Challenge of Change Non Success Story: How (and

Challenge of Change Non Success Story: How (and

Challenge of Change Non Success Story: How (and Why) a (The judge reduced to $150K, but he got settled for $300K) fired itCity Auditor a $775,000 Jury Award AGA/ASMC Spring 2019 PDT April 25, 2019 Jay Poole, CPA,CIA,CFE,CGMA (& expert witness!) City Auditor City of Chesapeake, Virginia

1 Facts Portsmouth, Virginia 33.3 square miles (land) Tenth Largest City in Virginia Population 91,940 (2019 Estimate) Budget - $720,102,069 (FY 2019) Employees - 1,858 (FY 2019) Council/Manager Form of Government Hired first City Auditor on April 2, 2013 2 The Portsmouth, Virginia City Council voted to fire their City Auditor on April 26, 2016. WARNING

! Some auditors may find this video disturbing to watch! https://www.youtube.com/watch?v=aIz0NKJZFjQ WAVY TV News 4-26-16 3 This firing occurred after: 6-19-14 6-28-14 7-16-14 9-28-14

4 Some of which included: From Judges Final Opinion January 17, 2019 5 So how could this occur? https://wtkr.com/2018/11/21/jury-saysportsmouth-vice-mayor-defamed-fired - city-auditor-must-pay-775k/ WTKR Norfolk 11/21/2018 6 Heres a Hint https://www.youtube.com/watch?v=RLySXTIBS3c Trading Places - 1983

7 What We Will Cover: Cases Summaries Both Cases How and Why the fired City Auditor won the cases (and why the judge reduced the first jury award) What the City Auditor and City Council did right and did wrong The Medias Crop(ped) report(s) and how they impacted the outcomes Tips to avoid other Challenge of Change Non Successes 8 CASE 1 SUMMARY February 17, 2017 - Case filed against Vice Mayor - $1.5M

November 13, 2018 - Trial began November 19, 2018 - Trial ended November 19, 2018 - Jury awarded $775,000 to fired City Auditor January 17, 2019 - Presiding Judge reduced the award to $150,000 March 7, 2019 (former) Vice Mayor appeals March 11, 2019 - fired City Auditor appeals March 28, 2019 - settlement 9 CASE 2 SUMMARY April 19, 2017 - Case filed against City Councilman - $1.5M March 28, 2019 - $300,000 settlement

plus court costs (for both cases) This outcome was unusual because: - Defamation cases tend to be difficult to win; - The fired City Auditor had been designated as a Public Figure by the court. As a result, his burden of proof was even higher 10 How and Why the fired City Auditor won the first case (and why the Judge reduced the first jury award) https://www.youtube.com/watch?v=1013K8fJfo8 https://www.youtube.com/watch?v=pM1cbckIXSo WAVY TV News 3-10-16 11 Opinion Excerpts Case 1:

Page 2 - In contrast, the statement that she "got nothing for two years was false and implied more than that Plaintiff had not provided regular updates. It suggested that he had provided nothing at all. No updates, no nothing. The jury was entitled to interpret this statement, and they did not accept the meaning that Defendant urged. They apparently did not believe that Defendant was telling the television audience only that she got no regular updates. Page 5 - When defendant spoke about Plaintiff on-camera for approximately 10 seconds in March of 2016, Plaintiff had been bludgeoned by the local newspaper in the above dozen or more articles, all discussing his lack of productivity and insufficient job performance. Page 9 - Moreover, it appears that they intended to punish her for all of the negative publicity that Plaintiff had received and not just the effects of one interview in March of 2016. From Judges Opinion January 17, 2019 12

What the City Auditor got right Outreach to ALGA July 2014 13 What the City Council got right: During Monday's closed session, council members discussed Thomas' performance over a 90day But talk probationary concerns period. often over negative veeredattention.

to media Mayor Kenny Wright repeatedly expressed distrust of city staff members. He argued that The Pilot's coverage has been manipulated by city employees keep Thomas to from uncovering fraud, waste and abuse at City Hall. Meanwhile, the most sensitive issue Thomas described to council members

involved a $3,000 discrepancy in ticket sales at Willett Hall. In the end, five council members -including one who left the meeting early, his colleagues said, to attend a campaign forum - put their support behind the auditor. Three of those Meeks and Vice Mayor Paige Wright, - live in the same gated subdivision as Thomas. Cherry - Cherry, who only briefly attended the meeting and left through a side door, lives two doors from Thomas in the same

cul-de-sac. Only one council member, Bill Moody, advocated to fire Thomas. Councilwoman Elizabeth Psimas, who also had said she wanted to let Thomas go, was attending an out-of-state funeral on the day of the meeting. City Council support for City 14 What they both got wrong: Thomas did concede one area where he has room for improvement: communication. "That's something I need to do a better job with," he said. Meeks, however, offered Thomas some additional

feedback before the auditor left the room. "Can I give you a little bit more advice?" Sure, Thomas said. "The newspaper guy, I wouldn't talk to him," Meeks said. "Don't even say a word to him," Randall added. "I'm just saying," Meeks said. "That's how it all started." "Just simply say, 'No comment,' " Edmonds said. When Thomas left the room, that's exactly what he did. Communication (or lack thereof) by City Auditor and City Council Virginian Pilot 9-28-14 15 Now, about those Cropped reports, 16

Guidance and Advice? "He asked for a copy of our audit plan to see what it looked like," Poole said. Four days later, Thomas shared his audit plan with City Council members. He publicly presented it to the council on July 8. Poole, who has provided guidance and advice to Thomas, reviewed the documents Tuesday at The Pilot's request. Poole acknowledged similarities but said he wasn't offended by them. "It's not copywritten," he said. "He's perfectly welcome to use it." Poole also said new auditors commonly rely on the work of other auditors to guide them. "And then, as circumstances change, they will adapt or make adjustments in the way they present their audit plan," he said. "There's a learning curve." Something is definitely missing here Who are these other auditors? Virginian Pilot 7-16-14 17

We need greater collaboration between cities JAY POOLE doesn't work for Portsmouth, but perhaps he should. The City Council might get a better return, and more credible and comprehensive information, by offering to compensate the Chesapeake auditor directly for his work, rather than finding it slightly altered and submitted by Portsmouth's own auditor. Because that appears to be what happened. Indeed, it's difficult to see how Portsmouth could be worse off without Thomas. His greatest contribution as auditor of Portsmouth so far may be to highlight the office of municipal auditor as one area for greater collaboration between cities. Hmmm Ever heard of Virginian Pilot Editorial 7-17-14 18 Whatd he say? (w/apologies to Ray Charles)

Whatd I Say Ray Charles - 1959 He also noted that Poole's cover letter was not an original. He said it was derived from an Institute of Internal Auditors' template document. As Thomas spoke, City Councilman Bill Moody interrupted him. "Quite frankly - and I'm speaking for me - I don't think it's an efficient use of our time to rebut a week-old newspaper (article)," he said. "I think there's a lot we do need to discuss, but I don't think now's the time to do it. Two other council members, however, encouraged Thomas to finish his presentation, during which he also revealed the risk assessment that he created to decide which audits to do. What did the Council Members actually say? Virginian Pilot 7-17-14 19

What he ACTUALLY said https://www.youtube.com/watch?v=j5BdJ_IUzNk I respect what Councilman Moody is saying but I think its a good idea to board it up since its going to be written up from a different perspective, it needs to be corrected so that all watching will know the right way. Council Member Curtis Edmonds , 7-21-14 Wonder why they didnt quote THIS directly? Portsmouth City Council Work session 7-21-14 20 When the Jury Award was announced Portsmouth vice mayor must pay ex-city auditor $775K, jury rules

2013, a n d t he following Thomas was hired in April three years were tumultuous. The Pilot reported in June that he had logged 2014 into the city's financial system twice in his first 14 months on the job. When he produced an audit plan, 15 months into his tenure, it resembled documents he had received from the Chesapeake auditor's staff

days before. The newspaper revisited these two 21 But completely ignored this Portsmouth auditor defends his work In addition between the letters, two of descriptions in plan comprise appear in summaries, The

to similarities auditors' cover the three audit Thomas' audit sentences that audit Poole's Pilotreported. Thomas said government auditing standards don't specifically address modifying cover letters, but they do approve

of auditors reviewing other auditors' work. He also noted that Poole's cover letter was not an original. He said it was derived from an Institute of Internal Auditors' template document. Virginian Pilot 7-22-14 (from page 4) 22 When the Jury Award was Judgereduced slashes judgment against council member In court records, Connell cited an interview with WAVY-1V reporter Joe Fisher in which Psimas "intended to suggest that Thomas had done nothing since he had been hired as the city auditor." But by the time that interview happened in March 2016, Thomas had "already

been unflatteringly portrayed in many articles criticizing him in The VirginianPilot," Hall wrote in her opinion, quoting 13 pieces about his job performance. Thomas' attorney told the jury that they were "the only people who can restore his reputation" after the comments made on television, but Hall found he didn't show sufficient evidence to illustrate the effect that the interview had on Thomas. "His testimony about the effect of the defamation on him was unremarkable," she wrote, adding that Thomas did not adequately distinguish between the hurt caused by Psimas' interview and that caused by his firing. He wasn't entitled to compensation for damages caused by anything but Psimas' comments, the judge said. Because most of the damages awarded to Thomas were punitive, Hall concluded that "the verdict was the product of passion or prejudice or some misunderstanding of the facts or the law." The article included this Virginian Pilot 1-30-19 23 But didnt include any of this Page 2 - In contrast, the statement that she "got nothing for two years was false and implied more than that Plaintiff had

not provided regular updates. It suggested that he had provided nothing at all. No updates, no nothing. The jury was entitled to interpret this statement, and they did not accept the meaning that Defendant urged. Page 5 - When defendant spoke about Plaintiff on-camera for approximately 10 seconds in March of 2016, Plaintiff had been bludgeoned by the local newspaper in the above dozen or more articles, all discussing his lack of productivity and insufficient job performance. Page 9 - Defendant refers In her motion to a question from a juror which the Court did not permit to be asked, which read: "Does [the witness] believe the articles written about Mr. Thomas were hit pieces aimed to discredit Mr. Thomas' work and tarnish his reputation as an auditor? From Judges Final Opinion January 17, 2019 24 The unfortunate result of this reporting

TWD - But since they were the factual truths GMM - This judgement will be invalidated rel got right: that Psimas and Moody were telling the upon appeal. Laws regarding slander and libel have a much higher threshold for public officials. The lawyer representing Ms. Psimas must have done a very poor job. MW - So much for freedom of speech by an elected official when there is wrongdoing. What about the truth to her statements? That is a defense in these types of lawsuits. Psimas was a watchdog for her constituents This verdict is wrong and I am surprised the judge even let it stand. I suspect there is more at play with this jury than the alleged defamation. M2C - You have got to be kidding me! Apparently he wasn't doing his job. I don't

see where the comments were detrimental. paper, there was no libel or slander. Just a stupid jury and a smart lawyer. JB - Reply to @Jesse Thomas: With that said I still can't believe you won. What did you even do for Portsmouth to earn your pay? At the time you were the auditor money was being wasted, bills went unpaid and money that was owned the city wasn't being collected. Yet you logged into your computer only twice. The city should sue you for back pay. VBC - Crazy ruling GMM - This lawsuit is the equivalent of Richard Nixon suing thefor all the

committee and all who testified impeachment bad things they said about him. When a public criticism is true, how can that be a problem? Online comments on City Auditor 25 When the settlement was reported on April 13th Portsmouth topay$300,000 tosettledefamationcases Portsmouth has agreed to pay more than $300,000 to settle a pair of defamation lawsuits lodged by the city's fired auditor, ending years of legal wrangling over

comments that council members made about his job performance. In an email, Connell added, "Psimas's and Moody's comments cost the city more than the city paid Thomas for his three years of work." The article did include this Virginian Pilot 4-13-19 Thomas was hired in April 2013, and the following three years were tumultuous. The Pilot reported in June 2014 that he had logged into the city's financial system twice in his first 14 months on the job. When he produced an audit plan, 15 months into his tenure, it resembled documents he had received from the Chesapeake auditor's staff days before. But it also still included this Virginian Pilot 4-13-19 26

Furthermore: The fired City Auditor settled both cases with the City on March 28, 2019 The newspaper didnt report the settlement online until Friday afternoon on April 12th, and not in the print version until Saturday April 13th . (> 2 weeks later) The local TV news reported it on April 15th https://www.13newsnow.com/video/news/local/mycity/por tsmouth/city-of-portsmouth-settles-lawsuits-with-firedauditor/291-c8c9f602-6fb3-44da-83a0-c8464a4371db WVEC News 4-15-19 27 Closing Tips to avoid non successes Make sure that your superiors have a thorough understanding of the change and what to expect Push back if someone is getting it wrong

28 Finally, $300K may not quite be Winthorp and Valentine rich https://www.youtube.com/watch?v=RLySXTIBS3c Trading Places - 1983 But, after all that wonderful publicity, (plus how hard it is to win one of these things), Im sure the fired City Auditor and his attorney wont give it back. 29 QUESTIONS? [email protected] 30

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