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Resignations and Suspensions at Palm Coast’s Building Department After Employees Accept Developer’s Whisky and Other Gifts

| April 30, 2019

Workers outside Palm Coast government's building department as City Hall was getting ready to open in 2015. (© FlaglerLive)

Workers outside Palm Coast government’s building department as City Hall was getting ready to open in 2015. (© FlaglerLive)

The morning of Dec. 20 last Christmas, Sergey Nevod, co-owner of Blue Crown Construction, walked into the building department at Palm Coast City Hall and handed out eight gift boxes of Crown Royal Whisky, a bottle of Jack Daniels and eight boxes of chocolate.


The intended recipients, whom Nevod specified by name and type of gift to be handed, were mostly employees of Palm Coast’s building department, who work with builders and developers. Accepting gifts is a violation of policy as it sets up the potential for corruption. Most of the employees took the gifts, some of them hiding the booze in cabinets then dissimulating it out of City Hall under their clothes.

Only one, Building official Ricky Lee, was incensed by the gift (the bottle of Jack Daniels was intended especially for him). He’d been out that morning, but when Libby Musgrove came to him with a coffee box containing his special Jack Daniels, he refused it and told her to return it to Nevod.

A whistleblower reported the gift-giving to city officials through the city’s web-based whistle-blower link. It is the second time in a matter of months that whistle-blowing leads to the disciplining or employees, an indication that the city’s effort to encourage reports of abuse or improprieties on the job is working.

The city’s Internal Control Ethics team, ominously called “ICE” in city documents (like the eponymous federal immigration agency), investigated.

By early February, seven employees had either resigned or been disciplined with unpaid suspensions of either two or five days.

Plans Examiner Daniel Rewis resigned in January. Planning technician Teresa Williams, after a five-day unpaid suspension, resigned more recently. Utilities Customer Service Representative Luisa Nabico got a two-day unpaid suspension. Permit Technician Lydia Musgrove got a five-day unpaid suspension. Planning technician Jackie Gonzalez got two days. Planning Technician Alisha Mobley got two days. And Senior Permit technician Marga DeFreitas got two days.

Memos to employees, outlining their infractions and penalties, were written with varied degrees of severity.

Stephen Flannagan, writing of Williams, said there were “many things” he found “extremely concerning,” from the number of gifts taken into Community Development to Williams knowing it was inappropriate but still taking them, to the gift-giving taking place within sight of a customer. “The facts remain that you, and you alone, accepted multiple bottles of alcohol and boxes of chocolate into the City,” Flanagan writes Williams. “At no point does it appear that you hesitated during the process and you concealed the gifts as soon as you received them, indicating you were aware of the inappropriateness of the event. At no point did you excuse yourself to find a supervisor, any supervisor, to provide you with guidance or support.” Flanagan’s memo to Musgrove was equally stern, while recognizing Musgrove’s value to the department.

The memo to Gonzalez was more forgiving: “I want to thank you for your candor and honesty,” Flanagan wrote. “You fully accepted responsibility for your acceptance of the gift. As we discussed, please do not let this one poor decision affect you going forward. You are a long-term and valued member of the Community Development Team and also as discussed, I believe that this event was a one-time lapse in judgment and I don’t expect that we will have to have similar conversations in the future.”

All the gifts were eventually returned to Nevod unopened. The investigation revealed that it was not the first time that sort of thing had happened: there’d been “several improprieties regarding gifts being given to Community Development clerks” around Christmas 2017, the investigation stated.

“It may seem innocent thank you gifts during the Xmas season it’s just unacceptable in the world we live in,” Deputy City Manager Beau Falgout said on Monday. The incident and the subsequent investigation and disciplinary actions all took place before the arrival of Matt Morton as city manager, when Falgourt was the interim manager.

State ethics laws outline what gifts may and may not be accepted, and how. But there is a zero tolerance policy in effect for gifts from people doing business with the city to city employees, though several of the employees involved in the investigation told city officials that they thought that as long as a gift is “shared,” like a gift cookie tray, it’s permissible.

Falgout said that the disciplinary actions would have been more severe had the employees involved not been front-line employees. “Had they been in decision making capacity the suspension would have been more severe,” Falgout said.

Morton said the zero-tolerance is essential to avoid the appearance of impropriety.

It so happened that Blue Crown, in business 12 years in Palm Coast, had a hold on one of its permits the morning Nevod came bearing gifts, and that he discussed the issue with Rewis. The permit hold was not lifted just then, but Rewis is seen taking a survey from Nevod. Nevod’s gift-giving, and the manner in which employees took the gifts, was all witnessed by another person doing business with the city that morning, as video surveillance footage indicates.

“The optics of these transactions, coupled with the interaction with the plans examiner, cannot be understated,” the city’s internal investigation concluded.

That video footage served the buttress much of the internal investigation, as did interviews with almost all the participants, including Nevod, who apologized for his role. “He stated he believed there was nothing wrong with doing so,” according to the investigation. “He stated that the reason he gave the gifts is that he does a lot of construction work and the workers in the Building Department help him. He mentioned calling in for inspections and that he never has any problems. He added that he gives boxes of Crown Royal to Utilities workers as well.” He promised not to give gifts in the future.

“When he was asked why there was one bottle of Jack Daniels, he replied that it was for Rickie Lee, the Building Official,” the investigation report states.

Lee is the only employee who displayed any sense of ethical obligation to turn down the gratuity, though another employee returned the bottle after consulting with a supervisor.

Musgrove, the permit technician who got a five-day suspension, told investigators that when she tried to give Lee the Jack Daniels, hidden in a box, he told her to get rid of it or give it back. She said she kept the bottle until the end of the day then “drove around the corner and threw it away,” keeping a Crown Royal for herself. She told investigators that she’d accepted cookies from contractors in the past. Asked why the alcohol was hidden inside boxes to remove them from the building, “she responded that it was an adult decision not to just walk out with alcohol.”

Musgrove was interviewed by internal investigators  Debbie Streichsbier and Jay Maher on Dec. 28. On Jan. 9, she returned the Crown Royal gift box set and the bottle of Jack Daniels she’d previously claimed to have thrown away.

Musgrove, according to Mobley, also gave Mobley a bottle of Crown Royal wrapped in a sweater, taking the package to Mobley’s car. Mobley reported the gift to a supervisor when she returned to work after Christmas, and brought back the bottle.

The investigation took a harsher tone against Williams: “Ms. Williams accepted gifts from a contractor with whom only a working relationship existed. She was the conduit through which unauthorized gifts were accepted into the city. Ms. Williams hid the unauthorized items to escape detection using coffee boxes and garments. During her interview, Ms. Williams acknowledged that she knew her actions were wrong and that she had in fact, recently been instructed by her Supervisor not to accept gifts from customers. Ms. Williams stated during her interview that she had only taken a box of chocolates and had not taken Crown Royal.” But on Jan. 9, she returned a bottle of Crown Royal Gift box that she had taken.

Permitting Supervisor Barbie Bembry was not implicated in the gift-giving but was interviewed by the investigators.

“Ms. Bembry went on to question why the case was being investigated by the ICE team instead of the Department Director,” the report states. “It was pointed out to Ms. Bembry that accepting gifts from a contractor could be construed as a form of corruption. Ms. Bembry did not agree with this observation and attempted to minimize the acts by stating that the Permitting Techs are limited in what they can do for contractors. Ms. Bembry was asked several times if she had specifically instructed her staff not to accept gifts to which she responded ‘they all know it is wrong to accept gifts’. She explained that they had a lot of training on the subject prior to Rickie Lee being hired.” The report adds: “ Ms. Bembry was not bothered by the extent that the staff had gone to hide the items that had been given to them by the contractor. She stated that she felt that once they took the items, they already knew they were wrong so she would expect them to attempt to conceal the items.”

City policy is explicit: “Employees who may be in a position to influence actions and decisions regarding the administration of the City shall refrain from relationships that may adversely affect the exercise of his/her independent judgment in dealing with suppliers, bidders, vendors and contractors, or any other person doing business with the City.”

The policy specifies: “The acceptance of anything of value, including but not limited to: loans, advances, gifts, gratuities, rewards, favors, entertainment or promise of future employment from any party doing business with the City, including but not limited to vendors, suppliers, and bidders may be considered improper…. Acceptance of Gifts – Employees should not accept anything of value including gifts that is intended to influence the judgment of the employee in carrying out his or her employment responsibilities.”

There is nothing in policy making an exception for cookies, boxes of chocolate, or gifts to be “shared” among office staff.

The City’s Internal Investigative Report:

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26 Responses for “Resignations and Suspensions at Palm Coast’s Building Department After Employees Accept Developer’s Whisky and Other Gifts”

  1. atilla says:

    A two or three day suspension is trivial compared to the violation. The work rules are to be followed and their supervisors should make sure they are. To violate and then try to sneak the evidence out is enough for immediate termination.

  2. Dave says:

    More corruption in Flagler County. All employees involved should be removed from their positions immediately! The contractor who gave the gifts should lose his buisness license with the county. This blatant corruption can not be tolerated.

  3. Legoland says:

    Good reporting Flaglerlive. Policy is policy along with proper ethics, but these city officials ain’t exactly recipients of Al Capone type bribes and payoffs. Yes the optics are bad, but I can promise you if they wanted to be corrupt they would have and could have done it for way more than sugar and booze. Lesson learned let them move on, and look out for the real crooks!

  4. Thomas Conrad says:

    Thank you Flagler Live…good job.
    I

  5. Please getrealstories says:

    Get to some real news. This was Christmas gifts and it was months ago. Get to the real crime in this County!!!

  6. Stretchem says:

    This is just what they got caught at. There’s a 100% chance there were numerous other occasions, and probably not just in the building department. The flat out brazenous of the contractor walking into City Hall to hand out “gifts” leads me to believe it was likely a regular and okay thing to do, and often.

    But then again, maybe a bunch of s#!+faced drunks in City Hall is a way to effectively get things done.

  7. John R Brady says:

    Now let’s look art why the City is in debt to the tune of 180 million(page 74 of current budget). How is money allocated to fiber net without any solid ROI (return on investment). How is money allocated for splash ponds and employees are working in dangerous working conditions. We need a forensic to see how money is transferred from one department to another. Where is ICE

  8. They need to be fired NOW says:

    Ms. Bembry and all involved should be immediately fired! To not fire them is absurd and unethical. The City Manager should see to it that employees are not slapped on the hand and given a day or two for a policy that has zero tolerance, and that they are all fired!

  9. Jane Gentile-Youd says:

    A little birdie told me that the size of ‘gift’s to a very ‘select’ few in the county offices are far far greater in value than a bottle or two of booze given openly to Palm Coast employees ( and not in the booth, in the back, in the corner, in the dark, like in the county -my opinion and the birdie’s opinion…..
    Kind of a real harsh punishment for stupidity for those in Palm Coast – seems that there was no intentional corruption… come on over to the potato building for the ‘real action’ ( my opinion and the birdie’s)

  10. Plantation Bay Security Dog says:

    You should look at public corruption in the private communities you live in. I am surprised Jane Youd Gentile is not all over this. At Plantation Bay, a Security “Director” allows private contractors to violate rules if they work for “certain” contractors, to the point that a gate is allowed to be left open for them all night long, allowing unlicensed, and undocumented workers in. You guys are getting ripped off for what you pay in HOA fees. You pay for having a protected community, but from 6:00am anyone can drive through the construction gate, and can show up at your house. The amount of undocumented, and unlicensed workers allowed in to Plantation Bay is amazing, but as long as the big contractors are paying the bills, no one seems to care, good luck with your insurance rates. I have video evidence of this. I learned that if you point out to one of the Security Director, and HOA manager that they are violating rules of the community you will be fired, and threatened with a lawsuit. One of the Security Directors has a direct familial connection with a contractor that works for ICI, and allows him various compensations.
    \Some of us worked our best to protect this community, at a salary below Security Standards, we showed up during the hurricanes to protect the community, but Big Money, and a complacent, you tube watching Security Manager manged to destroy that. If any citizens of Plantation Bay are ever curious, call the Security Manager, ask him why he allows the property to be understaffed, for the past two years, why there aren’t patrols you are paying for, why his deputy manager is working the night shift, and why he can’t hire anyone, ask him why you are being charged full price, when he is understaffed, by 10 people, here’s a hint the profits goes in his pocket if he’s under budget. Ask why twice a year we allow anyone in for “Parade of Homes” . Seriously, you guys are paying for Security that does not exist. Gross Mismanagement may be the first clue, and you fools pay him $60,000+ a year! As Security Guards we are routinely told to violate rules of the community to the benefit of Kargar, and ICI. Luckily I kept all of the proof. PS, You guys living in Plantation Bay realize all of your information is being updated by an $11.00 an hour Security Guard, because Property Management is too lazy, and over paid to do it? You have no Security whatsoever.

  11. PlantationBayDog says:

    You should look at public corruption in the private communities you live in. I am surprised Jane Youd Gentile is not all over this. At Plantation Bay, a Security “Director” allows private contractors to violate rules if they work for “certain” contractors, to the point that a gate is allowed to be left open for them all night long, allowing unlicensed, and undocumented workers in. You guys are getting ripped off for what you pay in HOA fees, you pay for having a protected community, but from 6:00am anyone can drive through the construction gate, and can show up at your house. The amount of undocumented workers allowed in to Plantation Bay is amazing, but as long as the big contractors are paying the bills, no one seems to care. I have video evidence of this. I learned that if you point out to one of the Security Director, and HOA manager that they are violating rules of the community you will be fired, and threatened with a lawsuit. One of the Security Directors has a direct familial connection with a contractor that works for ICI, and allows him various compensations.
    \Some of us worked our best to protect this community, at a salary below Security Standards, but Big Money, and a complacent, you tube watching Security Manager manged to destroy that. If any citizens of Plantation Bay are ever curious, call the Security Manager, ask him why he allows the property to be understaffed, why his deputy manager is working the night shift, and can’t hire anyone. Ask why twice a year we allow anyone in for “Parade of Homes” , seriously, you guys are paying for Security that does not exist. Gross Mismanagement may be the first clue, and you fools pay him $60,000+ a year! As Security Guards we are routinely told to violate rules of the community to the benefit of Kargar, and ICI. Luckily I kept all of the proof. PS, You guys living in Plantation Bay realize all of your information is being update by an $11.00 an hour Security Guard, because Property Management is too lazy, and over paid to do it?

  12. Anonymous says:

    It’s all bullshit, everyone should look in the mirror especially the so called ICE Investigators and say oh I remember doing something similar during my lifetime . Everyone has a Skelton in their closet

  13. Anonymous says:

    Ok…so i read up and down. 1st the idiots on here saying they should be fired should looked themselves in a mirror. Act like you never in your life broke a rule or policy whether it be in school or work. 2nd those ladies and guys up front have no power to provide corruption for contractors, they are clerks. It was xmas you season of giving. Thats what the guy did. Was it wrong yes but if you read the article majority returned the booze back to the city unopened. They were punished now move on. A city thats in debt 180 million needs to focus on other things.

  14. Blue Crown Construction says:

    There is absolutely nothing outside the rules permit technicians, plans examiners or inspectors can do for contractors. They are lovely people who have a ton of patience for everyone who walks through the door. They are always polite and helpful. I remember when we were just starting out here and needed a lot of guidance. We would not have survived without their help. I am grateful for all the failed inspections and permit holds that helped us achieve high quality of construction that our customers now enjoy. We had a couple of very busy years. We saw that department understaffed and overworked during that time. They did not miss a step. Always courteous and helpful and paperwork processed in a reasonable amount of time. There is no story here. I am disappointed in FlaglerLive for pursuing this and whoever decided to make this into a big investigation.

  15. starryid says:

    …so that makes it acceptable for City Employees to take gifts from contractors with no repercussions, Anonymous?

  16. Percy's mother says:

    All City employees involved should be FIRED.

    They know the rules. They willingly broke the rules.

    How many other similar instances such as this that haven’t come to light?

    There needs to be a complete housecleaning in that department.

    Waiting to see what happens now. A slap on the hand is not sufficient. If further action isn’t taken no one from the city manager on down will have any respect from anyone in Palm Coast.

  17. dam frustrating says:

    Very impressive and thorough investigation. Now let’s take this talent and effort with zest into cleaning up the contractor database and issuance of permits that we approve to weed out the unscrupulous behaviour that exists in Palm Coast.

    That would be a terrific and rewarding use of your time and a true value to homeowners.

  18. Diane says:

    Perhaps all of these gifts were meant to be shared …Sounds like the whistle blower was pissed they did not get a better bottle ………. the bottles that were given were hardly great bottles of spirits …… in my opinion if only one person received a gift like Pappy Van Winkle that would be a problem but everyone received Holiday gifts …..I don’t really see the catastrophe…….. tackle the real problems in that town …….

  19. Jane Gentile-Youd says:

    PlantationBaydog —
    You have not seen my e-mails, public appearances and threats to take our HOA to court for the violations you state in your fantastic comments above.

    You forgot to mention selective enforcement – as well as the oversized construction rigs allowed to use our roads which the developer/builder pays not a dime towards our ‘road reserve anemic fund; nor does he pay a dime for ‘security’… Illegal renters in ‘additions ignored – a homeowner with a busted driveway gets a letter once every 2 years but I was threatened to have our transponders turned off for having my tiny campaign trailer 100 feet up my driveway for one night last year!

    The VP of the Board – who changed security to limited access ( cost us $400,000 a year for this) told me to ‘F; off in an e-mail March 27th… A couple of bottles of booze is nothing compared to the builder paying not a dime towards ‘security’ ( excuse me now ‘limited access) and his on-going illegal ads ” Play for a weekend – $599 – stay at a villa” when our documents do not allow rentals for under 6 months for a townhouse and county and state law have not yet allowed short term rentals. Our HOA is a JOKE. Seems like every corporation registered at 2379 Beville Road Daytona gets what they want, when they want, how they want from our HOA as well as Flagler County.

    238 new homes being allowed to hook up to our cracked wastewater tank by the developer who was issued a Consent Order to fix the tank 6 years ago before he sold the dump to the county who makes ‘us’ pay!
    There’s lots more… but don’t want to bore all Pierre’s readers who don’t need to hear or care about Plantation Bay –

  20. T says:

    This is just overkill. Its just Christmas gifts. Lighten up!

  21. Anonymous says:

    I love the part about “front line workers” and their “ICE” department. They must not realize that the front line workers wave deposits and stuff for people renting houses they own. They just have you go to the teller next to the worker. Bada Bing… (Isn’t that something ICE, should have figured out by now. Smh…)

  22. palmcoaster says:

    Current and past conflict of interest worth much more that a bottle of whiskey and a box of chocolate was and is taking place county or city not only with the administrations but with the ones we vote to represent our needs in office and turn around on us and millions of our hard earned taxes are wasted. Example the approved destruction of a currently beautiful (White View) Parkway to narrow it in a growing city to benefit right of ways clear for future developments. Meanatwhile Florida Park Drive congested dangerous traffic including gasoline tank and liquified gas, construction supplies and land debris huge haulers speed over the 30MPH limit at 60 feet or less from houses in part also because Old Kings Road North to Matanzas Parkway is still waiting the widening. This will alleviate FPD ‘s traffic . Millions wasted in futuristic revenue imagined of Fiber Optic now, like Netts did before with the failed Desalination plant. FO/tech Innovation, Council Flukas and Mayor Holland’s costly pet projects that take away the residents hard earned taxes to supposedly benefit the city with revenue in the future, The way technology changes so fast the system will be obsolete once completed (city of Leesburgh just had to sell theirs: https://www.dailycommercial.com/news/20180112/leesburg-fiber-optics-utility-sale-approved )but here in old Palm Coast we will still endured the never properly programmed red lights in PC Pkwy, the traffic congestion in our drives and lanes not intended by ITT for that congested usage, the lack of proper landscape in Florida Park Drive (as is no Town Center) that could erase the blight obviously displayed that attracts crime, the need of some streets lightning , the need to address the awful litter all around us, the need to repair our drainage system etc. etc, How come our elected ones often manage to put the cart before the horse? Why is our water utility the best business we the residents approved to own, looks like being used a cash cow for developers benefit plans like the widening of Old Kings Rd south and also the IT/FO/Innovation fund.? Meanwhile our utility rates keep going up and the utility infrastructure is not updated (old failing sewer lift station pumps so old that parts no longer available and decaying caving in old drainage culverts?. But every turn of a meeting we need to be alert because already water front tax district were looked after and so far on hold, maybe after 2020 election…

  23. Tom H. says:

    Don’t believe everything you read. An internal team was created for a reason and the ‘reports’ have a LOT of bogus and fabricated, twisted and incorrect accounts of conversations and what was really said during these said ‘interviews’. There are employees within city hall that are working diligently to rid the staff base of folks that aren’t ‘minions’ of the current culture. Human Resources rule over the directors at the city and dictate, the directors are too scared to do the right thing and follow like minions. Yes, what the employees did was not the right thing, everyone admitted to the wrongdoing and waited for their punishment – the investigation wasted months of time when all pleaded guilty. No one thought punishment wasn’t deserved, but valuable employees being treated like criminals is uncalled for over the bad decision of accepting a $25.00 bottle of liquor. The city does not do ANY ethics training with the employees. Employees have never been told of a ZERO tolerance policy for gifts. Gifts come in all the time in city hall during Christmas – boxes of candy, baskets, cards, all with personal names Let’s put it all out there Flagler Live – ask for ALL the information. BTW – Daniel Rewis resigned before this took place to take a job serving his country overseas, not because of a $25.00 bottle of liquor.

  24. Anonymous says:

    You as a contractor should know that it is a felony to bribe building officials. You had to take and pass business law section as well as the trade section to get a contractors license. You can reference this Florida State statue for your self it is Chapter 838 Bribery. It is actually a felony for both the giver and reliever. Maybe you should not have pointed at the permit on hold that you wanted released as you brought gifts for specific people. I hope you do realize that law enforcement will be looking into this and this is not over. The building department should be looked into criminally as well for excepting and then trying to cover it up by sneaking the gifts out. Thank you FlaglerLive for exposing this corruption in our Palm Coast Building Department and I look forward to hearing how the Flagler County Sheriffs Department is handling this. Hope it was turned over to the DBPR as well.

  25. Nicole says:

    Are you real people with these comments???? It’s Christmas. Maybe it’s unethical but it isn’t illegal and you people make it sound like they’ve commmitted a heinous crime! Really people, get a life. Go look for real sh$t. This is not news and you self rightous people need to get over yourselves. What an example was of taxpayer money what services were lagging while this internal team worked on this??? What an absolute joke and people jumping on his bandwagon pointing fingers is disgusting. All you perfect people. This low level of a bad choice is not worth a news article or the amount of time spent. Geesh. Any humans left out there? With all the crap going on in this world……….

  26. PC WORKER says:

    First off what they did was wrong.2 days for all is fair not 5. I would ask how Jay ab Debbie were threatened by 2 females. Jay being a retired NYPD officer ask him if he ever took a free lunch on the job.And what does Debbie know about doing an investigation. And what about the free lunch Waste Pro bought for the whole city.Why did Debbie and Jay go to the city manager and say it looks like a bribe,when Waste pro does such a poor job

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