Attorney General’s office demands four years of financial records; city asks for three more months to respond
The Alabama Attorney General wants to know what happened to $1.7 million that residents of Marion paid for water and sewer service, money the state says the city cannot account for.
In a subpoena issued March 25 and received by City Hall on March 30, the Attorney General’s Consumer Interest Division ordered the City of Marion to turn over years of financial records as part of a formal investigation under the Alabama Deceptive Trade Practices Act. The investigation centers on whether the city collected utility payments from its customers during Fiscal Years 2022 and 2023 and then failed to properly track or account for those funds.
One day later, the city wrote back asking for up to 90 additional days to respond.
The subpoena was signed by Brad A. Chynoweth, Assistant Chief Deputy of the Attorney General’s Civil Division. An addendum accompanying the document lays out the state’s case for opening the inquiry.
The Attorney General’s office states that it has “a good-faith basis to investigate whether the systemic failure to account for these consumer payments, or the unauthorized diversion thereof, constitutes unconscionable, false, misleading, or deceptive acts or practices” under state law.
The investigation was triggered in part by the city’s own audits. Independent financial audits for FY2022 and FY2023, conducted by the accounting firm Banks, Finley, White & Co., could not be certified because the city’s bookkeeping was too incomplete and unreliable to verify. Because those audits failed, the Attorney General is now demanding to see the underlying records, the bank statements, ledgers, and transaction logs that should show where the money went.
The scope of the investigation is broad. The addendum states that the inquiry encompasses not only the $1.7 million discrepancy but also “any additional violations of the DTPA arising out of, relating to, or uncovered during the course of this investigation.”
The subpoena contains dozens of specific document requests organized into four categories, with a deadline of 10:00 a.m. on April 30 at the Attorney General’s offices in Montgomery. Unless otherwise specified, the requests cover records from October 1, 2021, to the present.
The general records requests include all city ordinances, council minutes and agendas, organizational charts, and all correspondence with state and federal agencies, including ADEM, the EPA, and the Alabama Department of Examiners of Public Accounts, concerning the city’s finances or water system.
The financial records requests call for every proposed, amended, and adopted budget for the Water Utility Fund and General Fund from FY2022 through FY2026; all annual audits required by state law for FY2022 through FY2025; all communications and workpapers exchanged with the city’s outside auditors; complete unadjusted general ledgers for the Water Utility Fund and General Fund; and bank statements, canceled checks, deposit slips, reconciliations, check registers, credit card statements, payroll checks, and wire transfer logs for every municipal bank account.
The water system requests are equally detailed: service maps, meter inventories, depreciation schedules, maintenance logs, customer accounts receivable, billing cycle data, rate calculations, employee records, well locations, water quality inspection reports, ADEM monthly reports, and all customer complaints and the city’s responses to them.
Perhaps the most revealing section of the subpoena targets individual transactions and financial events, several of which have been subjects of prior reporting by the Times-Standard-Herald.
The state wants a full accounting of approximately $170,000 in grant funds allocated or released by ADEM to the city on or about March 17, 2025, including a letter sent from ADEM to Mayor Dexter Hinton on November 19, 2025, with a complete schedule showing who was paid from those funds, for what purpose, and when.
The subpoena also demands records related to emergency borrowing by the city in late 2025, including a $50,000 request for audit funding and a $100,000 request described as being for payroll. The state wants loan documents, proof of disbursement, and details on how the borrowed money was spent.
Additional targeted requests cover the receipt and disbursement of approximately $179,000 from Alabama Power; all IRS Form 941 filings, penalty notices, and correspondence regarding past-due payroll taxes for 2025 and 2026; an approximate $15,000 unpaid balance owed to Pruitt Oil Company and demands for upfront payment from water treatment chemical suppliers; and any financial disclosures or affidavits of insolvency the city provided to any court related to a $12,000 civil penalty for illegal dumping.
The addendum addresses a question that might otherwise arise: whether a municipal water system can be investigated under consumer protection law.
The Attorney General’s office argues that it can. Marion’s water customers are consumers purchasing a service for household use, which brings the transactions under the DTPA. The city itself, in its capacity as a utility operator billing for services, qualifies as a “person” engaged in trade or commerce under state law.
The state also forecloses the most likely defense. Alabama law provides a narrow exemption from the DTPA for utilities regulated by the Alabama Public Service Commission. But because Marion’s water system operates independently and is not subject to PSC jurisdiction or rate-making authority, that exemption does not apply.
City Clerk-Treasurer Laura Williams-Hinton responded to the subpoena in a letter dated March 31, one day after it was received.
The letter acknowledges receipt and states the city is “committed to cooperating fully and in good faith with the Office of the Attorney General.” But it immediately pivots to a request for more time.
Williams-Hinton asked for an initial extension of 60 to 90 days, citing “limited administrative capacity, including recent staff transitions and ongoing restructuring within key operational areas.” She wrote that producing the requested materials on the original timeline could impair the city’s ability to carry out its basic functions.
The city also proposed a phased production schedule, starting with readily accessible documents while continuing to compile more complex or archived materials. It requested clarification on certain items involving third-party data, and asked the Attorney General to consider “alternative methods of compliance” such as on-site review of records.
The response was copied to City Attorney Hank Sanders, Ainka Sanders Jackson, Mayor Hinton, and all five city council members.
The Attorney General’s investigation is the latest in a series of escalating pressures on Marion’s city government.
The Times-Standard-Herald has reported extensively on the city’s financial condition over the past year, documenting a General Fund deficit identified in a 54-page city audit, an unresolved IRS assessment, and nearly $466,000 in state and federal grant funds that arrived at City Hall on a single day in November 2025 while vendors, including the supplier of water treatment chemicals for the city’s plant, reported unpaid bills.
In March, ADEM warned that $2,475,000 in American Rescue Plan Act funding for sewer and wastewater infrastructure improvements in Marion could be at risk if the city did not respond to compliance concerns by April 10.
The city has also faced questions about transparency. The Times-Standard-Herald has had public records requests pending with the city since December 2025. The city council considered adopting a public records resolution earlier in March that would impose conditions not authorized under Alabama law, including a requirement that requesters state their purpose for seeking records, a provision that conflicts with the Alabama Open Records Act as amended by Act 2024-278.
The Attorney General’s subpoena now demands many of the same categories of records the city has yet to produce in response to the Times-Standard-Herald’s earlier requests.
This is a developing story. Updates will be published as new information becomes available.
Anyone with information relevant to this investigation may contact the Times-Standard-Herald at perrycountyherald@gmail.com or the Attorney General’s Consumer Interest Division at (334) 242-7300.
