Tuesday, March 6, 2012

Would You Trust this Man with $600 Million?

Jody Reece (Photo Courtesy Indian Country Today)
According to a news release on the Cherokee Nation's web site, "the Cherokee Nation has a new controller to manage its finances.  Jody Reece, of Muldrow, took on the job in late February."

Part of Reece's credentials are that, according to the news release, he worked at the Cherokee Nation from "1991 to 1997, starting as an accountant and eventually being promoted to controller, and again from 1998 to 1999 as director of grants administration and land management."

Well, those weren't exactly the glory years for the Cherokee Nation's accounting department and quite frankly-- those might be lines most people would leave off a resume!  Saying you were in charge of the Cherokee Nation finances during those years is a little like saying you were the guy in charge of the checkbook at Enron in 2000 or Worldcom in 2002.

But back to our point today: Mr. Reece (who is the second small town Sequoyah County CPA to be hired by Baker to run the Cherokee Nation's finances) has a pretty scary track record.

Mr. Reece was the financial boss during the years when Baker was chair of the executive and finance committee in the 1990s and Baker says "the Cherokee Nation will greatly benefit from his (Reece's) talents and expertise."

  • The Nation did not have "prepared financial statements for 1997 and 1998..." according to a federal audit conducted because the Nation didn't do any audits itself.  
  • An HHS audit of Reese's previous time concluded that the feds should have "substantial concerns about the tribe's financial accounting systems" and "used $1.9 million of IHS funds to cover deficits in other programs."

You should probably just read the articles in the Tulsa World yourself (after all, they were on the front page at the time and are hardly a secret), because they reveal too many financial screw-ups to list here, but we will provide some highlights during the Baker/Byrd/Reece financial era:
  • Incurring legal costs without contracts
  • Using taxpayers' dollars to fight the federal government
  • Improperly placing $16 million of federal funds in its general operating account
  • Improperly charging $88,000 to the (Interior) Department for legal services
  • Transferring federal funds of at least $16.1 million to the (tribe's) general operating fund without assurance that federal program expenditures had been incurred previously and were owed.
  • Inaccurate financial data in the financial status report submitted to the Bureau of Indian Affairs.
Like we said, not exactly resume material, unless your next move was to Enron.   

Tomorrow, we’ll talk about the consequences Cherokee Nation faced for the financial mismanagement that took place when Mr. Reece was in charge of the Cherokee Nation checkbook the first time.  Some of you might be surprised by one of the names that pops up - it's a guy who picked up right where Reece left off…