$1 million improperly reimbursed to grant-backed Memphis group, investigation finds

A Memphis nonprofit funded in part by state and federal grants received more than $1 million in improper reimbursements, resulting in two failed projects in West Tennessee, the state Comptroller’s Office announced Wednesday.

Mississippi River Corridor-Tennessee looked to develop and conserve six West Tennessee counties along the Mississippi River, including Shelby County, with a mix of private, state and federal funding. It dissolved in March 2017.

But during its life, MRCT received 57 reimbursements from federal and state agencies that “included unallowable costs according to state and federal laws and grant regulations,” the Tennessee Comptroller’s Office said.

Investigators identified $1.08 million in improper reimbursements MRCT received from March 2011 to March 2017, according to the Comptroller’s Office. The group received $1.92 million in total funding over this same period that investigators were able to document.

MRCT's former executive director, Diana Threadgill, was indicted earlier this month by a federal grand jury on three counts of mail fraud.

Threadgill is currently director of marketing and development at the Greater Memphis Medical Device Council and marketing and development director at the University of Memphis Meeman Biological Station, according to her LinkedIn page. The page says she was president and executive director of MRCT from 2005 to 2017.

Council and university representatives did not immediately respond to a request for comment Wednesday.

The organization left behind two abandoned projects north of Shelby County: the Reelfoot Lake interpretive visitor center, demolished in October, and the Dyersburg River Park and Blueway.

Public funding for the Reelfoot Lake project totaled $856,685. The Tennessee Department of Transportation found the Reelfoot Lake project had structural issues — a claim MRCT's executive director disputed — and the unfinished building was dismantled.

Investigation finds 'multiple failures'

Some MRCT reimbursements were backed by “missing or falsified documentation,” others were used for “meals, entertainment, fuel, and baby shower supplies,” and investigators also found instances of duplicate expenses submitted to different agencies, the office said.

MRCT also hired an architectural firm for project work that had one of its partners on the group's advisory council, investigators found. The MRCT also rented space from the firm, according to the investigation.

“This investigation points to multiple failures at many levels,” said Tennessee Comptroller Justin Wilson in a statement. “The MRCT Board of Directors and Advisory Council members not only had potential conflicts of interest, but they failed to provide adequate oversight. State agencies must also do a better job of monitoring and reviewing how grant funds are reimbursed.”

Group's leader 'instructed staff to falsify accounting records'

Threadgill, the MRCT's former executive director, was indicted Feb. 13 by a federal grand jury in the Middle District of Tennessee, Nashville Division, on three counts of mail fraud, the office said.

Investigators determined Threadgill “instructed staff to falsify accounting records” and continued MRCT operations after the nonprofit dissolved, requesting and receiving more funding in May 2017. She told investigators “she was knowledgeable of the grant process,” the office said.

Threadgill declined to comment Wednesday. In 2017, Threadgill told The Commercial Appeal the group decided to dissolve because it “just ran out of money.” Errors auditors pointed out were inadvertent and slipped through the cracks, she said.

"Most of our work was raising money for state assets," Threadgill said at the time. "There was no fraud."

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Max Garland covers FedEx, logistics and health care for The Commercial Appeal. Reach him at max.garland@commercialappeal.com or 901-529-2651 and on Twitter @MaxGarlandTypes.