DRUG FUND AUDIT WILL 'DISCREDIT' MPD, CHIEF SAYS

The city's police director has warned his boss, Mayor Willie Herenton,
that an exhaustive state audit of undercover operations to be released
Thursday will "discredit the reputation" of the department.

In his Oct. 27 letter, Director Bill Oldham also said that a parallel
investigation by the FBI and TBI could lead to criminal charges.

For months, auditors from the state Comptroller's Office have examined
how the department's Organized Crime Unit spends and accounts for
money confiscated in drug investigations and arrests. The
comptroller's report is to be released Thursday afternoon in Nashville.

"The audit culminated with a number of findings, which will show a
lack of accountability, the use of improper procedures and very poor
documentation to support expenditures of these funds,'' the director
wrote.

"All of this certainly will discredit the reputation of the Organized
Crime Unit and the Memphis Police Department.''

The letter was distributed Tuesday to members of the Memphis City
Council under a cover letter from Herenton who described it as a "very
sensitive correspondence.''

State auditors began their work after The Commercial Appeal reported
misuse of funds taken from drug dealers. The auditors examined how
funds have been spent for travel and entertainment and scrutinized the
department's cash payments to informants as well. Even use of money
from department vending machines was examined.

The newspaper reported in April that credit cards, issued in the name
of a fictitious company and intended for use by undercover drug
officers, were being used to fund department travel, meals and office
supplies beyond normal purchasing procedures. In all, records showed
$150,000 in purchases over a three-year period.

The newspaper reported one instance in which former police director
Walter Winfrey's wife used the covert credit card to purchase clothing
from a Idaho ski outfitter while accompanying him to a police chief's
conference. The purchase was later reimbursed.

In addition, the newspaper found that large sums of cash - as much as
$80,000 - intended for use in drug investigations were being kept in
an OCU vault and available for travel and a variety of unintended uses.

Public records also raised questions about the travels of some
department employees. Using credit card and cellular phone records,
for example, the newspaper tracked one employee to a midday meeting in
Los Angeles with lawyer Johnnie Cochran.

At the time, Lt. Charles Newell was supposed to be 275 miles away in
Las Vegas, attending an anti-gang conference.

Similarly, the records raised questions about the travels of then-OCU
Cmdr. Brenda Jones. Records showed, for example, that calls were made
on a department cell phone assigned to Jones from cities other than
where she was supposed to be attending a conference paid for with
confiscated drug funds.

"It should be noted that prior to the audit, many procedures had been
put in place to bring procedures at OCU pertaining to travel and the
use of credit cards into compliance with city policy and Tennessee
state law,'' Oldham wrote. "As the audit continued, the unit made
adjustments, especially in the area of the handling of cash funds, to
bring the unit into compliance with state procedures and state law."

Oldham said the department sought the criminal investigation now under
way and continues to cooperate with FBI and TBI agents.

"It should be noted that this investigation could possibly lead to
criminal indictments,'' he told the recently re-elected Herenton.

Once that investigation is complete, administrative charges would be
pursued "where applicable,'' Oldham said.

Reached late Tuesday, the police director would not elaborate on the
contents of his letter, saying it spoke for itself.

But Oldham added, "I want people to know that we are going to do
whatever needs to be done.''