By J.B. Smith

Tribune-Herald staff writer

A review of nearly four years of checks issued by Downtown Waco Inc. has officials questioning expenditures that total more than $500,000, internal documents reviewed by the Waco Tribune-Herald show.

The internal analysis of Downtown Waco Inc.’s financial irregularities shows at least $410,575 in “questioned check activity” between October 2002 and July 31, 2006, with yet other financial irregularities pushing the total beyond the half-million dollar mark, the documents show.

That includes a large number of Downtown Waco Inc. checks written for cash or seemingly personal expenses and signed by one person: former executive director Margaret Mills, according to the agency’s records.

Downtown Waco Inc. board president Scott Felton said the “questioned check” list of $410,575 that interim executive director Toni Herbert put together doesn’t necessarily reflect how much money is missing from the 50-year-old downtown development agency.

“Those are items that are in question, and we need some response about those,” he said. “They just have some peculiarities, which any individual involved has the right to be able to explain.”

Felton said most of the checks are signed by Mills alone, a violation of an agency policy that required two signatures. He said Downtown Waco Inc. officials don’t know how much money is missing and won’t know until the Waco Police Department concludes its criminal investigation.

Herbert’s check list, obtained through the Texas Public Information Act, is the best indication yet of the scope of the scandal. Previously, Downtown Waco Inc. officials had acknowledged receiving a $70,000 restitution check on Mills’ behalf.

Downtown Waco Inc. last month lost its city and county funding due to the scandal, and has now vacated its office on Washington Avenue with little hope of returning. Mills stepped down from her 18-year career at Downtown Waco in July after acknowledging to board officers that she had taken “liberties” with the agency’s accounts.

$86,517 in 2002-03

The check list goes back to fiscal year 2002-03, a year with $86,517 in questioned checks. Downtown Waco Inc. officials said their internal investigation only goes back four years, but police could go back further.

The Tribune-Herald’s random examination of canceled Downtown Waco Inc. checks from February 2000 suggests the pattern of irregularity goes back more than six years. In that month, Mills was the sole signatory on six checks totaling $7,790, with most of them written for cash. There also were two debits on the account for $200 and $50.

Herbert’s analysis of questioned checks since 2002 excludes several other categories of suspected financial irregularities:

* Checks written to Downtown Waco Inc. but diverted into Mills’ personal bank account. The internal investigation found at least $19,300 in diverted funds.

* Purchases on unauthorized Downtown Waco Inc. credit cards, estimated at $20,000.

* Forty-three checks missing from bank statements since October 2002, totaling $55,030.

* “Chargebacks” for personal checks Mills cashed at Bank of America, where Downtown Waco Inc. had an account. On finding insufficient funds in Mills’ account at her home bank, Bank of America took the money out of the Downtown Waco Inc. account, which included Mills’ name, agency officials said. There were two chargebacks totaling $1,550 in May alone, bank statements show.

* Checks written on the account of RiverCity Inc., a nonprofit spinoff of Downtown Waco Inc. Between January 2004 and October 2005, bank statements show, Mills made 46 withdrawals totaling $113,697 on the account, which board members thought was inactive. Some of those checks appear to be for downtown development purposes, but the list also includes tens of thousands of dollars worth of checks made out to cash.

Tangled web

A review of the bank statements shows that Mills was shifting money from her personal bank account and Downtown Waco’s account into RiverCity, resulting in a tangled web of transactions that Downtown Waco Inc. officials haven’t yet sorted out.

In a June 26 letter to the executive committee of the Downtown Waco Inc. board, Mills listed $32,729 in expenses from the RiverCity account between October 2004 and September 2005, mostly for personal items and cash. The committee in April had cut off Mills from spending Downtown Waco money and demanded an accounting for unauthorized expenses.

Mills could not be reached for comment at her home Tuesday evening.

As Downtown Waco Inc. executive director, Mills, 65, one of Waco’s best-known civic leaders, worked with business and property owners, city and county leaders, and others to increase downtown property values, boost its workforce and spark economic development downtown and through the Brazos River corridor. Board members and others had credited her with much of the area’s revitalization.

jbsmith@wacotrib.com

757-5752