By Tim Farley
A federal lawsuit initiated by former Yukon city manager Grayson Bottom against current and former city officials has been dismissed, court records show.
Bottom, whose contract renewal was postponed indefinitely on Dec. 1, 2015, submitted a resignation letter three days later. Bottom alleged in the lawsuit he was asked to leave and did not receive his contractual severance payment. Bottom claimed he was entitled to a year’s salary as severance. At the time, Bottom was earning $145,000 a year.
Yukon City Manager Jim Crosby said city officials are pleased the lawsuit was dismissed, but acknowledged that Bottom could appeal the decision by U.S. District Judge Scott Palk, who ruled Bottom’s due process rights were not violated as alleged in the lawsuit. Palk also wrote in his decision that Bottom’s employment rights were not violated because Oklahoma is an at-will state.
In addition, under Yukon’s charter a city manager serves at the pleasure of the city council and can be removed from office at any time with a majority vote.
Bottom’s attorney, Joe White, could not be reached for comment.
Crosby also said he did not know the status of the city’s counter-claim against Bottom.
“We have not met with our attorneys to find out where we stand on that. As far as I know, that lawsuit is still pending,” he said.
The city’s lawsuit against Bottom alleges he failed to comply with state mandated competitive bidding requirements and misled Yukon City Council members about the municipality’s true financial position.
Although no money was missing, city leaders said $1.3 million was misappropriated when bond funds for capital improvement projects were transferred to a general operating account to pay monthly bills.
City officials claimed in October 2015 the city council was unaware of the transfer of money. A forensic accountant later discovered the city “had been using its reserves to pay expenses for a number of years” and did not have enough money to pay its bills for the rest of the 2015-2016 fiscal year.
According to the audit and the counterclaim, Bottom participated in a practice known as bid-splitting by purchasing poly-carts from a Canadian company, IPL, Inc.
Bottom “directed or authorized several purchases” by the city and the Yukon Municipal Authority in excess of $25,000 without utilizing the required competitive bidding procedure.
The lawsuit claims Bottom did not bid or purchase the poly-carts through the state bid sheet.
The lawsuit alleges Bottom also did not disclose to the city council fund deficits in several city accounts. The forensic audit uncovered evidence that the city’s overall cash and investment balances declined $9.5 million from 2012 to 2015 as a result of spending more cash than received during that time period. Bottom was the city manager during that time.
In addition, the lawsuit claims Bottom prepared a fiscal year 2016 budget that, if realized, would have resulted in an additional decline of $3.6 million.
The lawsuit also alleges Bottom instructed city employees to inappropriately use restricted funds. In one example mentioned in the lawsuit, $1.3 million of restricted construction money held by a trustee bank was used to pay city operating expenses instead of paying the Corps of Engineers for a water tower project.
In another instance, $1.3 million of restricted sales tax money was improperly appropriated as unrestricted revenue in the general fund budget rather than used to meet the city’s required reserve amount.
“Bottom’s conduct was intentional and malicious, or at a minimum in reckless disregard of the rights of the city and the YMA,” the lawsuit claims.
As a result of Bottom’s actions, the city’s bond ratings declined, assets were depleted and city officials were forced to make emergency cuts on planned expenditures. In addition, employees were laid off, utility rates were raised and the was forced to implement other “drastic recovery efforts,” the counterclaim alleges.
The lawsuit alleges Bottom violated the Municipal Budget Act by not disclosing to the city council that expenditures exceeded available fund balances. In one case, Bottom ordered a transfer of $1.2 million of restricted sales tax revenue from the general reserve account to the city’s pooled bank account without specific city council approval and legal authority.
Bottom is accused in the lawsuit of failing to prepare a legally required budget for the Capital Improvement Fund, Public Employees Sales Tax Fund and the General Reserve Fund.