Delbert E. Morgan
John "Johnny" M. Haun
Former Knox County Trustee Mike Lowe, and several of the people he employed, are charged with stealing from the county.
Four of the five indicted turned themselves in on Thursday. They mark the first arrests in connection with a multi-year TBI investigation into the Trustee's office.
Former Trustee Mike Lowe has been charged with six counts of theft of at least $60,000.
Ray Mubarak, whose actual employment with the office has been questioned, has been charged with four counts of theft of at least $60,000.
Delbert E. Morgan has been charged with two counts of theft of at least $60,000.
John "Johnny" M. Haun has also been charged with two counts of theft of at least $60,000.
The indictments make clear that Lowe and Mubarak, who were named jointly, are accused of stealing at least $120,000 each. According to the Knox County District Attorney's Office, two of the four counts involve fraudulent payments to Mubarak, while the remaining two involve fraudulent payments to Tennessee Residential Services.
Lowe and Morgan also were named jointly, indicating they each stole at least $60,000.
All of the alleged thefts are Class B felonies, with each count carrying a possible sentence of 8 to 12 years. All of the alleged thefts occurred between 2004 and 2009 while Lowe was in office.
Attorney Greg Isaacs, who is representing Lowe, issued the following statement:
Importantly, a Presentment is not evidence that Mr. Lowe committed any of the allegations which he strongly denies. Mr. Lowe, based on our firm's continuing investigation, plans to enter a plea of not guilty at his arraignment.
Mike Lowe is a highly respected member of the Knox County Community who was the elected Knox County Trustee from 1994 until Term Limit Opinion of the Tennessee Supreme Court in 2007. As Trustee, Mike Lowe increased delinquent tax collections by Two Million Five Hundred Thousand Dollars ($2,500,000.00), turned over Forty-five Million Dollars ($45,000,000.00) in excess fees to Knox County, and significantly modernized the Trustee Office's operations. Mr. Lowe managed over Seven Hundred Million Dollars ($700,000,000.00) in tax collections. Significantly, the Knox County Trustee's Office was routinely audited with favorable results throughout his tenure. Our firm's preliminary investigation, which has paralleled the Grand Jury's investigation, corroborates Mike Lowe's innocence.
Knox County Mayor Tim Burchett released this statement: "News of these indictments is certainly troubling, but I think it is important to let the judicial process work. My focus remains on doing the best job possible for Knox County Residents."
10News previously reported that in 2009 the Knox County Commission pushed for an audit and an investigation into the trustee's office after hundreds of thousands of dollars spent on employee vacation buy-outs, comp-time, bonuses, and travel came to light. There was also the issue of "phantom employees," or people on the payroll who did little to no work.
For example, 10News previously discovered that, in 2007, Mubarak was paid $37,784 in base pay, $5,400 in travel, $5,663 in overtime, and a $1,000 bonus. That totals a little less than $50,000. The trustee's office declined to hand over Mubarak's employee records, saying they were part of a TBI case, and were no longer public.
10News previously reported Mubarak said he was a tax collector and would come into the office about twice a week to get his assignments. He was issued a key card to gain entrance to the City County building, but according to the Public Building Authority, the key card was never used from 2005 until the day it was deactivated in 2008. During 2007, when Mubarak was paid for working full-time and overtime by the county, he was also in working as a realtor and broker. Mubarak co-owns Tennessee Mortgage Connections in Knoxville with his wife, Diana.
10News also previously reported in 2009 that the county paid Delbert Morgan $48,770 in 2007, but he was never issued a key card to get in to the City County Building.
Johnny Haun has previously admitted to overpaying himself thousands of dollars in salary. He worked in the trustee's office as a bookkeeper.
Lowe was forced out of his office in 2009 due to term-limits. Fred Sisk, Lowe's chief deputy, took over the trustee job when Lowe left. Mubarak and Morgan both quit after Lowe left office. Sisk fired Haun in 2009.
A grand jury handed up the indictments Thursday afternoon, writing that the accusations were effectively "abuses of power" and showed that the "personal interests and benefits of the trustee and some members of the trustee's staff, through means both improper and fraudulent, have often been placed ahead of the trustee's duty to the citizens of Knox County."
The jurors also submitted a list of recommendations for the trustee's office, including:
- The trustee be appointed by the county mayor rather than elected.
- Annual audits be under the direction of the mayor, but until then include procedures to identify waste, fraud and abuse, as well as evaluation of staffing, workloads and operational efficiency.
- Pay and benefits be based solely on the nature and amount of work, quality of performance and years of experience.
- The Knox County Finance Department should handles expenditures for contract services and purchases using the normal county procedures.
- All property of the office should be registered with the county, and physical markings and tracking numbers should be attached to all items other than supplies used daily.
- Offices should have a policies and procedures handbook reflecting the practices laid out above and the accountability expected of supervisors and employees and the means of enforcement of that accountability.
The grand jury was seated for 18 months, longer than any other grand jury in Knox County history, according to the district attorney's office.
The DA's office also reported that one more person would step forward to face Class C felony charges on Friday.