Bessie Smith Cultural Center board Chairman Jeffrey Wilson speaks Thursday in Chattanooga at a news conference to discuss a recent audit. Standing with him, from left, are board members Irvin Overton, Vanessa Jackson, Marge Flemming and Roger Brown.Bessie Smith audit findings include:• Uncounted cash from Bessie Smith Strut left overnight in a locked desk drawer.• None of the staff knew the combination to the office safe.• The center doesn't use its alarm system.• The center's staff said they ordered 16,000 wristbands for the strut, but the vendor confirmed only 12,000 were ordered and shipped.• The center didn't document how many wristbands were sold at the gate.• The auditor couldn't verify how much money was collected in beer sales because the cash was pooled with the total from admission sales.
Bessie Smith Cultural Center officials had no idea how much cash was coming in or going out during this year's Bessie Smith Strut, according to an independent audit that investigated the theft of tens of thousands of dollars after the annual blues-and-barbecue party.
At the end of the celebration on June 9, employees collected all the cash in an office room, stuffed the money into a desk drawer, uncounted, then locked the drawer and stuck the key into an open safe that wasn't locked. The staff then left the center without turning on the alarm, which the audit report found was common practice.
But what the Bessie Smith employees should have done -- standard practice for handling cash -- was to count wristbands before the event even started, to track sales; to have the managers total the individual cash bins separately; and to deposit all the proceeds in the bank that night, according to auditors.
In July, former Bessie Smith employee Torrey Hines admitted he stole about $42,000 in cash from the office drawer. Later, cultural center officials said about $88,000 was missing.
The audit couldn't determine how much cash actually was collected that night.
Auditors found that the center's earnings from beer and wristband sales and donations could be around $46,000, but because the staff didn't keep track of how many wristbands were sold, that number could be higher or lower.
Bessie Smith board Chairman Jeffery Wilson said Thursday the board is reviewing the staff's actions and will make essential changes to how the center operates the Strut in the future.
Wilson said the Strut is the largest event the center has hosted for the past three years and he partially blamed the mishandling of the money on the large amount of cash the festival generates.
"It's a unique event, an enormous undertaking, and in hindsight we should have had a lot more training involved," Wilson said at a news conference Thursday morning. "Because you're dealing with a lot of cash money."
But Pete Cooper, president of the Community Foundation of Greater Chattanooga, pointed out that the financial controls nonprofits use when conducting large fundraising events are often indicative of the groups' everyday bookkeeping.
"If they're taking cash at the door for anything, getting checks in the mail, selling items in the gift shop, they should have a series of dual controls in place to manage that," he said.
The cultural center took over the Bessie Smith Strut -- a popular event on Martin Luther King Boulevard to celebrate native blues singer Bessie Smith during the nine-day Riverbend Festival -- in 2012 when the city pushed to move the event to the main festival site at Ross's Landing.
The center -- comprising an African-American museum and an event hall -- operates on a budget that hovers around $500,000 a year. The building is leased from Chattanooga and Hamilton County and the city contributes $60,000 in taxpayer funds for operations. The city also pays for capital expenses, such as repairs.
When it picked up the Strut, the Bessie Smith Cultural Center's gross proceeds from special events more than doubled from the previous year, to $175,000.
Councilman Moses Freeman said Thursday that based on the audit findings, the center didn't appear to have any controls in place any of the three years it has operated the Strut. He wants that to change, saying the board should immediately put controls in place to ensure this can't happen again.
"I think it's a case of mismanagement and probably misfeasance," Freeman said. "But everybody now is going to be alerted to how serious and important it is to have these controls in place. I look forward to the day when the community at large will have a restored trust in the Bessie Smith Cultural Center."
When the money was stolen the board also commissioned a panel -- made up of Jim Pulliam, director of safety and risk management at the University of Tennessee at Chattanooga; Gail Dawson, a UTC professor, and James McKissic, director of the city's Office of Multicultural Affairs -- to look at how the center managed the Strut and to make suggested changes.
Some of the recommended changes include:
• Clear accountability, annual training and tighter control over wristbands.
• Better procedures to track funds received, disbursements and deposits.
• Improved safety and security, including limiting key access, functioning security system and working safe.
But Cooper asked whether the board also needs to look at its entire financial management structure.
"Typically that [type of situation] can only happen when there's something rotten there," he said. "You shouldn't have a situation where there's that much cash sitting around unattended for any period of time."
Contact staff writer Joy Lukachick at jlukachick@timesfreepress.com or 423-757-6659.