Special Agent in Charge Jerry Scott confirmed Saturday the investigation into the city's "financial matters," but declined to give specific allegations or name suspects.
Mayor Dexter Jones -- who said at Monday's council meeting the city "had some serious problems in the last couple of weeks with checks being written erroneously" -- spoke Friday with The Daily Tribune News and said the allegations involve fraud.
"It's been something that has been going on here for a couple of weeks," he said. "I have been in contact with the GBI agents out here and if it gets to the point that we have to make some internal adjustments over the next couple of days then I'll move through that also. But it's a serious situation and we want to make sure that everyone is treated fairly and everyone is allowed to make their case."
Currently experiencing financial woes, the city is over budget on transfers to the general fund from the water fund. At a special called meeting less than two weeks ago, the general fund contained $2,299 and payroll was due.
"Anything that we transfer from the water fund to the general fund, it should be documented and it's been done wrong in the past and that's one of the things I'm trying to correct," Jones said Friday. "Part of the reason that the general fund has been so low is that the people who should have been paid from the water fund were not paid from the water fund. There's just been a mix-up on how the money has been allocated and we're in the process of correcting that right now."
" ... We have to follow proper procedures, and in the past proper procedures just have not been followed and we're about to get into the trouble."
Jones also addressed rumors the city had transferred water fund dollars to the general fund to make a recent payroll.
"The situation with the water fund is something that we have to get a grip on because, according to the agreement, the water bond itself, the procedures have to be followed. And over the last year, I know since I've been there, proper procedures have not been followed and it's my job to make sure that they are. But we have not done anything illegal that I know of and if I ever find anything out that was done, believe me we would not be silent about it," Jones said. "But we have to take better care, particularly of our receipts. There's just no records. The records are not being properly kept. That's one thing that I can totally say. We try to go in and find the financial histories, receipts and it's almost impossible. It's costing us thousands and thousands of extra dollars to get the audit simply because the books are so out of whack. The reconciliation of all the debts and all these things are just not being done. We are waiting on the auditors to complete it and give us a report. Hopefully, we'll be getting that soon, but no doubt the report will be the same as it was last year."
In September, CPA Sabrina Cape of Capable Financial Solutions told councilmen to slow expenditures -- especially in a couple of departments that in June had already spent more than was budgeted for the first half of the year -- or risk ending the year over budget.
"There are a couple of departments that basically are already over that 50 percent mark," Cape said. "A couple of those top departments right there are ahead of schedule in their spending, which means that if you keep going down the current path that you are on you will be over budget at the end of the year -- just to let you know kind of where you are."
She added the city had already used 60 of the 80 percent budgeted to be transferred from the water fund to the general fund for 2010.
"Cash is being [depleted] and not being replenished as quickly as it is declining. So the next three months, I just want to caution you to make sure you have a plan in place for your cash flow," Cape said. "You're going to have to transfer a lot more money from water to pay the bills out of the general fund in addition to what has already been transferred."
While Jones continually voices a positive outlook and insists the city's financial situation is stable, councilmen may not be so sure. Less than two weeks ago, Councilman Ed Miklas reiterated Cape's warning regarding the pace of transfers and the need to curtail expenses.
"We just don't have that much money to be transferring from the water fund to the general account. We have to cut back on our spending starting with payroll immediately, otherwise we'll really be short of money," he said. "Right now, looking at the budget we'll be running out of money before you know it."
In the spotlight for some time with heated city council meetings and several staffing changes, Kingston is no stranger to financial woes and endured a previous two- to three-year law enforcement probe.
In March, former Kingston city clerk Samantha Silvers pleaded guilty to charges she had stolen a total of more than $62,500 from the city in 86 individual incidents from January 2004 to April 2007.
That investigation, which began in 2007, is not believed to be related to the current investigation involving Kingston, but resulted from a 2006 audit that found payroll checks unsupported by time cards.
A bonding company paid the city more than $61,000, and when Silvers was sentenced to serve four years of a 20-year sentence in prison, she paid restitution of more than $62,500, most of which went back to the bonding company.
"The court takes judicial notice -- it reads the paper like anyone else -- that Kingston during this particular time was in an extraordinary fiscal crisis," Superior Court Judge Carey Nelson said during sentencing, apparently referring to the city's financial woes, which included $117,000 in unpaid bills, that led to the subsequent sale of city hall to Bartow County.
Currently, Kingston leases to purchase its own city hall from the county.