'ECO Resources problem bigger than reported'
Comment: WHAT ARE SIENNA MUDS DOING ABOUT THIS....ANYTHING? As clients of ECO we have a right to know more:
FOR BACKGROUND ON THIS CASE: http://www.fortbendnow.com/archive/?c=MUDs -- article series from the first report.
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'ECO Resources problem bigger than reported'
By:SESHADRI KUMAR, Editor 12/2005
A forensic audit conducted by ECO Resources, a subsidiary of Southwest Water Company, which operates and maintains the services of area municipal utility districts, reportedly concluded that the $185,000 billing scam, affecting 11 MUDs, was confined to one individual who is no longer in service with the company.
ECO Resources presented its findings to the 11 MUDs at a meeting on Dec. 16. The company also held a separate meeting with other districts the same day.
First Colony MUD #9, one of the water districts which was over billed to the tune of $25,000, was "uninvited" for the meeting, says Attorney Trey Hendershot.
The district has filed a lawsuit against the client manager of ECO Resources, who allegedly committed the fraud.The board of directors of First Colony MUD #9 held their meeting last week at EcoResources.
Hendershot says Eco Resources' forensic audit is confined to the transactions involving only one employee, but the problem appears to be widespread.
As a proof, Hendershot showed EcoResources a service order where 317 sewer bands were ordered when only two were needed. Also, the rate per piece is about $6.44. At that rate, the bill should have been $2,389, but the water district was actually billed for $8,829. If in one service order about $6,000 was over billed, what about the other 60 service orders, for which the water district has not yet received the back up information, Hender-shot said.
EcoResources officials have agreed to provide the back up document in the next few weeks. But, Hendershot maintained that the investigation conducted by EcoResources is inadequate and the MUD district has to undertake its own independent probe to protect the taxpayer's interests.
The First Colony MUD #9 board of directors also decided to invite bids from waster service companies as a back up, if the contract with EcoResources were to be terminated. The district pays about $500,000 a year EcoResources annually.
Go to http://www.hcnonline.com/site/news.cfm?newsid=15807852&BRD=1574&PAG=461&dept_id=532245&rfi=6 to view this FB Sun article.
©Houston Community Newspapers Online 2005
posted by responsible_dvlpmnt at Wednesday, December 28, 2005
6 Comments:
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Related FBNow.com article located at http://www.fortbendnow.com/news/508/first-colony-mud-board-grills-eco-managers-over-billings
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First Colony MUD Board Grills ECO Resources Managers Over Billings
by Bob Dunn, Dec 20, 10:11 pm
Suffering fallout from a financial scam by an ex-employee, ECO Resources managers fended off sharp questioning by First Colony Municipal Utility District #9 board members in a heated session Tuesday.
Near the end of the meeting, the board approved a motion by Board Director Gary Perry to obtain bids from other MUD management companies “just in case something happens.”
The district is one of 11 identified by ECO as having lost a total of $250,000 in the scam, allegedly perpetrated by the Sugar Land company’s head contract manager. ECO, a subsidiary of publicly traded Southwest Water Co., manages and operates 145 MUDs.
Although ECO managers were careful not to mention her by name Tuesday, Janet E. Trentham of Missouri City has been identified as the head contract manager. She was fired shortly after the billing scheme was discovered in September, and First Colony MUD #9 filed a fraud suit against her in October.
ECO manager John Boardman discussed results of a forensic audit with the board, conducted as part of ECO’s investigation into the billing scam. As other MUD representatives were told recently, Boardman said the audit showed the scam was the work of a single contract manager and was an isolated incident.
He explained auditors used representative samples of MUD service orders to determine the extent of the scam, and the amount of money it repaid, with interest, to its clients who suffered losses from the scheme. In First Colony MUD #9’s case, ECO said losses amounted to about $26,700.
As Boardman wrapped up his presentation, attorney Trey Hendershot of Kerr & Hendershot, P.C. grilled him about MUD #9’s billing records, and launched into a presentation of his own, producing large blow-ups of some of the MUD’s service orders billed by ECO.
One of the service orders included labor, equipment and material for the March 4, 2005, excavation and repair of a sewer line. Hendershot asked how many “sewer bands” such a job would require, and ECO Senior Contract Manager Cathleen Falke said the job would require two.
Hendershot noted that the service order included charges for 371 sewer bands, at $6.44 each. At that price, the total charge should have been for $2,389.24. But the amount charged on the invoice was $8,829.24.
“That’s a $6,440 overcharge,” Hendershot said, “and that wasn’t identified by any of your auditors, was it?”
Boardman began an explanation, but Hendershot cut in.
“Yes or no? Answer the question.”
“What’s nice is, this is not a court of law, and so I don’t have to answer ‘yes or no,’” Boardman said.
“We at least know of $6,440 in additional over-billings that your auditors haven’t found,” Hendershot said. “I’d like you to explain to the board why you continue to refuse to bring the back-up documents so we can conduct our own review.”
Boardman said the company’s MUD clients have all been asked to meet with the Dave Gillis and Associates forensic auditors before proceeding further.
“We have to account to the taxpayers,” said Board President Alan Sandersen. “All I’m saying to you is, we have a right to look at our bills and double-check them if we want to. You have an obligation to say – given the fact we’re out $25,000 due to your employee, and a giant hole in your controls – that’s not exactly unreasonable.”
Boardman said he had been attempting to respond to a “myriad” of requests for documents that Sandersen and Hendershot had made.
Attorney Lennea Cannon, also with Kerr & Hendershot, said “at first” ECO officials had said the MUD was welcome to any documents it wanted.
“How many were produced?” Hendershot asked her.
“Zero,” she replied.
Boardman said several times during the meeting that ECO would as a matter of course reimburse the district for any service order found to be incorrect.
“I assure you that we have tried to be up front. We will get to the bottom of this,” said Jim Brown, Houston Regional Vice President for ECO parent Southwest Water Co. “We value our customers and appreciate your business.”
“I appreciate hearing that,” Sandersen said.
Nonetheless, the board voted to look at other bids for management of the MUD.
It is at least the second ECO MUD client to do so since the billing scam was uncovered. Late last month, Pecan Grove Municipal Utility District board directors voted to end their contract with ECO and put it up for bid.
1 Tom Hilton - Dec 21, 06:18 am
Howdy,
It looks as though there is alot more to this here than meets the eye.
Quote;
“What’s nice is, this is not a court of law, and so I don’t have to answer ‘yes or no,’” Boardman (ECO Manager) said.
“We at least know of $6,440 in additional over-billings that your auditors haven’t found,” Hendershot said. “I’d like you to explain to the board why you continue to refuse to bring the back-up documents so we can conduct our own review.”
and…
“Attorney Lennea Cannon, also with Kerr & Hendershot, said “at first” ECO officials had said the MUD was welcome to any documents it wanted.
“How many were produced?” Hendershot asked her.
“Zero,” she replied.”
This accounting scandal has revealed a number of ethical lapses, and since County Judge Bob Herbert has a business relationship with ECO, I would like to see full PUBLIC disclosure of that relationship. This would include but is not limited to; 1) A copy of Judge Hebert’s contract detailing the type of “consultation” provided, and 2) A copy of the compensation package from ECO to Judge Hebert.
There is a clear Conflict-of-Interest at play here.
Sincerely,
Tom Hilton
2 consumerwise - Dec 25, 04:10 pm
From what I’m reading this appears to be an internal investigation. Even by handing this over to the county DA, who receives his budget from the county commissioners (ergo chief county judge Hebert), it would appear that not enough separation between policing agencies and governmental over-site exist. Why not call in the attorney general’s office along with the rangers for a full investigation and why hasn’t the primary culprit in this had any criminal charges filed yet? Is there something Trentham knows that isn’t being shared? I encourage everyone to keep following this since many area MUDs are involved in this.
It looks like several MUDs that are looking for alternative companies for bids are acting prudently on this and in the best interest of their tax payers. Stay vigilante!
Are the Missouri city area MUDs following the que of the First Colony MUD and the PGMUD? Shouldn't these contracts be put out on bids to better protect the tax payers of tis community?
What are the developer appointed MUDs doing in Sienna?
I want to know what's going on!
This comment has been removed by a blog administrator.
Here's one:
Two political candidates were having a hot debate. Finally, one of them jumped up and yelled at the other, "What about the powerful interest that controls you?"
And the other guy screamed back, "You leave my wife out of this!"
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