The bureau has spent the last six months dealing with the alleged embezzlement of more than $500,000 by its former executive director, Debbie Dusenbery.
That investigation is officially closed after reviewing the findings and after Dusenbery's death of an apparent self-inflicted gunshot wound in a remote area of Arizona.
Representatives of the bureau, local law enforcement and accounting firm Solga and Jakino PA appeared before the Council on Tuesday to answer questions about the investigation, how the embezzlement was possible and what the bureau has done to stop it from happening again.
"When we were first retained, we were all under the impression that it (the embezzlement) went back two years, based on (Dusenbery's) confession," said Brandon Jakino, who performed the forensic audit. "When we got to work, we realized that it went back to the beginning of her employment, back to 2006."
According to Jakino, there were policies in place at the bureau which, if followed, would have made the embezzlement nearly impossible.
"There was a segregation of duties breakdown," he said. Dusenbery "gained the trust of the board and circumvented the policies which were in place."
Instead of clearing each check the bureau issued with board members, Dusenbery had a stack of presigned checks that she could fill out at her own discretion.
"The register of the check in the books would say New Mexico Tourism Agency," Jakino said. "The check would actually be to her credit card. You couldn't see the fraud without a check-by-check flip."
The fraud centered around three main transactions. Funds were paid from the bureau's account to a Wells Fargo checking account, an American Express card and a Wells Fargo business card.
Dusenbery allegedly took $52,000 in 2006, $72,000 in 2007, $85,000 in 2008, $53,000 in 2009, $85,000 in 2010 and $134,000 in 2011 and 2012 combined.
The investigation may be closed, but officials at both the Farmington Police Department and the bureau are hoping to recoup at least some of the money.
"There is some money," Farmington Detective Robert Perez said. "We have recovered some property; a couple of vehicles, a Grand Cherokee as well as a fifth-wheel, and there are other items that we are probably going to probate like a residence and some small accounts. The accounts that were remaining are not significant. I don't see that it's possible to recover funds in the amounts that have been lost."
Mayor Tommy Roberts wanted to know if there was any indication of outside collaboration.
"I will tell you this. In releasing the report to the board I have closed the case," Perez said. "Unless I receive further direction to investigate those exact issues, then the investigation is done. There are indications, red flags, that there is that potential, but it's a document case and it's going to take Mr. Jakino or some other financial firm to look it over."
Potentially there are others who knew and benefited greatly from the embezzled funds, but that investigation has stopped because of lack of funding, Perez said.
The city contracted with a forensic accountant and allocated $50,000. Those funds are now gone.
To contract for more than $50,000, the city would need to put the contract out for bid, which would have delayed the investigation.
The visitors bureau is funded by the city's 5 percent lodger's tax. The bureau receives 70 percent of the approximately $1.2 million the tax generates annually, which works out to approximately $840,000. Of that, the bureau has direct control over 70 percent. The other 30 percent is held by the city to pay for bureau-sponsored advertising.
"So comparing apples to apples, we are talking about 22 percent of the money that there was unfettered access to was frittered away," Councilor Jason Sandel said. "My question is if the CVB has been able to function with 20 percent less money, should we be looking at different ways to use that money? I understand that we have protections moving forward, but for five years we had 15 to 20 percent less and have been able to live without it."
Visitors bureau board president Larry Baker assured the Council that when the bureau makes its next budget, that will be an important question.
"We will be critically evaluating budgets in terms of where we spend funds in the future and whether that can be done with less money or more money in the future," Baker said.
Sandel also wanted to know if the bureau had professional liability insurance.
"We have, I assume, some type of criminal and civil capabilities at our disposal to come after the CVB?" he asked. "I would assume that the CVB had some type of E&O (Errors And Omissions) insurance."
If the bureau had professional liability insurance, the city could sue the bureau and the insurance might cover the missing funds.
But Dusenbery let the insurance lapse without the knowledge of the board, Baker said.
Baker didn't know when the insurance had lapsed, but according to City Attorney Jay Burnham, it might be possible to recover funds from the years it still was active.
"The language in the contract just says use of funds. They will be expended for these purposes," Burnham said. "We could sue for breach of contract failure to adhere to that paragraph. But just as any lawsuit, there are gray areas. Basically we could claim our damages to be the amount of funds that were expended properly."