Counsel Delivers report to Council on investigation

During the meeting of the Fairview City Council Sept. 1, council members voted to adopt a report prepared by the legal counsel, which dove into issues that had been perpetuated by past City of Fairview employees. The following are key exerts from the over 90 page report. The full report in its entirety may be viewed on the Fairview Republican website at www.fairviewrepublican.com, at the City of Fairview offices and the Fairview City Library. Additionally, copies are available at the City of Fairview offices for $10 per copy.

A special counsel’s investigation into three incidents involving the City of Fairview has concluded that former city officials and outside actors circumvented municipal procedures in matters involving $60,000 in cash, construction of an electric line to a marijuana grow operation and the sale of two city-owned transformers.

The 90-page report, dated Aug. 4, was prepared by attorneys Stephen Jones and William Jewell of Jones, Otjen & Jewell after the Fairview City Council retained the firm to investigate allegations of governmental corruption and mismanagement occurring primarily between 2019 and 2022.

The report stresses that the investigation was civil and administrative rather than criminal and applied the civil “greater weight of the evidence” standard. It also distinguishes findings of civil liability from findings of criminal guilt.

According to the report’s executive summary, the investigation centered on three matters: the alleged conversion or loss of $60,000 from city offices; the expansion of municipal electric lines to a property referred to as the Cimarron Acid building; and the conversion or sale of transformers owned by the city.

$60,000 cash payment

The first matter dates to March 11, 2021, when the report states $60,000 in cash was brought to Fairview city offices as a down payment on an electrical project intended to serve a marijuana grow operation.

According to the report, former City Manager Jerry Eubanks received the money and directed then-city employee Casie Johnson to place it in the city safe. City Clerk Melinda Gould, who had been off work when the money arrived, later counted the cash with Johnson and prepared a deposit slip.

The report states the money remained in the city offices for approximately two weeks rather than being deposited through normal procedures. Investigators found no March deposit matching the $60,000 in the city’s books or bank records.

On April 16, 2021 — Eubanks’ last day as city manager — a collection of checks and money orders totaling $60,000 was deposited and applied toward the contractual obligation. According to the report, those instruments included numerous money orders purchased from various locations and a $4,000 cashier’s check.

Special counsel concluded under the civil standard that Eubanks “converted the City’s funds,” although the report states the precise disposition of the original cash could not be established. It also found that Johnson participated in handling the cash and later gave knowingly false accounts concerning it.

The report specifically notes those are civil findings and “are not findings of criminal guilt.”

Electric line project

The investigation also examined the construction of a three-phase electric line outside Fairview’s corporate limits to serve a marijuana grow operation at the Cimarron Acid building.

The City Council authorized an agreement Feb. 2, 2021, and the contract was executed March 11. However, the report states the version signed by the private parties did not contain the city’s signature.

The original project contemplated a roughly $75,000 electric-line extension. According to the investigation, the route was later changed without another City Council vote.

The report states Oklahoma Municipal Power Authority personnel performed construction beginning in June 2021, with materials invoiced at approximately $273,787.68. After payments by private parties, approximately $224,527.19 of that amount was borne by the city, while OMPA charges added another $217,710.69. The report said taxpayer exposure from materials and OMPA charges together approached $267,000.

Investigators also found no bids were taken for materials, no construction contract existed between the city and OMPA, and the old conductor removed from the line was sold without the City Council first declaring it surplus.

The report further examined former Councilman Shane Bode’s involvement. According to special counsel, Bode had a business relationship with grow operator Andy Yang that was not disclosed to the council while Bode participated in matters related to the project.

Special counsel concluded Bode’s participation violated Fairview’s conflict-of-interest ordinance and state law and found him civilly liable under the standard applied in the investigation.

As for the electric-line extension itself, the report concluded the extension to an already-served customer was unlawful if the property was within Cimarron Electric Cooperative’s service territory and no written consent had been obtained. Because the underlying service history remained disputed, however, the report did not make an individual liability finding on that theory.

City-owned

transformers sold

The third major portion of the investigation concerns two 750 KVA transformers purchased in 2021 for approximately $45,156.98 with Fairview Utilities Authority funds.

The transformers were intended for electrical improvements at the Crescent Building at 1700 N. Main St., which was to be used in connection with another marijuana growing operation. That project was never completed, and the transformers remained unused.

According to the report, Bode later moved the transformers from the Crescent Building to another property before selling them in May 2022 to Ninnekah Rural Electric Cooperative in Kansas for $60,000.

The investigation concludes that the transformers belonged to the City of Fairview from the time they were purchased. Fairview Municipal Code provides that electrical installations purchased or installed by the city remain city property.

Special counsel rejected Bode’s argument that the transformers were privately owned because another business had paid an invoice associated with the project.

The report concluded Bode exercised control over city property without authorization by moving and selling the transformers and retaining the proceeds.

“Bode is liable for the common law tort of conversion,” the report states.

Special counsel also concluded the sale violated Fairview ordinances because the City Council never declared the transformers surplus, no competitive bidding process was conducted and Bode, while serving as a councilman, had a financial interest in the transaction.

The report distinguishes those civil findings from the criminal proceedings previously brought against Bode. Criminal charges were dismissed in April 2023 after the district attorney concluded the state could not prove the required criminal intent beyond a reasonable doubt.

Special counsel said dismissal of a criminal case did not determine ownership of the transformers or prevent those questions from being considered under the lower civil burden of proof.

The city later filed a civil action. That case eventually ended without a ruling on whether Bode owned the transformers. According to the report, Fairview recovered approximately $60,000 from the buyer while reserving its claims against Bode.

Special counsel noted, however, that limitations issues may now prevent the city from obtaining additional monetary recovery. The report said a newly filed conversion action against Bode “appears to be time-barred,” although its findings regarding liability remain unaffected.

Report cites broader institutional failure

Beyond the individual incidents, special counsel said the investigation exposed what it characterized as an institutional failure within Fairview’s municipal government.

The report said the three cases shared recurring characteristics: decisions made in executive session and reflected publicly only through brief motions; city property and money leaving without required declarations, deposits or records; and officers participating in transactions involving interests they had not disclosed.

Special counsel said the incidents were not simply three isolated acts but reflected “the same gaps in the same controls” being exploited over several years.

The report separates the failures into what it calls “hard” and “soft” failures. Hard failures included ordinances being circumvented, contracts not being properly executed and property being disposed of without required declarations. Soft failures involved personal and business relationships and a culture that allowed formal safeguards to be bypassed.

The report emphasizes that its findings are confined to the three incidents investigated and should not be interpreted as findings concerning other matters, transactions or individuals.

Six recommendations offered

Special counsel made six recommendations intended to strengthen Fairview’s internal controls.

They include adopting a written ethics code requiring disclosure and recusal when an official has an interest in a matter; enforcing written surplus-property declarations and competitive bidding requirements; requiring contracts to be fully executed before work begins or money is paid; instituting periodic ethics training for elected officials and department heads; adopting a records-retention policy covering electronic communications; and expanding procurement policies to include competitive bidding and conflict disclosures for service contracts as well as property transactions.

The report concludes that its purpose is to place the investigative record before Fairview residents rather than tell them what conclusion to reach.

“What the record shows is offered to the citizenry of Fairview who is the account owed them,” the report states. “It is not a verdict. It is the evidence, and the standard by which it was weighed, set out so the Council and the public may judge these matters for themselves. CITY OF FVW REPORT