JOHNSON COUNTY, Tenn. (WJHL) – Tennessee financial investigators outlined their case against two municipal employees of Mountain City, Tenn. on Thursday. An investigation released by Tennessee Comptroller of the Treasury Jason Mumpower alleges Mountain City recorder Sheila Shaw attempted to cover up thefts by one of her former employees.
As detailed in a press release from the Comptroller’s office, investigators allege bookkeeper Donna Nelson stole nearly four thousand dollars of town money by failing to return payments provided by town residents after certain checks bounced. Funds provided by Mountain City residents were allegedly kept out of city accounts for years, and state investigators said in their report that some money was used for Nelson’s personal purchases.
According to the release, Nelson also allegedly cashed 11 personal checks from herself and family that also bounced. After Nelson had the cash, investigators say she did not return it to make the town balance whole. Once Shaw was aware of Nelson’s actions, the release says she held off on returning cash to avoid getting Nelson caught.
“Mountain City Recorder Sheila Shaw failed to impose one of her duties by failing to deposit at least $5,582.63 in cash,” the report reads. “Shaw kept this cash in her office, and some of the money had been collected more than a year prior. Shaw told investigators she did not make deposits in a timely manner because she believed someone may realize what Nelson had been doing.”
Nelson resigned in September 2021, and Shaw was suspended without pay Thursday morning by Mountain City Mayor Jerry Jordan.
Shaw and Nelson were charged with official misconduct in connection to the investigation, with Grand Jury indictments handed down Friday. Nelson was also charged with felony theft. The report alleges she stole at least $3,959 in town money.
Mayor Jordan says Shaw and Nelson both worked for the town for decades and this all came as a shock.
“Bad decisions were made, or wrong decisions were made, it’s a sad situation,” Jordan said Thursday. “The town was in full cooperation of the investigation. We aren’t trying to hide anything. We are very sorry this happened. I hate it for the two parties involved.”
The mayor added that the town is now left picking up the pieces and working to make sure all duties of the city recorder’s office are completed as an interim recorder has yet to be announced.
“We are working to take care of all the city hall duties and make sure everything continues and the town functions properly,” said Jordan.
Duties of the recorder’s office include collecting resident payments for water and sewer, paying town bills, check writing, tax bills and handling correspondence for grants.
Jordan defended the city recorder, saying these actions seemed out of character.
“It’s disheartening, a disappointment. She was a very good city recorder. She worked numerous hours, was very proficient. The wrong decision was made that created this situation. She’s a very trustworthy person. I hate it very much for her,” said Jordan.
Comptroller Mumpower in the report said to prevent actions like this, the town of Mountain City needs to establish clear procedures for how bad checks are handled.
“This includes developing a formal record of which customers’ payments have been rejected, and when those customers have repaid the town. These records should help the town track and collect its debts,” Mumpower wrote in the report.
Click here to read the full investigative report released by the Comptroller’s office.