LITTLE ROCK — Prosecuting Attorney T.J. Hively is out as head of the 16th Judicial District Child Support Enforcement Unit.
The state will take over the unit today.
"There was sufficient evidence of wrongdoing, and the contract needed to be terminated immediately. It was a situation that did not need to go on any longer," said Richard Weiss, director of the state Department of Finance and Administration.
Hively's unit, which is under investigation by the FBI, has overbilled the state for reimbursement of expenses and misrepresented how it pays its legal expenses, records show.
Dan McDonald, administrator of the state office of Child Support Enforcement, met with Hively for more than an hour Monday. He said he and Hively reached an agreement in which the $1.2 million contract would be terminated at the end of the working day.
McDonald said he found three main problems with Hively's unit.
"First, there was the practice of overbilling. Second, there was the fact that there was not a 34 percent match coming from Mr. Hively to help fund the office, and third, he was benefiting from all legal services. He received all of the compensation."
Hively did not answer a reporter's questions as he left the state office Monday afternoon.
In a letter faxed to McDonald earlier Monday, Hively had offered to terminate his contract to track down deadbeat parents and enforce child-support payments in five north-central Arkansas counties -- on the condition that Hively run the unit for the next 30 days.
McDonald turned him down. "It was not an option I was willing to take under the circumstances," he said.
Monday's events came a day after the Arkansas Democrat-Gazette reported that Vickie Warner, who does most of the unit's legal work, received little of the $317,394 the unit paid for legal services over the last 41/2 years, and two weeks after the newspaper reported that the unit overbilled the state by nearly $35,000 in 1997.
McDonald said his agency, along with the Division of Legislative Audit, will investigate to determine if the unit owes money to the state or federal governments. The money for the state program comes from a federal Department of Health and Human Services grant.
"I did let Mr. Hively know that there will be an investigation in coordination with Legislative Audit and employees from my staff that will start up real soon," McDonald said.
As prosecutor, Hively, 55, has run the Batesville unit since July 1993. The unit is charged with identifying and pursuing deadbeat parents in Cleburne, Fulton, Independence, Izard and Stone counties.
Hively's contract requires that the unit pay its expenses, then submit bills to the state for reimbursement. The state reimburses two-thirds of most costs.
The Democrat-Gazette reported April 12 that, in 1997, the unit reported spending $34,791 more than its check ledgers documented.
The unit's largest single expense is for legal services. Warner has done most of that work. But the newspaper reported Sunday that she had received just $9,015 of the $317,394 the unit has paid since July 1993. Records show Hively got the rest.
Until this year, the unit wrote its checks to Hively. Starting on Jan. 30, the unit made them payable to Hively's Batesville law firm, Hively and Ketz. The law firm, in turn, wrote checks to Hively. But the unit, since January, has been reporting that it paid Warner.
McDonald met with Hively and Warner on Friday at the state office. He said the two verified that Hively received all the money, except for the $9,015 paid to Warner in 1993-95.
"The state has not been aware ... that Mr. Hively was receiving all the compensation for legal work performed as a result of this contract. The documentation in the past has been less than adequate," McDonald said.
"In fact, Vickie Warner has not been compensated for her work in child support," he said.
"Basically, it was a trade-off. Vickie Warner apparently feels comfortable doing child support work, and T.J. Hively is good at doing ... criminal prosecution and work in court, so they came up apparently with a mutual agreement that 'If you handle the child-support stuff, I'll handle the criminal stuff,' and they seemed both to be real comfortable with that arrangement. So Vickie was apparently doing child-support work for her salary ... paid by the county."
Independence County last year paid Warner $23,320 as deputy prosecutor. County Judge David Wyatt said her duties included prosecuting cases in municipal and juvenile courts. Wyatt said he was not aware of any trade-off agreement.
Hively receives $69,016 a year for his job as part-time prosecuting attorney.
The FBI has agreed to cooperate with the state's investigation, McDonald said.
On Nov. 5, FBI agents raided Hively's unit, seizing check ledgers and other financial records. They also raided two of the state's 19 other child-support enforcement contractors.
"The FBI has agreed to work with us any way they can to provide the information we need to do an administrative review, and that if they have records that we need they would provide copies or let us review their records," McDonald said.
In replacing Hively's unit, McDonald said, the state will offer jobs to most of his employees. But that won't include Warner; unit manager Lisa Yeager, who has been on unpaid leave since the Democrat-Gazette reported the overbillings; or Sue Patton, Hively's secretary, who last year was paid $11,561 by the unit in addition to the $27,008 that Independence County paid her as a full-time employee.
The unit employs 10 other people. McDonald said representatives of his office would meet with them today "to offer them a transition into state employment, and we will take over operation of that Batesville office. That's a permanent arrangement."
"As for legal services, we will be utilizing staff here from the central office and other offices as deemed necessary," he said.
"We've got to move on and get this thing right."
Finance and Administration Director Weiss, who is McDonald's boss, said the priority will be to make sure that the 16th Judicial District unit's work continues during the investigation.
"Our first priority is with our custodial parents. We have to take care of them first, and then we will protect the taxpayers," he said.
Hively, in the letter he wrote offering to terminate his contract in 30 days, blamed his decision on recent federal insistence that child-support attorneys' time be strictly documented. Until this year, the unit had simply billed the state for one-twelfth of the annual legal budget each month.
"The bureaucratic insistence from the federal government which has caused the increase in costs to the taxpayers mentioned above makes this position no longer acceptable to my view of frugality in government," Hively's letter said.
McDonald said Hively had made no mention of that during their meeting Friday.
After that meeting, Hively issued a statement to the The Associated Press that his office was taking steps to correct "transitional problems" on legal-fee billings.
"Frankly, we have not done as good a clerical job as should have been done," Hively said in the statement.