Attorney General's Office launches investigation into $1.7M of missing funds in Marion

The Alabama Attorney General’s Office is investigating the city of Marion over a claim of $1.7 million in missing utility payments.

The AG’s office sent a letter to the city on March 25, received March 30, that says it has launched a Deceptive Trade Practices Act investigation and issued a subpoena demanding decades of records, including all ordinances, policies, minutes, organizational charts and documents related to the creation and governance of the water system.

The city of Marion responded to the AG’s office’s letter promising transparency and to cooperate with the investigation. However, they said the scope of the requests encompasses multiple years of information and the city has limited administrative capacity to produce the documents quickly. The city asked for an extension to answer in 90 days instead of 60, asked for clarification on some requests and for alternate methods to comply such as an on-site review of records.

Mayor Dexter Hinton told the Black Belt News Network the allegation at the center of the probe is based on a fundamental misunderstanding of the city’s finances and possibly fueled by internal political maneuvering.

“Our water system doesn’t even collect $500,000 a year,” he said, noting that annual revenue is closer to $450,000. “How can $1.7 million be missing when we don’t even collect that?”

According to Hinton, the figure cited in the AG’s letter appears to come from the city’s 2023 audit, but reflects decades of uncollected water bills, not missing money. “The money hadn’t went nowhere because the money was never collected,” he said.

He pointed to the COVID-19 pandemic as a major factor in the buildup of unpaid bills, noting that the city, like many utilities nationwide suspended shutoffs during that period. “You accumulate that debt, then it shows in your audit,” he said.

Despite his concerns, Hinton said the city will meet the AG’s demands.

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“We’re going to fully comply with them… and see what it leads to,” he said.

Hinton questioned the scope of the subpoena, which requires the city to produce records dating back to the water system’s founding in 1968.

Hinton also said the city has not been told who filed the complaint or what specific allegation prompted the subpoena.

Black Belt News Network has requested comment from the AG but has not yet received a response.

The City of Marion addressed residents with an official statement on social media Friday afternoon to reassure the public, adding the probe is “not a criminal investigation, but a review mechanism utilized by oversight agencies to ensure compliance with applicable laws and procedures.”

“We remain confident in our financial records, operational procedures and administrative practices, and we are committed to demonstrating full compliance with all applicable laws and regulations,” the statement said.

The post urged residents to allow the review to proceed without speculation and added the city will provide updates “as appropriate” as the investigation moves forward.