Demorest approves new water and sewer account after reported fraud

Demorest City Council unanimously approved a new operating bank account for the city’s water and sewer services on June 2, after Rabun County banks reported fraudulent activity involving the current account. The action directs the city to keep the existing account open until outstanding checks clear, then close it and use a replacement account. Council also authorized Shawn Allen, Mark Musselwhite and Jerry Harkness as signers for the new account, according to the regular-session minutes.

The decision concerns the account that supports two essential city utilities, so the change reaches beyond a routine banking matter. Demorest must respond to the reported fraud while avoiding disruption to payments already issued through the old account, including checks that may still be in the hands of vendors or other recipients. The staged approach gives those checks time to clear before the city closes the account that banks said had been affected.

The matter first appeared in the council’s June 2 work session, where staff presented the banks’ recommendation: leave the water and sewer operating account available temporarily for outstanding checks, close it afterward, open a new account and designate authorized signers. That discussion set up the later regular-session action the same day. In the regular session, a motion and second carried unanimously, 4-0, converting the proposed transition into council-approved direction.

Rabun County banks were the source of the reported fraud concern and recommended the staged transition described to council, the work-session minutes say. City staff sought council approval for that plan rather than presenting it as a completed banking change. Council members ultimately endorsed the approach unanimously and named the three signers. The minutes do not record a competing proposal, dissenting vote or public position from utility customers, vendors or the banks beyond the recommendation conveyed to the city.

Council approval is complete; opening and operating the replacement account, allowing outstanding checks to clear, and closing the old account are authorized steps, not completed acts established by the minutes. The record confirms that fraudulent activity was reported, but it does not describe its scope, any dollar loss, which transactions were involved, whether the activity was resolved, or whether the city recovered any money. It also does not show whether any outstanding checks have cleared or when the existing account will close.

The next public indication of progress would be a later city record showing that Demorest opened the replacement account, put the approved signers in place, or closed the former water and sewer account after checks cleared. The council has decided the policy direction, but the timetable for the transition remains undecided in the minutes. It is also not publicly established when remaining checks will clear, whether additional fraud-response measures are planned, or when customers and payees could expect the banking change to be fully complete.