Palmertree withdraws claims in civil case

Published 8:55 am Wednesday, January 14, 2015

JACKSON — Lawyers for jailed former circuit clerk Shelly Ashley-Palmertree moved Monday to dismiss her complaint in the nearly two-year civil case in Hinds County Chancery Court, signaling a slow end to the case of more than $1 million in improper payments is near.

Next comes the tough part — figuring out how much she’ll be on the hook for and who’ll pay it.

Palmertree’s Attorney Marc Brand’s request of Chancellor Dewayne Thomas got no objection from counsel for Warren County and the Office of the State Auditor when the motion was made, some seven hours into Tuesday’s testimony. Thomas directed attorneys for the county and state to prepare a finding of facts and terms of a summary judgment by Feb. 16. CNA Surety, a third party in the case, which has fought in court reimbursing any improper financial activity, has until March 16 to respond. The firm insured Palmertree and most other elected officials until her legal woes began. The state and county then has until March 30 to respond to any response from the bonding company.

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Palmertree was not in court Tuesday, as she had waived her right to be there, Brand told the judge. She is serving a five-year prison sentence in the Central Mississippi Satellite Facility for women in Flowood for embezzling $12,000 from her office’s civil and criminal accounts in 2012. She faces more criminal charges this April after an indictment in October that alleges she embezzled $100,000 from her office’s restitution fund in 2013 and early ’14. She was removed from office last May by county supervisors after OSA investigators turned up evidence she had declared residence in Canton in 2013.

Filed by Palmertree against the county and State Auditor Stacey Pickering in March 2013, the case’s central issue is whether she owes the county $671,751.75 in excessive salary above the state-set cap for circuit and chancery clerks and questionable subcontractor payments to her father and predecessor in office, Larry Ashley.

The amounts cover activity from 2006 through 2011. The state and county countersued and contend the payments were improper. The state and county amended their complaint to include payments in 2012 deemed improper, bringing the total claim to more than $1.04 million.

Court-ordered mediation talks after the first three-day run of testimony in December 2013 broke down a month later, reportedly due to the bonding company’s hesitance to cover any of the debts. Three more days of testimony in April 2014 included an expert accounting witness for the clerk and current and former investigators with the auditor’s office before Thomas continued the case to this month.

Tuesday’s testimony picked up where last April’s proceedings began, with Ben Norris, a retired deputy director of investigations for the auditor’s office, on the witness stand. He was questioned by CNA attorney Ron Yarborough on whether he thought the Board of Supervisors should have known about financial impropriety in the clerk’s office sooner, based on audits they accepted each year.

“I don’t expect anything from officialdom,” Norris said. “I don’t mean that in a bad way.”

David Bridgers, the county’s contract auditor for the past decade, took the stand and answered questions about audits dating back to Larry Ashley’s time in office. He said a $279,000 chunk of money that he claimed he owed the county — and part of his daughter’s original offer to the court to trade her debts for his — was placed into the office’s fee account from the civil and criminal accounts. Shelly’s term, as a result, started in 2004 with the accounts already in a hole.

“It’s money that should have been paid back to the civil and criminal account,” Bridgers said, adding past experience with similar cases in other counties have ended up landing in the lap of county boards to sort out. “It’s my opinion the supervisors of Warren County will be dealing with this for the next several years.”

Insurance agent John Hennessey, who wrote bonds for CNA’s subsidiary, Western Surety, for years, testified to dates on Palmertree’s final bond being issued in September 2011, more than a month prior to that year’s general election which saw her re-elected to a third term. He said it was customary for a chancery clerk to facilitate ordering another one in case an elected official wasn’t re-elected.

In a peculiar move, Yarborough attempted to enter Sheriff Martin Pace’s current bond into evidence while questioning Hennessey on various procedural matters with filing bonds. Thomas asked him his reasoning for doing so, to which Yarborough said he had mentioned it on the stand.

“He can talk about the president’s bond, too, though,” Thomas replied, and the subject changed.

The line of questioning was allowed to stand over the state’s and county’s objection, as Yarborough said the governments had not sent him a request for production of documents in the case.