofessional conduct began flowing into the front office.''
The sheriff stated that the allegations were libelous and pointed to his agency's budget letters, audits and social media postings to prove that there never has been anything secret about the federal inmate dollars.
"Those audits were conducted by the same CPA firm that audits the county,'' he told the Times in a written statement. "The auditors have maintained since the beginning, that the actions of my office are appropriate.''
Open discussions about the issue and the $12 million in capital needs for the jail have taken place, he said.
"With all the public conversations and documentation existing previously, it is concerning that Mr. Terry, after spending numerous years in law enforcement, has such a glaring inability to grasp the concepts and basic definition of fraud. However, that deficiency alone reaffirms the decision to separate him from employment with the Hernando County Sheriff's Office,'' Nienhuis wrote.
He added that the complaint serves "no purpose but to distract the good men and women of law enforcement and to perpetuate discontent in local government."
Terry worked for the Sheriff's Office for 20 years with progressive promotions. His last job was supervising more than 200 employees and overseeing departments ranging from investigations to road patrol and emergency management. He was hired by county government this month as Hernando's new animal services manager.
On Tuesday, he was introduced to commissioners. Records search requests by the county when he was interviewed did not result in any negative documents, critical statements in performance evaluations or copies of the memos released to the Times, according to documents provided by the county staff. Terry said that his release from employment with the sheriff states he was not under investigation at the time he left.
County officials have been riled about the federal inmate money because state law requires that unspent revenue for services be returned to the county monthly and, at the very least, the end of the budget year. Nienhuis didn't return the federal inmate money last year and, when he presented his proposed 2017-18 budget on June 1, did not share information about new revenue anticipated during the coming year.
Several county commissioners and the county's budget manager have said publicly they were not aware of what was in the fund or why it wasn't returned.
Sheriff's officials told the Times last week that their auditor, the same auditor used by the county, told them they didn't have to return the money. But on Tuesday, during a commission discussion, Commissioner Steve Champion said the auditor had reversed himself. Memos between the auditors and the county legal staff in the last few days indicate that, while the sheriff is allowed to put the inmate money in a "special revenue fund,'' he is still obligated to return the funds as required by state financial rules.
Sheriff's officials dispute that.
During Tuesday's meeting, Commissioner Jeff Holcomb, who has been gone for the last year on active military duty, chided the commission for criticizing Nienhuis, for not giving him the funds he needed, for not being transparent themselves and for not congratulating him for thinking ahead about saving money for capital expenses.
Commissioner John Allocco echoed some of those thoughts.
Commission Chairman Wayne Dukes told Holcomb that "some of the information you have is not correct.''
Champion went further, saying that it is the County Commission, not the sheriff, that makes budgetary decisions. While the commission might give Nienhuis back money he returns to the county, it isn't his choice.
"It's not the sheriff's responsibility. It's against the law for him to do it,'' said Champion, who was the chief advocate for Nienhuis getting a budget increase when commissioners settled his appeal in March.
Dukes said the issue will be discussed further on July 11.
Terry's complaint has been forwarded to the county's auditors for review.
Contact Barbara Behrendt at email@example.com or (352) 848-1434.