(WMC-TV) - A newly released internal audit of Shelby County Chancery Court reveals gross mismanagement of millions of dollars.
The Shelby County Internal Control study completed this week found: Transactions weren't recorded in ledgers, clerks had free reign to write checks of any amount, and bank reconciliation's were done late if at all.
Memphis attorney Frank Jackson says he discovered problems with Chancery Court while representing a property owner owed money from a delinquent property tax sale.
"It's not a system of valid record keeping, credits debits just like you keep in your checkbook," Jackson said. "Being a lawyer, I had to report this, because it seemed to be an improper if not irregular proceeding, and it took me awhile to find someone who was interested."
Eventually Jackson says the FBI took interest. Former Chancery Court Bookkeeper Brandon Gunn is now the focus of a criminal investigation.
Gunn resigned in April after investigators found large checks written from the Chancery Court Fund Account to Sunset Thirty Three LLC.
A company auditors say Gunn controlled. The checks total more than one million dollars. Gunn has not yet been charged.
"I think theft means taking someone else's property, without any right to do so," Jackson said.
The report found a quote, "...antiquated system of recording transactions. This system is completely manual and paper driven down to the production of hand written customer receipts..."
The audit blames the "internal controls weaknesses" for the alleged embezzlement of the one-million dollars.
Chancery Court Clerk Dewun Settle resigned last week. He is replaced in the interim by former Chancery Clerk John Robertson.
Robertson told me he is working to set up an electronic accounting and case management system and put safeguards in place.