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Atlanta inspector general says ex-mayor Reed misled city about $80K+ in spending; claims it was salary he never took

A spokesperson for the former mayor said the amount is easily covered by salary Kasim Reed declined to take while in office.

ATLANTA — A new report by the City of Atlanta's inspector general alleges former Mayor Kasim Reed misled the city about where more than $80,000 in payments for health insurance and charitable donations came from and the report recommended the city seek reimbursement from Reed.

A spokesperson for the former mayor, who lost a bid last year to return to the office, said the amount is easily covered by the salary increase Reed declined to take while in office.

The report notes that Reed declined to take the pay raise after the City Council approved it in time for his second, four-year term, beginning in 2014.

It alleges that Reed misled the city in three instances about where the money came from to pay for his health insurance after leaving office, a 2017 outreach trip to South Africa and a donation to Howard University.

Read the full inspector general report here

It says the city passed an ordinance to provide for any salary that the mayor declined to go into a special distribution account to be used for charitable donations. The inspector general said the Reed Administration, instead, used money from city funds for the expenditures. 

The inspector general's report says a review, looking for the account where Reed was holding his unused pay raise, "revealed that Reed's distribution account did not exist."

11Alive's Jon Shirek reached Reed by phone at his law office in Atlanta and Reed declined an interview. He referred 11Alive to a statement from his spokesperson, which called the inspector general's report "inaccurate and grossly misleading."

The spokesperson highlighted a line at the end of the report which notes that one of the inspector general's recommendations is to "issue a W-2 or payment to Reed for any income that should be credited to Reed."

"The last page of the Inspector General’s report clearly shows that Mayor Reed is owed tens of thousands of dollars by the City of Atlanta because he declined his pay raise for his second Mayoral term (a promise that was documented publicly in 2012)... The amount deferred by the Mayor clearly covers the amounts discussed in this story which is now more than four years old," the spokesperson said.

The report does note that Reed "may be entitled to the difference between his actual salary and entitled salary" from January 2014 to 16. It also says if the city seeks reimbursement for the roughly $83,000, it should "calculate and, if deemed appropriate, issue Reed a W-2 or a check for any owed salary" beyond the $83,000.

But the report sharply criticizes Reed and his staffers for allegedly misrepresenting where the money came from.

According to the report, members of Reed's administration "arranged for an improper transfer of $24,465" in 2018 to pay for his health insurance after he left office. The money, which was supposed to have come from the special distribution account, instead came from the office of the Mayor's general fund, the report states.

Later, a $40,000 payment for the South Africa trip (made to a charitable group that then used it to reimburse the city for the trip) and an $18,514.24 donation to Howard University were allegedly made with city Department of Human Resources funds "and not Reed's salary," according to the report.

"Reed's representatives justified the usage of these funds on the basis that they were from Reed's declined salary," the report notes. "Despite these assertions, none of Reed's salary was used to fund these disbursements. The disbursements were made with unrelated (City of Atlanta) funds."

In a statement, Atlanta City Council President Doug Shipman said he had not yet reviewed the report.

"I plan to do so thoroughly and discuss the findings with the IG. Transparency and accountability are vital to serving Atlanta Residents and I plan to work quickly with the entire City Council to determine the appropriate course of action given our oversight role," Shipman said.

The response from Reed's spokesperson pointed to other donations made by the former mayor out of his declined salary.

"In what world is it appropriate to personally attack an individual for declining a pay raise and using those funds for charitable purposes?" the statement said. "Notably, this report did not reference the more than $50,000 that was donated to the Mayor’s Youth Scholarship Program as a result of deferring his pay raise. These funds were used for the purpose of advancing economic development and helping Atlanta students attend college. Anything to suggest otherwise, is simply incorrect.”

The inspector general rejects that the money was Reed's declined salary.

"In the public discourse surrounding Reed’s 'forgone salary,' the Reed administration repeatedly asserted that funds being directed according to Reed’s wishes were not public funds. They were."

The report says, "Reed’s administration was aware that Reed’s distribution account was unfunded even as it made representations to the Council that the requested donations would be funded by declined salary within Reed’s distribution account. After securing approval from the Council for several disbursements, despite having no accrued declined salary available, Reed’s administration used unrelated (City of Atlanta) accounts to fund these disbursements."

It goes on to allege that when it was discovered that payments were made without the City Council's approval, "Reed's representatives misinformed the public about the funds used."

"The funds that were to have belonged to Mayor Reed were never awarded, never segregated into a disbursement account, and never spent for the public’s benefit," the inspector general concludes. "None of Reed's salary had ever been set aside or transferred, nor was any distribution account established."

   

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