DALLAS — Harris County, Texas, has asked five law firms involved with 30 county bond issues over three years to return $300,586 of undocumented travel and entertainment expenses.
The county, which includes Houston, said former finance director Edwin Harrison had allowed the firms to be reimbursed for up to $25,000 of travel and entertainment expenses per issue without being required to submit receipts for the expenses.
The law firms charged the county the travel and entertainment total allowed under the contracts, which Harrison negotiated with firms he chose. He also was responsible for reviewing the bills submitted by the bond counsel firms.
The bond sales in question occurred between Jan. 1, 2006, and Dec. 31, 2009.
The five law firms received $5.5 million in fees for the transactions, including $487,000 for travel and entertainment.
Four of the firms have repaid a total of $172,818 of the disallowed travel and entertainment expenses. The county is negotiating with Greenberg Traurig LLP over the remaining $127,786, according to the Harris County attorney’s office.
Repayments that have been made include $111,422 from Andrews Kurth LLP, $27,840 from Bracewell & Giuliani, $23,350 from Fulbright & Jaworski LLP, and $10,206 from Winstead PC.
Harris County’s general obligation debt is rated triple-A by all three rating agencies.
Assistant county attorney Douglas Ray said the firms were allowed the reimbursement for “reasonable and actual out-of-pocket expenses” that were typically $10,000 for most issues, but up to $25,000 for larger issues.
Ray said all the firms would submit invoices on each issue for the full allowance set by Harrison.
“We were told that this money was in case the county financial services department had questions later, or if the issues were being refunded,” he said. “But that was not the way the contracts read.”
When the firms were asked by the county auditor to submit receipts for the travel expenses, Ray said, the documentation amounted to almost $200,000 less than the total they had received.
Several firms declined to submit receipts associated with expensive meals for county staffers and opted instead to return the money, he said.
Ray said the county attorney’s office, which handles civil matters and not criminal investigations, began looking into the operations of the financial services department about 18 months ago. The probe in the bond counsel travel expenses has been going on for about a year, he said.
The county attorney’s office now selects bond counsel for county issues, Ray said, rather than the financial services department. He said that change occurred in the fall of 2010.
Assistant county auditor Steve Garner said the probe into the bond-related travel expenses is continuing, along with an investigation into how county funds were invested by Harrison.
Harrison was removed as head of the financial services department last year after he and his wife were indicted in September for allegedly stealing $233,000 from an incapacitated relative. Harrison, who had been department head since 2003, has denied the charge that he used fraudulent documents to obtain a line of credit.
Harrison declined to comment on the bond counsel situation but said all the payments were approved by the county auditor and county commissioners.