Panama City to undergo forensic audit after ex-employee's arrest on embezzlement charges
PANAMA CITY — Local officials are working to tighten any loose ends in the city's policies and procedures.
City Commissioners on Tuesday unanimously voted for Panama City to undergo a forensic audit to make sure its fiscal and operational system cannot be manipulated by employees.
The audit was sparked by the Oct. 20 arrest of Michael Johnson, the city's former community development director, who was accused of embezzling more than $470,000 from the Friends of After School Assistance Program, a nonprofit organization that supports the city's After School Assistance Program.
More on Johnson's arrest: Former Panama City administrator arrested on charge of embezzling $470,000 from charity
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"This event proves (Panama City's systems and policies) are still not sufficient to prevent these kinds of activities, and I have to believe we all can agree that is unacceptable," Commissioner Josh Street said. "When strong systems of internal and external accountability exist, theft is prevented in the best case and found quickly in the worst-case scenarios."
Street, who introduced the motion for an audit at the Tuesday commission meeting, also personally compiled and released to city staff all texts and emails between himself and Johnson.
It should be noted electronic conversations between elected officials and city employees in Florida already are subject to public record requests.
Panama City has 'systemic issues' with finances, according to commissioner
Street also said Johnson is not the first city employee in recent years to have allegedly manipulated Panama City.
"I do believe we do have systematic issues regarding procurement, auditing and accountability practices," he said. "They've existed over multiple management administrations, clerks and commissions. This is not a singular instance.
"Since 2018, there have been issues regarding multiple employees, ranging from theft involving a city-backed nonprofit, to bid rigging, to misappropriation of funds and now theft again."
Police reports state Johnson was arrested after an account for the city's After School Assistance Program was discovered at Hancock Whitney Bank that only had him on its signature card.
Johnson has directed the program since 2012, and he had sole access to its checkbook.
Statements from Hancock Bank 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.
Johnson resigned from his position as community development director about two weeks before his arrest, when City Manager Mark McQueen confronted him about unrelated and sloppy management practices.
This included a lack of policies, procedures and documentation, along with noncompliance of federal regulations, related to his local role with the U.S. Department of Housing and Urban Development's Community Development Block Grant Program, which provides governments with federal funding to develop housing for urban communities.
The Panama City Police Department, along with the FBI, is investigating all programs and funds Johnson had access to or authority over.
Information provided by Panama City notes city staff plans to present commissioners with a contract for the forensic audit at a meeting on Nov. 8.
"This audit and its scope are not a determination of guilt, innocence or collusion," Street said. "This is about ensuring our fiscal and operation systems have not and cannot be circumvented."
This article originally appeared on The News Herald: Panama City audit sparked by arrest of Ex-employee Michael Johnson:
