The State Attorney's Office began its review of the way the city of DeFuniak Springs runs its government in July when complaints of fiscal mismanagement arose.

DEFUNIAK SPRINGS — It will be after the holidays before officials learn whether State Attorney Bill Eddins intends to take an investigation of the city’s financial fumbling to a grand jury.

“We are making substantial progress, and I expect we will complete our review and make a decision in January whether we will present our findings to a grand jury for further review,” Eddins said last week.

The State Attorney’s Office began its review of the way the city of DeFuniak Springs runs its government in July when complaints of fiscal mismanagement arose.

City officials were notified by their attorney in June that nearly $221,000 in sales tax revenues and municipal revenue sharing funds had been lost over a two-year period due to the failure to file required audits and annual financial reports in a timely manner.

The city initially failed to file either an audit or an annual financial report for fiscal 2013-14, according to attorney Clayton Adkinson’s report. A similar scenario played out during the 2014-15 reporting cycle.

The reporting violations were exacerbated by the city failing to respond to warning letters from the state, Adkinson said in his report. By the time city officials did get around to turning in required documents, they’d already heard from the state that they’d lost their funding.

State Attorney investigators continue to obtain documents and interview witnesses in the case, Eddins said. Those interviewed include city employees and City Council members as well as accountants and state employees versed in sales tax issues.

The scope of the inquiry was expanded in October when questions arose about what had happened to $368,063 the city obtained through a 2014 legal settlement with British Petroleum.

Eddins compared the city investigation to a 2015 inquiry that looked at the Walton County Planning Department.

In that case, paperwork uncovered by a department employee showed that twice, once in 2005 and again in 2006, accounting errors had led to a failure to collect proper recreation fees from development interests. The first time, $614.25 was charged when the bill should have been $614,250. The second time, $20,560.25 was charged on a $205,560.25 invoice.

That case was turned over to a grand jury that not only found “the failure to collect almost $800,000 in recreation fees to be egregious and unacceptable,” but also called for the indictment of Pat Blackshear, a former Planning Department director, on perjury charges.

Blackshear pleaded no contest to the charges and was sentenced to two and a half years of probation.