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Alabama lawmakers call for AG probe into occupational licensing firm for potential ‘theft, fraud’

MONTGOMERY, Ala. — Some Alabama lawmakers want the Alabama Attorney General to investigate whether the recently-documented mismanagement of a state occupational board may have included illegal activity.

Smith Warren Management’s third-party oversight of multiple licensure boards has been questioned multiple times since 2023 by the Legislative Sunset Committee. But a recent audit of the Alabama Board of Electrical Contractors has some lawmakers calling for the involvement of the state’s top law enforcement officer.

“I think that may be a question for the Attorney General’s Office to look into to determine whether or not theft, fraud or even if there’s an ethics violation for some of the stuff here,” Rep. Matt Simpson, R-Daphne, told Alabama Daily News after a contentious Sunset Committee hearing at the State House.

The Sunset Committee meets at the Alabama State House in Montgomery for a hearing Oct. 24.

The Electrical Contractors Board is one of dozens state occupational licensing boards that regulate and license professions. And up until last month, was managed by Smith Warren Management, as are several others.

Smith Warren was paid $510,000 a year, or $42,500 a month, to provide administrative services for the Electrical Contractors Board. 

However, a recent audit covering October 2022 to October 2023  found that Smith Warren Management had billed the board for additional personnel beyond what is permitted by statute, failed to properly document nearly $100,000 in receipts, and purchased a $32,500 vehicle without prior board approval as is required, among other issues.

Keith Warren of Smith Warren Management was present Thursday for an earlier discussion of a board he manages, but left ahead of the Electrical Contractors Board being questioned by the committee.

“The person who was monitoring and responsible for this board didn’t stick around for this question, and that’s not surprising to me,” Simpson said.

Rep. Matt Simpson during an Oct. 24 meeting of the Sunset Committee at the Alabama State House in Montgomery.

While Warren declined to comment on the matter to ADN, he did say, in a letter penned to the committee chair, that he could not participate in the hearing as he was not provided with the audit report in advance. He also did not outright deny the allegations made against him, but provided additional context to his decisions while managing the board.

At the meeting, Simpson recounted the various issues with Smith Warren’s Management’s conduct in managing the board, with board member Jeremy Atchley telling Simpson that it was only in April that he and other board members “realized that it was a situation where we felt like we were getting taken advantage of.”

“In the question of the vehicle, we only found out about the vehicle just a few months ago when we actually were starting to ask questions of what’s going on with these comments and questions that were coming to us behind the scenes,” Atchley said.

However, while the vehicle was still purchased without prior approval of the board, which is outside the authority of Smith Warren Management, board members did retroactively approve the purchase in November of 2023 during a meeting Atchley was present at, according to board meeting minutes provided by Warren to the Sunset Committee.

On Smith Warren Management hiring additional personnel beyond what is permitted by statute, the audit found that the firm had paid $30,868 for an investigator, despite already charging the board $60,000 a year for investigative services, and $44,430 for a policy director and state government liaison, plus a combined $6,962 in benefits.

That policy director, Alva Lambert, was a state retiree, who under state law, cannot be compensated more than $37,000 a year by a government entity also participating in the state’s retirement program.

According to Atchley, when this violation was discovered by the board and Lambert was asked about it, he made a quick exit.

Alabama Board of Electrical Contractors member Jeremy Atchley speaks during an Oct. 24 meeting of the Sunset Committee at the Alabama State House in Montgomery.

Visibly frustrated, Simpson argued that the amount Warren Smith Management was charging the board for administrative services was “taking advantage of other peoples’ money to just throw more in their pocket.”

Licensure boards are funded by fees and fines paid by the people they regulate.

“They have to pay these licensing fees, so money taken from hard-working electrical contractors to the extent of $510,000 was not enough to do their job, they needed to take a little more,” Simpson said.

In 2022, the board licensed about 5,100 people and had about $825,000 in revenue.

Warren, who up until last month acted as the board’s executive director, was not the only target for criticism during Thursday’s hearing.

Hendon Coody, who’s been the board’s legal counsel for 15 years, was questioned by Rep. Margie Wilcox, R-Mobile, the co-chair of the committee, as to how Smith Warren Management’s conduct, particularly charging the additional $82,261 to the board for, in part, services it was already paying for, was allowed to go on for so long.

“I’m a little shocked that, since you’re on retainer and you’ve been there for 15 years, the level at which they’ve been taken advantage of,” Wilcox said. “Do you have any plans to help them recoup any of this money?”

Coody said she did intend on helping the board recoup some of the money, but argued there was no way she could have known about some of the expenditures due, in part, due Smith Warren Management presenting the board with misleading and “inaccurate” financial information.

“The financials that were presented to these board members and to me were inaccurate, (they) showed us to have more money to spend than we had, very much in excess of our income,” Coody, who’s annual salary is capped at $100,000, said. “There was no reason for us to doubt that, as we were told by Keith Warren.”

“Your statement to this committee right now is that the information that was provided to the board was false?” Simpson interjected.

“I didn’t say false; inaccurate, and presented in a way to make the board think they had more money,” Coody clarified. “It was inferred that there was more money at the board’s disposal than there actually was.”

Hendon Coody, legal counsel for the Alabama Board of Electrical Contractors, stands before the Sunset Committee during an Oct. 24 hearing at the Alabama State House in Montgomery.

Simpson was blunt in his belief that were Coody’s claim accurate, the matter should be thoroughly investigated by the state’s attorney general.

“If you’re talking about presenting incorrect information to a board, and then taking more money than what they should be getting, that is something that I absolutely believe the Attorney General’s Office should be looking into.”

Kevin Smith is the Smith in Smith Warren. A certified internal auditor, he provided accounting and financial support for the company’s contracted boards. Smith, who is married to Warren, previously told ADN he left the company in June.

Reached Thursday by ADN, Smith said he hadn’t been included in the audit process, hadn’t been provided the report and could not comment.

Sen. Keith Kelley, R-Anniston, said he felt the “gravity of the situation here is dire, tremendously,” but expressed optimism for the board under its new management.

Tiffany Loveless, who was voted as the board’s new executive director last month, said that going forward, the board will be far more meticulous in its finances, and that the launch next month of a new database would improve efficiency and transparency.

After the meeting, Kelley told ADN that there were “clear violations of the contract or overstepping of bounds” by Warren Smith Management, and that the board should seek to hold the firm accountable for its conduct.

“We’ve got to hold that board accountable, and now they’ve got to hold that management company accountable for the actions they either did or didn’t do,” he told ADN.

Simpson doubled down on his call for the attorney general to look into the matter, telling ADN that an investigation “needs to be done.”

The examiner’s reports are public and the Attorney General’s office is made aware when new documents are released.

Asked about the electrical board report and sunset meeting, the AG’s office said it doesn’t confirm nor deny the possibility of an investigation.

Alabama Daily News’ Mary Sell contributed to this report.

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