Kickback Scheme: Florida Sheriff Indicted For Allegedly Doling Out Bonuses Then Stealing the Money

Okaloosa County Sheriff Charlie Morris indicted

The allegations sound like they could be pointing to the latest Wall St. scandal: bonuses, a trip to Las Vegas and illegal financial transactions. But, instead, the charges surround a county sheriff in small-town Florida, who is to be arraigned this morning on counts of federal conspiracy, theft and money laundering.

Okaloosa County Sheriff Charles "Charlie" Morris, 59, and his former administrative director, Teresa Adams, 50, are alleged to have run a kickback scheme in which they gave fictitious bonuses to sheriff's department employees, who were then directed to return some or all of the bonus money to them via cash or cashier's check. The employees were reportedly told the money would be given to charity.

But a joint investigation by the FBI and IRS alleges that after the sheriff handed out $194,002 in bonuses, $115,500 was returned in kickbacks.

Morris and Adams gave bonuses to 15 employees ranging from $3000 to $15,000, with kickbacks ranging from $1000 to $12,000, according to the federal indictment federal indictment returned by a grand jury.

"It was further part of this conspiracy that the accounting entries and payroll records… pertaining to the employees who received these illegal bonus payments with subsequent kickback payments were falsified so as to conceal from auditors' review the nature and degree of the kickbacks ultimately received" by the sheriff, according to the indictment.

Morris and Adams were arrested Feb. 27 – she in Florida, while the sheriff was apprehended by federal agents during a trip to Las Vegas. A federal indictment was returned against them last week. They are expected to be arraigned on the charges this morning in federal court.

Florida Gov. Charlie Crist suspended Morris in February and appointed an interim sheriff while the case plays out.

The interim sheriff – Ed Spooner – told ABCNews.com that "a lot of innocent people were hurt" by what's happened.

"Here's the sheriff of the county… He's the president of the Florida Sheriffs Association, he's been in office for 12 years, just been re-elected," Spooner said. "There was no reason for an employee not in the investigative field to believe he did anything wrong. He just preyed on these people."

Florida Sheriff Gives Statement to ABC News Affiliate

Morris did not immediately return a call from ABCNews.com, but in a statement to ABC News affiliate WEAR-TV, he said, "The allegations against me are serious and I have retained counsel to represent me. I have cooperated with the government in its investigation and I look forward to a full and fair hearing on the charges. My attorneys have advised me not to answer any questions at this time, and I am following the advice of my lawyers."

Adams, who was fired after she was arrested, could not be reached for comment.

If convicted on all six counts, Morris and Adams could face 75 years in prisons and up to $1.25 million in fines.

Click Here for the Investigative Homepage.

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