The chairman of the Oneida County Board of Supervisors ratcheted up the pressure this week on Erv Teichmiller, the Oneida-Vilas County Transit Commission chairman, gaining the authority to draft a letter with the Vilas County board chairman asking for Teichmiller’s cooperation in a review of potential conflict-of-interest issues involving Teichmiller and the transit commission.
County board chairman Dave Hintz, who is also the chairman of the county’s administration committee that approved sending the letter, said he would work with Vilas County to get a letter drafted that Vilas agrees with.
The idea, Hintz said, is to send a letter signed by Hintz and Vilas County chairman Ron DeBruyne asking for Teichmiller’s cooperation in resolving and understanding the conflict of interest issue raised in a recent audit of the commission. That cooperation would include turning over bank records, Hintz said at an administration committee meeting this week.
Hintz said he had talked with Oneida County legal staff and with DeBruyne.
“How I think we should proceed, and this is our idea, and I’m looking for your endorsement from this committee, is that we write a letter to Erv basically saying that this issue has been around for a long time,” Hintz said. “In order to settle it or understand what is going on, we need your cooperation. That cooperation would include bank records, where the money was deposited and to which bank account, how that money came out of that account, who had control over how that money was spent, and there may be other things, but if I was doing the audit and the review I would start with where the money went and how it was spent.”
Hintz said he didn’t think the county’s legal staff could collect all that information without Teichmiller’s cooperation: “It would be very, very difficult if not impossible.”
Conflict of interest
In the audit report, the auditor cited a “related-party transactions/conflict-of-interest policy,” in which it was determined that the commission was leasing office space from a nonprofit company, of which the transit commission chairman was also the principal officer.
However, the audit firm said it was not qualified to determine the legal issues surrounding the matter. Hintz said the county needed to address it.
“That’s the Erv Teichmiller issue that we’ve been dealing with for some period of time, where checks were I believe at first addressed to Erv’s home and later direct deposited into a bank account,” he said. “People often questioned whether there was a conflict of interest there. Is that an appropriate procedure?”
Hintz said he had spoken with the auditor but wasn’t satisfied.
“The auditor struggled with this and I told the auditor that I think people were expecting you to say whether there was anything wrong with this relationship,” he said. “Is it OK or is it a problem? The auditor basically said, ‘We don’t know if there is a legal issue there,’ that it takes a lawyer to determine that and we would have to hire a lawyer if we wanted a review of that.”
Hintz said the audit raised other questions, including a sentence in the report that read, “We inquired to ensure the Transit Commission chairman has no personnel interest in this properly.”
Apart from the typos — the sentence should have stated that the auditors inquired to ensure that Teichmiller had no personal interest in the property — Hintz said the sentence seemed conflicting.
“If you’re a principal financial officer, how do you not have a financial interest in it?” Hintz asked. “I asked the auditor to explain that and he was unable to explain his thinking.”
Supervisor Robb Jensen further pointed out the auditors said they inquired about the matter, but did not reach a conclusion.
“I’m guessing they asked the question of Erv and got Erv’s answer,” Hintz replied to Jensen.
Holding company’s parent group defunct
Hintz also said he had heard that The Lakeland Times had filed a complaint over the issue with the Oneida County’s sheriff’s department.
The newspaper has clarified that it has not filed a formal complaint, or made any allegations against Teichmiller, but asked the sheriff’s department to try and get answers to various questions the newspaper considers in the public interest, including whether Teichmiller’s positions on the transit commission and in the nonprofit holding company represent illegal conflicts of interest on their face.
Beyond that, Times publisher Gregg Walker said this week, there are other questions potentially involving public monies.
“The holding company in which Mr. Teichmiller is the principal officer exists only to hold title to the property, collect rent, and turn over net proceeds to the nonprofit Community Mental Health Services, Inc,” Walker said.
In 2017, Walker said, the property collected $41,250 in revenues, which would presumably include transit commission rent, but the company paid out almost all of it in functional expenses, $39,224.
“That leaves precious little to go the Community Mental Health Services, Inc., and the holding company’s Form 990 contains some interesting expenses, including $3,359 in snow removal and lawn care, $3,202 in garbage disposal, and $14,210 in ‘occupancy’ expenses,” Walker said. “Because pubic money is involved, it would behoove the county and the sheriff’s department to determine the exact breakdown of those expenses and who received the money.”
What’s more, Walker said, Community Mental Health Services Inc. is now defunct, having dissolved itself at the end of last October, and the building is up for sale.
“That raises the question of where any net proceeds from the holding company’s property are going, and where the money gained from selling the building will go,” he said. “It also raises the question of where the assets of Community Mental Health Services, which had more than $400,000 in revenues in 2017, went. Everything may well be beyond reproach, and we hope that’s the case, but these are all questions in the public interest that need answers.”
At the administration committee meeting Monday, Hintz said he wasn’t sure how all the lines of inquiry would mesh.
“I don’t know how this review, and the sheriff department’s investigation all works together,” he said. “We don’t want to do anything inappropriately. The idea for the letter came before I knew the newspaper was (involved). We have to understand how everything works together and who does what.”
But, Hintz said, if Teichmiller will cooperate, the Vilas and Oneida County legal departments would do a review to see if there is an issue.
The sword of Damocles
During the administration committee discussion, supervisors Billy Fried and Robb Jensen wondered just what Oneida County’s role was in overseeing the transit commission, and specifically who was responsible for any investigation.
Supervisor Ted Cushing said it was the county’s responsibility to address the potential conflict issue.
“The letter that was sent to get this audit done said that if you don’t get this audit done in a certain timeframe, we’ll pull our support,” Cushing said. “Now they have the audit done and there is a fairly significant issue, and I think it has to be addressed and we’ve got to get the answers to it.”
Jensen suggested the transit commission — composed of representatives appointed by both counties — has oversight responsibility: “It seems to me our concerns should go to the commission.”
Assistant corporation counsel Tom Wiensch, who has been handling transit commission matters for the county, compared the set-up to a corporate structure, saying the transit commission was the equivalent of a corporation’s board of directors, while the two counties were the equivalent of the corporation’s shareholders.
“The commissioners run the business, but the two counties own the business,” Wiensch said.
Hintz said one alternative would be for the transit commission to hire an outside attorney to look at the issue, but he said he didn’t think the commission was interested in doing that.
“We have a legal staff, both Vilas and Oneida counties,” he said. “The letter could go to the full commission, but it’s not the commission who is sitting on the books and could say open up the bank accounts. They don’t have that authority. We really want Erv to open up the books.”
Supervisor Steve Schreier, who is an Oneida County representative on the transit commission, said he had no problem with sending a letter to Teichmiller.
“I agree that something needs to be done about it,” Schreier said. “Sadly it’s been four years now that this has gone on. This is not a secret. This thing about the relationship and transit has been out there for quite some time, certainly prior to me coming on the transit commission. It was explained to me that he (Teichmiller) left the room when they voted on this and they didn’t feel it was a conflict.”
However, Schreier said the matter needed to be addressed.
“I’m concerned that it has been allowed to go on as long as it has, but it is obviously an issue that is now hanging like a Damocles sword over the head of the transit commission,” he said. “This is there. It’s not going away obviously. What authority we have to compel him to produce whatever it is we need to prove something one way or another, I don’t know. He either cooperates or not. That will be his choice.”
However, Schreier said he would hate to think that the letter would say produce the evidence or the county would pull out of the transit commission.
“I don’t think that’s something Oneida County wants to do,” he said. “That’s going to impact a lot of people. You’re going to punish all the riders because you have an uncooperative chair of the transit commission. Ask him to step down from being the chair. Perhaps you should have done that some time ago.”
Schreier also said some people perceive the ongoing inquires as a vendetta by people who just want the transit commission to fail, and he said he didn’t know how much good the letter would do.
“My guess is, he’s going to ride it out until April,” he said. “He’s not going to run again, and he’ll say, ‘Put a new guy as chair of the commission and I walk away.’”
The committee approved giving the authority to Hintz to draft and sign a letter and to work with Vilas County to try and get their agreement to signing a letter.
Operating the business without financial reports
Beyond the conflict-of-interest issue, Hintz said the audit raised other concerns.
“There is an open issue or two that I think we should address,” he said. “ … They list a number of significant deficiencies in the process. They talked about making a number of adjustments in the books. They talked about segregation of duties, reconciliation of payrolls, capitalization policy, and documentation of expenses.”
Interestingly, Hintz said, the report pointed out that the auditors were requested to draft the financial statements and accompanying notes to the financial statements.
“This means that the transit commission did not have financial reports until the auditors came so the auditors prepared the balance sheets and income statements for the transit commission as part of their service,” he said. “So they were operating and managing the transit commission without financial reports.”
Fried wondered how the commission could have obtained government grants and loans without such statements, and ADRC director Dianne Jacobson explained that, in 2015, her office still performed a lot of the paperwork.
“Some of the problem was that they didn’t have copies of reports,” she said. “In 2015 they didn’t have any staff. Actually our office was doing some of the — it was really almost just like checkbook kind of entries. There were very little ins and outs because we were still employing the drivers but it was under transit, so that reporting was done to the DOT, it’s just they didn’t have staff or an office or anything.”
Jensen asked if that meant the accounting procedures for the grants were in place and were still being done on behalf of the county, and that the county had its checks and balances for services that it once provided on its own, and Jacobson said that was a good way to put it.
However, she said, after 2015, in 2016 and 2017, the transit commission was doing its own books.
“And in 1016 and 2017, they still did not have financial statements and they were basically on their own,” Hintz observed.
Schreier said all of the non-conflict-of-interest issues would be taken up at the next transit commission meeting.
“The audit obviously produced concerns, all of which the commission is aware of and will be addressing, every single one of these items at the next meeting,” he said. “There’s a suggestion that there will most likely be a CPA that will be paid to look at the books and reconcile the things that need to be reconciled.”
The committee then approved a motion to send an email to the commission — apart from the letter to Teichmiller — underscoring that it wants the commission to respond as to how it intends to handle those other audit issues.
Finally, Fried wondered whether the audit answered the question of long-term sustainability of the transit commission’s operations. He described the transit commission’s services as “wonderful” and claimed the commission had not only maintained services but expanded them.
Still, Fried said, there were concerns.
“My biggest concern is, going into the audit, is this a viable entity?” he asked. “Because, of all the discussion we’ve had over the last few years, it’s like, are they going to be there in two years? It just seemed like they weren’t charging enough for rides, that there were a lot of things being bought and services provided without maybe the revenue for the long term to sustain it. Did this audit tell me , is this a sustainable operation?”
Hintz said it did not.
“They really didn’t address whether the transit commission can continue on,” he said. “They didn’t look at the fares. They didn’t look at the number of people on the buses. For the most part, they did not address that.”
For his part, Schreier was optimistic, saying the transit commission expected to end the year in the black, which he said represented significant progress. He said progress was slow, but the ship was being turned around.
Richard Moore is the author of the forthcoming “Storyfinding: From the Journey to the Story” and can be reached at richardmoorebooks.com.