Council to get outside legal help regarding alleged misappropriations by mayor

Motion passes 4-3 after hourlong discussion
By Brandon Gustafson | Oct 31, 2018

The Mukilteo City Council, at a special meeting Oct. 29, voted to obtain outside legal help to look into alleged misappropriation of funds by Mayor Jennifer Gregerson in past severance agreements.

The vote passed 4-3 after about an hour of discussion.

Council President Steve Schmalz, Council Vice President Christine Cook, and Councilmembers Anna Rohrbough and Scott Whelpley voted in favor of the motion, which sets aside $10,000 for legal services. Councilmembers Bob Champion, Richard Emery and Sarah Kneller opposed it.

Schmalz brought the idea of retaining outside legal counsel after past discussions involving separation and severance agreements between Gregerson and past employees.

Through public records requests, Whelpley discovered Gregerson signed off on agreements with multiple former city employees awarded more severance than they were allowed, according to their employment agreement.

He also found that some past employees received their payments in one lump sum, as opposed to being paid in agreement with the city’s payroll.

In the agreements, most past employees were allowed two months of severance if fired without cause.

In one instance, former Management Services Director Chris Phillips was awarded one month of severance despite resigning from his position, and despite his employment agreement showing he wouldn’t be offered any severance if he voluntarily resigned.

Since this information was brought forward, the council is now in charge of approving all contracts and severance agreements, voted no confidence in Gregerson’s leadership, and made email records between Gregerson and attorneys public record regarding Phillips’ separation from the city.

Those emails showed the attorney recommended Gregerson bring the issue to the council since it was a variation of a preexisting contract. The issue was never brought before the council.

Whelpley and Schmalz found that multiple RCWs (Revised Code of Washington) were violated when Gregerson signed those agreements, and the city was open to legal action from residents due to the misappropriations of taxpayer dollars.

“It comes down to the separation of powers of city government,” Schmalz said. “There was clearly an overstep by the executive department.”

The city currently has members of the Washington State Auditor’s Office in City Hall for their annual review, and they have reportedly talked to each individual councilmember about any issues that may arise.

Emery felt they should wait to make a decision on legal counsel until the auditors finish their report.

“Many of these issues were brought to the auditors’ attention,” he said. “They’ll say whether it needs more investigation.”

Kneller agreed, and felt they may be spending money when it’s not necessary.

“I don’t see a way out of this without spending less than $10,000,” she said.

Whelpley vehemently disagreed, saying more than $200,000 in city funds have been misappropriated over the last few years. He felt they should get legal counsel so they can understand exactly what they as a council can do going forward.

“If I’m wrong (about alleged violations by Gregerson), I’m wrong,” he said. “But this is how we can close the door on this. Those documents won’t be ratified until we do this, and it leaves the city open for litigation.”

Later, Whelpley said a citizen told him they would sue the city if those past agreements were ratified by the council, which he felt showed even further that they need outside legal help.

As of Monday, Champion said he wasn’t in favor of hiring an attorney, and that the auditors are focusing on payroll, severance and other issues that have been discussed at length at previous council meetings.

“I want to know all the facts,” he said.

Whelpley said the auditors are focusing on what Champion mentioned because of conversations with councilmembers, and will thus discover inappropriate spending.

“If I found it, they’ll find it,” he said. “We can wait, but we’ll be right back here in two months.”

Whelpley said he didn’t understand how some of his fellow councilmembers were so adamant on waiting until the auditor’s report came back.

“We’ve seen the emails. It’s plain as day it’s an RCW violation,” he said. “We have contracts, attorney emails – what other excuse do you want to use to delay this?”

Schmalz echoed Whelpley’s frustration with the whole process.

“We just need someone to stand up for the residents,” Schmalz said. “Taxpayer money is being spent. I find it interesting the approach some are having here. Who’s going to follow the law here?”

Emery said he wanted it to be clear he isn’t opposed to getting legal counsel at some point, but as of Monday, said it was premature.

Whelpley went on to compare the way the city is running to the city of Mill Creek, which recently fired City Manager Rebecca Polizzotto after investigations into charges she misused city-issued credit cards and that she used intimidation tactics to create a hostile work environment for city employees.

“People like to talk,” Whelpley said of past and current city employees. “This isn’t good ladies and gentleman. The city is in jeopardy if we don’t resolve this.”

The motion passed, and the council will now have to approve an attorney, as well as figure out what questions it will be addressing. The city attorney recommended those concerns be discussed in a closed-door executive session at a later date.

 

 

 

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