News
Nelsonville poised to collect more than $683,000 following long investigation
By: David Forster
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ATHENS, Ohio (WOUB) — The city of Nelsonville discovered it is owed more than $683,000, and this week the City Council approved a plan to get that money.
This followed months of investigation by the city’s auditor into a large sum of money set aside for the city by Betty Johnson, a longtime resident who died in December 2007.
The investigation by Taylor Sappington raised questions about who actually owned the money and why it wasn’t until nine years after Johnson’s death that the city started receiving any disbursements.
Some of the details are still murky, but what is known is that years before her death, Johnson set up a trust and named the city as one of the beneficiaries.
But it appears the city did not become aware of it until sometime in 2014 or 2015, Sappington said. The city’s understanding at the time was that the money in the trust did not belong to the city. Instead, Raymond James was managing the money, investing it in stocks and bonds, and the city would be paid annual dividends.
The first dividend payment, $6,677.05, arrived in December 2016, Sappington said. And each year after, he said, the city received another dividend in the range of $6,000 to $10,000.
Sappington, who had been a member of the City Council, took over as auditor in 2019. He learned the city was receiving regular statements on the investment performance of the trust. That seemed odd, he said, because those statements would go to the owner of the trust funds.
Then in late 2020, he learned that Raymond James had been trying to reach him regarding a change to the trust. It turned out that internal auditors at Raymond James were raising concerns about where the money was being invested, Sappington said.
Raymond James wanted to add Sappington’s name to the account so he could authorize a change in the investment portfolio to address those concerns. This also struck him as odd: Why did he need to sign off on how the funds were invested since it wasn’t the city’s money?
Or was it?
Sappington started requesting more documents related to the trust. He reached out to attorneys, to former Nelsonville city officials, to people who knew Johnson and might shed some light on her intentions. He tracked down a former employee of a now defunct financial services firm who had helped draft the trust documents.
And then he came across a letter from Wilmington Trust to Raymond James. It was dated Nov. 15, 2016, and said Johnson’s trust was being dissolved following the death of her son, whom it appears was her only heir. The money was to be distributed equally between the city and the First United Methodist Church.
Sappington believed this proved the city owned its share of the trust and was entitled to all of the money, not just dividends.
“Nobody at the city had seen this letter,” he said, and he couldn’t determine whether it had even been sent to the city.
Sappington said he reached out to Raymond James about the letter but couldn’t get a clear answer on who owned the money.
“I felt that we were getting something of a runaround and it didn’t sit right with me,” he said. “It didn’t add up.”
At this point, Sappington asked other city officials for help, instructing Raymond James to pull the city’s share of the money out of the stock and bond markets.
It’s illegal for cities to invest public money in the markets, he said, and he wonders if this was the reason Raymond James’ internal auditors were raising concerns about the investments.
Nelsonville’s city attorney went to court and got a judgment that there were no living heirs and the money belonged to the city.
On Monday, the City Council authorized city officials to create a new fund in Johnson’s name and to recover the money from Raymond James and place it in the fund.
Sappington said that once this happens the city will begin a process of soliciting input from the community on the best way to spend the money to honor Johnson’s legacy.