"I can tell you one thing -- it's all (expletive), and it's getting ready to come to roost," Fillingame said in an interview after the council's decision.
At the council's Aug. 18 meeting, council members noticed nearly $300,000 missing from the DOJ forfeitures fund and called for authorities to investigate. The mayor told the council the DOJ money was being deposited into the city's general operating account and "was definitely being spent on the police department." However, the general operating account had a balance of only about $80,000 at the time.
Becky Hammond, an auditor hired to investigate the forfeitures account as part of a DOJ mandate on the city, delivered her findings Tuesday night after months of speculation by council members that the mayor was borrowing from the DOJ fund to cover the city's cash-flow problems. Hammond said if the council does not place the total amount into a restricted checking account, the DOJ will demand a reimbursement. About $21,000 is in a newly opened account restricted to DOJ funding, bringing the balance the city owes to about $300,000.
According to federal affidavits obtained by the Sun Herald in 2015, the last time the police department spent any DOJ forfeitures money was $1,207 in 2011. Hammond made similar statements Tuesday that affirmed the Sun Herald's previous reporting, saying the affidavits indicate a total of about $45,000 spent over a six-year period.
"In 2011, something happened with the restricted accounts, and they were all closed," Hammond said, adding she saw no signs of illegal activity or malfeasance on the part of any city employees.
But when city leaders asked what happened to the money, Hammond's answers caused some confusion.
"She would say one thing," Councilman Jeffrey Reed said, "and then when one of the councilmen questioned her, it was like she was on one side of the fence and then she was on the other side of the fence.
"We owe $300,000. That's the bottom line."
Hammond was tripped up several times during the meeting while trying to field a barrage of questions from the council, the mayor and city attorney Donald Rafferty. When Fillingame asked her when the financial problems began, Hammond said she reviewed records dating to 2007. Fillingame has been mayor since 2009.
"This has been a problem going back a long ways," she said.
According to the city's general ledger, she said, the money wasn't spent or moved around. However, under more-specific questioning by several council members, Hammond said the money wasn't actually in the city's accounts.
"In 2007, actually, the accounting appeared to be different," she said. "It looks like the pooling of cash was set up in 2009."
"Do we know what this $300,000 was spent on?" Councilman Joey Boudin asked.
"It hasn't been spent," Hammond said. "(About) $45,000 of it was spent. The other $321,000 is in your accounting."
Seeking clarification, Boudin asked, "In our accounting -- but not in our accounts?"
The seemingly confused city leaders began prying for a simpler explanation, to little avail.
A "much bigger accounting" would be required to determine where things went wrong," Hammond said. "It's not clear" ... "You can't just find that bucket of money."
She compared Bay St. Louis' situation with one she recently encountered in St. Bernard Parish where there was "basically, borrowing from restricted funds."
Pressing for a more definitive answer, Favre asked if the money was misspent.
"Again, I couldn't verify that because of the restricted nature of funds," she said.
Asking more bluntly, Favre said: "But if we would have spent it correctly, we wouldn't have to pay it back?"
"Correct," Hammond said in response.