Panama City working on details of forensic audit in wake of embezzlement charges

Nathan Cobb, The News Herald
·2 min read
Panama City will soon begin accepting bids from firms to perform a forensic audit into the city's fiscal and operation systems, which was sparked by the Oct. 20 arrest of Michael Johnson, the city's former community development director, was accused of embezzled $470,000.
Panama City will soon begin accepting bids from firms to perform a forensic audit into the city's fiscal and operation systems, which was sparked by the Oct. 20 arrest of Michael Johnson, the city's former community development director, was accused of embezzled $470,000.

PANAMA CITY — Local officials continue to iron out the details of an upcoming forensic audit to make sure the city's fiscal and operation systems cannot be manipulated by employees.

According to Mayor Greg Brudnicki, Panama City will soon begin accepting bids from firms to perform the audit, which was sparked by the Oct. 20 arrest of Michael Johnson, the city's former community development director.

Johnson was accused of embezzling $470,000 from the Friends of After School Assistance Program, a nonprofit organization that supports the city's After School Assistance Program.

More on the audit: Panama City to undergo forensic audit after ex-employee's arrest on embezzlement charges

Johnson's arrest: Former Panama City administrator arrested on charge of embezzling $470,000 from charity

Brudnicki noted Panama City is working to establish the scope of work for the audit and how far back it will go into the city's records. He hopes for this to be complete by the next Panama City Commission meeting on Nov. 29. The city will then begin accepting bids, and officials plan to select a company during a meeting on Dec. 13.

"Nobody expected somebody to be a crook, (and) it triggered some things," Brudnicki said. "We would never have thought anyone would do anything like he (allegedly) did. ... We will formulate a plan to help try to make (city systems) more foolproof."

Commissioners unanimously approved the audit last month following Johnson's arrest.

What Michael Johnson is accused of doing

Police reports state an account for the city's After School Assistance Program was discovered at Hancock Whitney Bank that only had Johnson on its signature card. As director of the program since 2012, Johnson had sole access to its checkbook.

Statements from Hancock Whitney Bank show Johnson wrote himself checks. The first was written on Feb. 1, 2012. for $9,839, and the largest 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 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. The program provides governments with federal funding to develop housing for urban communities.

The Panama City Police Department and FBI are investigating all programs and funds he had access to or authority over. Brudnicki said Wednesday afternoon he did not have any updates on the investigation.

"It's very unfortunate that (we) had somebody who (allegedly) did what he did," Brudnicki said. "Hopefully ... we'll be able to recoup some of that, and just see in the future what we possibly could have done to prevent what went on."

This article originally appeared on The News Herald: Panama City audit being finalized after alleged employee embezzlement