The former business manager and treasurer of the McKinleyville Community Services District says he was forced to retire after Manager Tom Marking thwarted his efforts to have a proper investigation into financial irregularities and the possible embezzlement of taxpayer dollars.
The situation spurred Jim Harding – who has served as the MCSD’s chief financial officer for 11 years before retiring on Tuesday, March 4 – to file a complaint last week with the Humboldt County District Attorney’s Office and the Grand Jury.
Harding said he discovered “financial irregularities” in the general ledger several months ago. In an interview last week, Harding said that Manager Marking was definitely not a suspect and that the amount missing was “a thousand dollars or less,” at least that he knew of. Harding would not disclose the name of the suspected employee.
“I reported my suspicions to my supervisor, General Manager Tom Marking, and requested an impartial investigation by the County Auditor or Board of Directors in closed session,” stated Harding in a written statement to the McKinleyville Press. “He (Marking) agreed only to conduct his own, solo investigation, and he refused to tell me how or whether he dealt with the embezzlement I suspected.”
It’s worth noting that Harding is not merely a business manager working at the behest of Manager Marking. He was also an officer of the board who had been unanimously selected as MCSD treasurer by the board every year during his 11-year stint with the district. If he were to ignore what he suspected was the embezzlement of district funds, he could be fingered as being part of a cover-up.
Harding said that “he (Marking) ordered me to drop the matter. I told him that I had a fiduciary responsibility to the district and would not accept his burying the issue. I demanded to take the matter to the board in closed session and told him that if I weren’t allowed to address the board, I would need to report the situation to the County Auditor.”
Harding says that when he returned to work the next day, Feb. 28, he was physically barred from his office by Marking, who confiscated his keys and placed him on disciplinary suspension.
“The following day, he had delivered to me another letter that said I was under investigation for making physical threats to someone unnamed,” Harding stated. “He threatened involvement of law enforcement authorities and, in a subsequent letter, exercise of legal remedies if I had contact with ‘any and all district employees.’ ”
Harding flatly denied that he made threats towards anyone and called the allegations “patently false.”
“It was clear to me that Marking was about to fire me in an attempt to make the whole thing go away. As an employee I had no access to the board and no way to pursue my suspicions,” Harding stated.
Oddly enough, board members would not have been allowed to discuss the issue with Harding unless they were willing to violate a policy they created in January. After meeting with Marking in closed session on Jan. 8, the board announced that “contact with district staff will be through the general manager.”
“So I could speak freely about the disharmony and apparent malfeasance at the district, and to protect the benefits I’ve earned over the past 11 years at the MCSD, I felt forced to submit my retirement,” Harding stated.
“As a retiree, I feel free to make my appeal to the MCSD board, county investigative agencies and the community. Regarding the suspected malfeasance and attempted cover-up, I’ve contacted Board President John Corbett requesting a hearing before the board in closed session,” Harding wrote. Last week Harding submitted complaints to the District Attorney and the Grand Jury.
When contacted by the McKinleyville Press, Marking declined to comment and said that Board President John Corbett is designated as the district spokesperson for this issue.
In a phone interview Friday, March 14, Corbett said he was limited in what he could say because personnel matters are involved.
The board, he said, discussed the issue of the financial irregularities during a closed session at a special meeting held Tuesday, March 4. The board decided to refer the matter to its auditor “for review,” Corbett said.
That meeting was held five hours after Harding officially retired from the MCSD. The meeting was agendized as a performance evaluation and contract negotiation with its general manager, according to the draft minutes included in this week’s board meeting packet.
As for the allegation that Harding threatened an employee, Corbett said the matter is being investigated by the MCSD’s attorney.
Harding was hired by former MCSD Manager Bruce Buel in mid-1997. At the time, the MCSD’s books were a total mess. “The accounting system had imploded,” Harding said.
The MCSD board was regularly briefed at its meetings about the accounting problems, which made some residents suspicious about whether there were some financial shenanigans going on with their tax dollars. But all the data was there and eventually the books were put back in order. “Everything got reconciled,” Harding recalled.
Over the years, Harding said, there’s been a steady improvement in the district’s financial system.
But the atmosphere at the district’s office seemed to change in the last year or two. “It certainly seems different to me, but I can’t put my finger on it.”
Despite tensions at the office, particularly in recent weeks, Harding said “I loved the job.” Harding seemed visibly upset by the turn of events and made it clear that he didn’t want to retire but was forced to do so.
“I feel the turmoil everyone has seen on the board level is even worse on the staff level. It’s sad to see how the district has changed these past few years under Tom Marking,” Harding stated.
“As reported in this paper, there have been other instances of his poor relationships and heavy-handed tactics towards those who disagree with him,” Harding stated. “It’s very disappointing that the board seems unwilling or unable to rein in his animosity.”
The situation with Harding isn’t the first time Marking has had a conflict with an employee. According to a Nov. 13, 2002, article in The InterMountain News, Marking was the manager of the Burney Water District from 1991 until 1998, when he was unanimously dismissed by the board. Burney is located in Shasta County.
An employee quit his job with the district in 1997 “due to stress, reportedly due to working with Marking,” the article stated.
The employee “filed a claim against the water district and in October 1997 was awarded more than $25,000 in Workers Compensation and Unemployment Insurance benefits.”
The MCSD Board of Directors is scheduled to consider a new employment contract with Marking at its meeting on Wednesday, March 19, at Azalea Hall, 1620 Pickett Road, McKinleyville.
The meeting begins with a closed session at 6 p.m. for a “contract negotiation with the general manager.” At 7 p.m. the board will convene in open session. Near the end of the agenda, the board is scheduled to consider the new employment contract.
The board was presented in Feburary with two contracts. Under one contract, Marking may get a $5,431 annual raise along with a $57,000 bonus in the event that he quits his job or is terminated, with or without cause. In addition, Marking would get paid and receive full benefits for three months after he’s terminated.
Both the raise and the bonus – equal to 6 months of his proposed annual salary of $114,040 – are included in an employment contract drawn up by Marking himself and submitted to the Board of Directors for consideration. The 14-month contract would run from May 1, 2008 to July 31, 2009. Marking also submitted a short-term contract, under which he would be paid $9,700 a month until the district finds a replacement manager. Under this agreement, Marking would also receive a bonus equal to six months of his base salary, for a total of $58,200.
Also at Wednesday’s meeting, the board will consider appointing a treasurer to fill the position vacated by Harding. Marking is recommending that the board appoint Assistant Business Manager Diane Sloane to serve in the position until a new business manager is hired.