The Florala Utilities Board has lost a fight to deny fired manager Lynn Hughes unemployment compensation.

Hughes, 52, was fired and arrested in September on theft and misuse of public office. After her termination, she filed for unemployment; however, the board voted to deny her payment.

Chairman Marvin Williford said at Monday’s meeting that while the board “presented strong evidence and good cause,” the state department of industrial relations ruled in Hughes’ favor.

“But as an update, I will say I testified (last week) for her attorney,” Williford said. “I think it went good. We’ve been asked for some information, but I was notified that we should not give it to them without a court order.

“With that said, I think it’s going as well as it could go,” he said.

Williford said he believes the case will be presented to the grand jury, which is convening this week.

Last month, Hughes’ attorney, Julian McPhillips of Montgomery, requested payroll records, personnel files, utility records and grant agreements, which allege other employees were granted special privileges.

The request outlines specific instances of the board providing cell phone bills for employee family members at a discounted rate, payment of family insurance as a condition of employment; payment of utility bills and the waiving of fees for establishing service; and allowing employees to leave early with pay to pick up children from daycare.

Hughes’ arrest came after other utility board staff allegedly found numerous accounting discrepancies following her termination in September for insubordination. The board then sought law enforcement assistance, and at the request of the Florala Police Department, the Alabama Bureau of Investigation was brought in to investigate.

Hughes was officially charged with two counts of theft and an ethics violation after she allegedly issued extra paychecks and paid family insurance premiums totaling more than $40,000. She is currently out on a $120,000 bond.

In other business, the board voted to pay its bills and heard updates from staff.