By J.B. Smith

Tribune-Herald staff writer

On the eve of her retirement as Downtown Waco Inc.’s executive director, dogged by suspicions of financial irregularities, Margaret Mills intercepted a $2,031 check that Waco Independent School District had mailed to the agency and deposited it in her own bank account, public records show.

Mills deposited the check July 28, three days before she was to retire from her 18-year career at the agency’s helm, according to WISD records obtained through the Texas Public Information Act.

She made the deposit nearly four months after Downtown Waco’s board officers cut off her spending privileges at the agency and began an inquiry into financial irregularities that ultimately forced Mills to resign, Downtown Waco Inc. documents show.

In late June, Mills had acknowledged taking “liberties” with agency checks and debit cards and promised the board’s executive committee to try and reimburse Downtown Waco Inc. for inappropriate expenses.

At the time of her retirement from the 50-year-old downtown development agency, Mills was making a salary of nearly $64,000.

The financial scandal has caused Downtown Waco Inc. to shut down indefinitely, and the Waco Police Department has launched a criminal investigation into misuse of funds. Downtown Waco Inc.’s own internal inquiry found more than $500,000 in questionable expenses under Mills’ tenure.

Downtown Waco Inc. board president Scott Felton said police have asked him not to comment on the case while it is under investigation. But he said it would be “unbelievable” for someone who was already under scrutiny to deposit company funds into a personal bank account.

“I would be flabbergasted,” he said. When asked why Mills was allowed to continue to lead the agency after the board discovered financial irregularities, Felton replied that “the size and scope of this was not readily apparent.”

Mills has not returned the Tribune-Herald’s phone messages seeking comment on the case in the last several weeks.

The WISD check isn’t the only evidence that Mills continued to appropriate Downtown Waco Inc. funds after she was barred from using agency checks or cards in April.

Downtown Waco Inc.’s bank statements from Bank of America show $5,005 in questionable charges between May 23 and June 29, including six “chargebacks.” Downtown Waco Inc. officials have said the chargebacks occurred when Mills cashed personal checks from another bank at Bank of America. The checks bounced, leading Bank of America to withdraw the money from the Downtown Waco account in which Mills was a signatory, officials have said.

Mills had left the Bank of America account open for several weeks after the board asked her to close it, Downtown Waco Inc. memos show. In a June 12 letter, she explained that she left the account open to process payroll taxes.

Meanwhile, WISD began scrutinizing its past checks to Downtown Waco Inc. after Sheryl Davis, associate superintendent of business and support services, read an Oct. 14 Tribune-Herald story. The article revealed that Mills placed a $3,000 dues check from the newspaper into her personal account in 2004.

WISD’s review found the $2,031 check, which was cut on July 27 to cover expenses for a Downtown Waco Inc. luncheon and a $2,000 advertisement in the agency’s Economic Resource Guide. It was deposited the next day into Mills’ personal account at First National Bank of Central Texas. Downtown Waco Inc. does not have an account at that bank, but Mills endorsed it as “Downtown Waco Inc.,” adding her bank account number and initials.

First National Bank of Central Texas chairman Monte Hulse said he could not comment on a particular account. But in general, he said his bank would not bar the authorized agent of an organization from depositing a check into an account that did not bear the organization’s name.

“If the CEO of an organization endorses a check properly and has been given the authority to manage (the organization’s finances), they have the authority to put the check into any account they want,” he said. “It’s not what we would call a fraudulent endorsement.

“It’s unusual, but not illegal or fraudulent. It could be a reimbursement. We don’t know the inner workings of any organization. A lot of things could take place and not raise a red flag.”

jbsmith@wacotrib.com

757-5752