Before the board's action, Joe McHaney had been on paid administrative leave since April 21.

HOLLY M. GILL - The Madras Aquatic Center Board of Directors, from left, Martti Rahi, Steve Webb, Larry Layton, Greg Tippett, and Chairman Jinnell Lewis prepare for their Monday night meeting. The board unanimously approved a 'no-cause' termination agreement for former executive director Joe McHaney, who has been on paid administrative leave since April 12. 
At its regularly scheduled meeting Monday night, the board of directors for the Madras Aquatic Center Recreation District unanimously voted to terminate the employment of its executive director, Joe McHaney.

McHaney, 38, who had served as executive director for the past four years, had been on paid administrative leave since April 12, as the board looked into "an internal matter."

The meeting followed the board's fourth executive session in the past month.

Jeremy Green, counsel for the district, said that the termination agreement memorializes the no-cause agreement between the board and McHaney, who met with his attorneys, Dave Allen and Katy Tank, in a separate room at the MAC, but was not present for the board meeting.

In response to an emailed records request on Monday night, Green emailed the six-page termination agreement to the Madras Pioneer Tuesday morning. The agreement, which was signed by McHaney, Allen, Tank and MACRD Board Chairman Jinnell Lewis, noted that the employer believes that its investigation supports theft allegations against the former director, which McHaney denies.

HOLLY M. GILL - Joe McHaneyAdditionally, "Employer has discovered other potential Employee misconduct and failures to satisfy standards of conduct acceptable to Employer, including, without limitation, Employee causing Employer to enter into one or more contracts without appropriate authority and Employee's theft of concessions," the agreement states.

Under the terms of the agreement, McHaney basically waives the right to raise claims against the board. However, the agreement does not affect McHaney's right to apply for unemployment insurance benefits.

A nondisparagement clause in the agreement directs that neither party — board members nor McHaney — may "knowingly make false, slanderous, and/or libelous statements," about the other party.

The board issued the following public statement: "After careful consideration and deliberation, the Board of Directors of the Madras Aquatic Center Recreation District has determined that it is in the District's best interests to terminate the employment of Executive Director Joseph B. McHaney effective as of 5:00 p.m. on June 11, 2018 pursuant to Section 4.1 of Mr. McHaney's employment agreement, which permits this 'no cause' termination. No further comment concerning Mr. McHaney and/or his employment with the District will be made at this time. Thank you."

Outside the meeting, Allen commented, "We don't think justice was done today. After two months, there is no cause. They've made some wild accusations involving theft, which we don't believe they can prove." The board did not make any public statements, but had earlier shared information with McHaney and his attorneys.

Allen provided a copy of an independent accountant's report by Jones & Roth, of Bend, that the board had given him, which documented voided transactions in the district's accounting system from Jan. 1, 2017, through April 30, 2018, including transactions of more than $10. A transaction was defined at "a financial interaction with a customer or group of customers for which one receipt is issued, regardless of how many individual line items are in that transaction."

The report found 23 transactions in which the district received cash payments, and later voided the transactions, in some cases issuing a "non-monetary receipt" the next day. Those transactions, which totaled $3,384.82, had an identifiable customer, but did not have support or an explanation.

"Names of customers were not provided to Mr. McHaney making it nearly impossible for him to explain the nature of the allegedly suspicious transactions," Allen noted.

Another 67 transactions, totaling $3,744, were also unsupported, but had no identifiable customer. Seven other transactions had "appropriate support or explanation."

"We don't think there's any money missing, let alone that Joe was responsible," said Allen. "There hasn't been a comprehensive audit. We believe we've only been given some of the material from the board's investigation."

"From the scant information that we've been provided, it appears a female employee of the MAC made allegations about suspicious transactions that had been voided," Allen continued. "Those transactions were then compiled from their software. Those transactions were then provided to Jones & Roth. That was not an audit."

The list of transactions begins on June 20, 2017, but more than one-third of the "no identifiable customer" transactions (26) occurred during the month of August 2017, when the city was inundated with visitors for the Aug. 21, 2017 total solar eclipse.

McHaney was reported to be "the user who processed the void," of 82 of the unsupported transactions — 49 of which were voided after 8 p.m.

Allen pointed out that the report reached no conclusions about the district's accounting measures. "All that report did was confirm that those transactions were voided without supporting documents, but in no way, shape or form did the CPA firm find that it was theft," he said.

"This is a sad day for Madras," said Allen. "They just unnecessarily got rid of an excellent employee."

McHaney became the director of the MAC on April 17, 2014, after nearly two years as the director of the Kids Club. Under a memorandum of understanding between the two organizations, McHaney had the dual role of overseeing both the MAC and Kids Club.

The Kids Club also placed McHaney on paid administrative leave in April, based on the action by the MAC board.

For the fiscal year which ends June 30, McHaney's salary was about $66,000 for the MAC, plus a portion of the Kids Club administrative fees, which totaled $27,250.

Under the upcoming budget, which begins July 1, the salary would have been a combined total of $88,000 for the two positions, according to Lewis, board chairman.

Last year, the Madras-Jefferson County Chamber of Commerce awarded McHaney as the "Outstanding Director of the Year," for improving the financial standing of the MAC; voters renewed the district's five-year operations levy in November.

In McHaney's absence, MAC recreation director Gregg Markwardt and aquatics director Tim Nelson have been managing the aquatic center and recreation district. At the Kids Club, operations manager Caren Pilkington has been handling operations.

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