Panama City to get $1.45M for 11 properties bought by former employee with embezzled funds
PANAMA CITY — A local organization will soon be reimbursed for money that was embezzled by a former city employee.
In a special meeting Friday, Panama City commissioners reviewed the results of a recent auction for the 11 properties seized from Michael Johnson, the city's former community redevelopment director. Johnson was arrested in October on charges of embezzling money from the Friends of After School Assistance Program, a nonprofit organization that supports Panama City's After School Assistance Program.
A forensic audit conducted by the city showed Johnson used about $1 million in embezzled funds to purchase the properties, which were deeded to the city after being seized by local law enforcement. The combined sales of the properties, which is expected to be about $1.45 million, will be used by the city to benefit the ASAP.
"It's been almost a year since this process began and when the criminal activity was discovered, so it's definitely a very good thing for the community, the city and for the ASAP program to see this finally come to a close," Commissioner Josh Street said.
The locations of the 11 properties and the amounts Panama City is expected to receive for each are:
3615 State Ave., Panama City − $192,000
4109 West 19th St. Unit A&B, Panama City − $189,000
1703 Foster Ave., Panama City − $173,000
1033 Grace Ave., Panama City − $157,000
1006 McKenzie Ave., Panama City − $157,000
1041 Grace Ave., Panama City − $155,000
1703 7t St. E., Panama City − $110,000
924 Magnolia Ave., Panama City − $106,000
908 Cone Ave., Panama City − $81,000
2819 Altha Ave., Panama City − $74,000
625 8th Court E., Panama City − $56,000
According to information from the city, the purchase contracts of nine of the properties are essentially a done deal, with some details still needing to be squared away for 1703 7th St. E. and 2819 Altha Ave.
The first of those has an pending purchase contract with its existing tenant. If they are unable to close, the city then will go to the next highest bidder. The deal with the highest bidder for the second property fell through, so the city also will contact its next highest bidder.
Past reports state that Johnson resigned from his position in October after former City Manager Mark McQueen confronted him about sloppy management practices. These included a lack of policies, procedures and documentation, as well as noncompliance with federal regulations related to Johnson's local role with the U.S. Department of Housing and Urban Development's Community Development Block Grant Program. That program provides governments with federal funding to develop housing for urban communities.
Johnson was arrested about two weeks later, after an account for the ASAP was discovered at Hancock Whitney Bank that had only him on its signature card. He directed the program since 2012 and had sole access to its checkbook.
Forensic audit: Panama City reviews, accepts forensic audit results in wake of fraud by former employee
Statements from Hancock Whitney show Johnson wrote himself checks, the first of which was written on Feb. 1, 2012, for $9,839. The largest check was written on Nov. 13, 2020, for more than $37,215.
In March, Johnson pleaded no contest to grand theft, money laundering and 19 counts of official misconduct. He was sentenced to eight years in prison.
"The city is not trying to profiteer off a bad situation," Street said of why the money is going to the ASAP. "I think that by committing it to the actual program where the funds were stolen from ... that's where we're trying to make a wrong right. It's the right thing to do to ensure that program is well funded."
This article originally appeared on The News Herald: Panama City selling 11 properties illegally bought by Michael Johnson
