Hampton, Florida (CNN) -- How off-the-charts corrupt do you have to be to capture somebody's attention in the Sunshine State?

You can lay claim to a 1,260-foot stretch of busy highway a mile outside of town and set up one of the nation's most notorious speed traps. You can use the ticket money to build up a mighty police force -- an officer for every 25 people in town -- and, residents say, let drugs run rampant while your cops sit out by the highway on lawn chairs, pointing radar guns at everybody who passes by.

Of course, none of those things are illegal. But when you lose track of the money and the mayor gets caught up in an oxy-dealing sting, that's when the politicians at the state Capitol in Tallahassee take notice.

Now they want this city gone, and the sooner the better.

A state audit of Hampton's books, released last month, reads like a primer on municipal malfeasance. It found 31 instances in which local rules or state or federal laws were violated in ways large and small.

Read the audit (PDF)

Somewhere along the way, the place became more than just a speed trap. Some say the ticket money corrupted Hampton, making it the dirtiest little town in Florida.

That's saying something, because Florida has seen enough civic shenanigans to lead the nation in federal corruption prosecutions and convictions, according to a watchdog organization called Integrity Florida. The group's 2012 study revealed that more than 1,760 of Florida's public officials had been convicted of corruption since 1976.

"It's a mess," Dan Krassner, the group's co-founder, said of the situation in Hampton. "Clearly, there has been misuse of public funds and lack of oversight. The cronyism and nepotism is out of control."

As for the city's prospects, "They don't look good."

Sure enough, a criminal investigation is gaining steam. On Friday, Florida Department of Law Enforcement investigators and the Bradford County Sheriff's detectives searched Hampton City Hall. The door of the police chief's office was removed from its hinges as investigators combed the tin-roofed building for documents and other evidence.

How did things get so bad that lawmakers now think the the dirtiest little town in America has forfeited its right to govern itself?

The local sheriff, never at a loss for a colorful turn of phrase, has a theory: The speeding tickets were such a cash cow, they proved to be Hampton's undoing.

"It became 'serve and collect' instead of 'serve and protect.' Cash register justice," said Sheriff Gordon Smith. "Do y'all remember the old 'Dukes of Hazzard'? Boss Hogg? They make Boss Hogg look like a Sunday school teacher."

Whom did the pipeline of easy money corrupt in this postage stamp-size town with fewer than 500 people? And if money is missing, how much are we talking about, anyway: $200,000, $600,000? One lawmaker has suggested it's as much as $1 million.

And where did it all go? There aren't any McMansions rising up out of the swamp, no country clubs, no casinos, no swimming pools, no stadium, not even a new City Hall, although the old one got a fresh coat of paint when the auditors came to town.

There are some nicer homes with fishing boats tied to docks along Lake Hampton, but they sit outside the city limits. Hampton proper -- several blocks on either side of City Hall -- consists of ramshackle homes with sagging tin roofs. Yards are filled with junk, high grass and overgrown trees and bushes. The proliferation of No Trespassing signs is disconcerting. People here seem to have so little and yet fear losing it so much.

Some old-timers remember when it used to be much grander, the Bradford County seat, with a hotel and a railroad station and large homes with sweeping lawns. Then the fancy folks packed up and moved 10 miles up the road to Starke, taking Hampton's dreams (and the county seat) with them.

The Florida Legislature convened last week, and by the time the session closes at the end of April, Hampton could be history.

Some residents think that would be a crying shame.

Other people say that dissolving Hampton would be more like a mercy killing.

'Crooks or stupid people'

Despite its polite audit-speak and dry title -- "Operational Audit: City of Hampton" -- the 42-page report from the state auditor general makes for riveting reading. Nepotism is rampant. City cars, cell phones and credit cards were misused. The city clerk was overpaid by some $9,000, and employees ran up $27,000 on the city's credit card and charged another $132,000 on an account at the convenience store at the BP station next door to City Hall.

"What's wrong with that picture? That's a lot of cigarettes and beer and what-have-you. That's corrupt as heck," said Jim Mitzel, who was mayor of Hampton from 2000 to 2008. He's sitting on the bleachers of a baseball field at a city park, one of the few things Hampton has done to improve the lives of its 477 residents. (Not with speeding ticket money, though. Hampton received a grant.)

Mitzel, who is in his early 50s, acknowledges his role in greasing the revenue pipeline from the speed trap out on U.S. 301. But he says he always intended for the money to come back to the city. All he ever saw was shiny new police cars in a place where old cars rust in front yards because there's no code enforcement.

"Where did all the money go?" he asked. "I hate to say it, but in somebody's pocket."

Mitzel's daddy served on the City Council for years. He said the way Hampton's government is set up, the employees had the run of City Hall and they didn't cotton to dissent.

"If you start questioning, they turn things on you. I got out when the getting was good." His salary as mayor -- $125 a month -- wasn't worth the hassle, he said.

The last mayor, Barry Layne Moore, was in office for just a few weeks when he was locked up and accused of being a drug dealer. He says he's not sure whom to blame for his predicament.

On a recent afternoon, Moore shuffled into a visitor's room at the Bradford County Jail in orange plastic slide-on sandals that matched his orange jumpsuit. His hands were cuffed in front of him, his ankles shackled. He took a seat and smiled, looking a little puzzled.

He allegedly sold a single 30-milligram pill of oxycodone -- a "blueberry" in street parlance -- to an undercover sheriff's informant for $20. He denies the charge and swears he's going to beat the case in court. He's been sitting in jail in Starke, about 10 miles up the road from Hampton, since a few days before Thanksgiving. He can't raise the $4,500 required to bond out.

He's still the mayor, he thinks, although Gov. Rick Scott has suspended him. He thinks he's being made a scapegoat to steer attention away from the audit and Hampton's bigger problems. He talks about himself as a little fish swept up in a big net.

"They made it sound as if I was running some kind of pill mill right out of my house, which is not the case at all," he said. "If I was some kind of drug dealer, I would at least have a car. I ride a bicycle around town. I had my lights cut off twice last year. If I am a dope dealer, why are my lights getting cut off?

"I'm a good guy that got caught up in a bunch of nonsense that was bigger than me."

He grew up in Hampton and worked as a general laborer until he got hurt. The first time, a forklift hit him. The second time, he fell off a roof. He says he is in constant agony and has taken prescription painkillers for the past 22 of his 52 years. He admits that he is addicted to oxycodone, which is what brought him to this little yellow brick jail.

He wasn't in office during the period the audit covers, and he hadn't seen a copy. But from what he's heard, it made it appear as if Hampton were being run by a coterie of crooks.

"I think that's not very far from the truth at all. They are either a bunch of crooks or a bunch of stupid people," he said with a rueful laugh. "I hate to say it like that, but it's the truth. I look like a crook sitting here in an orange suit, don't I?"

The way Moore sees it, he was targeted for arrest "as part of a systematic way to tear the town of Hampton down."

But why would anyone want to do that? Hampton seemed to be doing a pretty good job by itself.

'One heck of a debacle'

There are two reasons for the City of Hampton to exist: to provide water to 477 people and to protect the peace. Some 89 years after it became a city, the audit revealed how badly Hampton botched both jobs.

Nearly half the water the city pumps from the Suwanee River simply vanishes. Leaky pipes are partially to blame, but in some cases, the water goes to buildings without working meters. Some customers may have been getting free water for years.

Hampton's bigger problems grew out of the city's duty to "keep the peace." It led to what everyone calls "the annexation" in the early 1990s.

Somebody got the idea to snap up an easement along both sides of County Road 18 and a 1,260-foot stretch of U.S. 301. Because of the annexation, the bird's eye view of Hampton resembles a lollipop on a stick. Or, depending on your point of view, a fist with a raised middle finger. Most outsiders take the second view.

Hampton set up its speed trap, just like its neighbors, Waldo and Lawtey. Since Hampton has no schools, homes or businesses along 301, traffic safety really wasn't the issue. The focus always was on revenue -- and state and county officials say that's where the city went wrong. It's the crack that allowed corruption to creep in and take hold.

The key players in this chapter of the saga are the county sheriff and Hampton's chief of police.

Almost from the minute Sheriff Gordon Smith was sworn into office, he started hearing about Hampton and its speed trap. He couldn't go to the store or church or a Friday night football game without running into somebody with a gripe about the city.

At first, all of the complaints were about the speed trap. But as time went by, people started complaining about what was going on at City Hall, too. They told him they couldn't talk to anyone else. If they spoke up at City Hall, their water got shut off.

Smith is a bit of an anomaly: a Democrat in conservative North Central Florida. He's a redhead and fair-skinned. When something angers him, he sputters: "That makes my freckles pop."

He had started his law enforcement career on the police force in Starke, where he met another young officer named John Hodges. The two began as friends, but it didn't last.

Hodges became the police chief in Hampton. And what was going on in Hampton was enough to make the sheriff's freckles pop.

Hampton cops were a fixture out on U.S. 301. They sat on lawn chairs, pointing radar guns at unsuspecting motorists. They hid behind recycling bins. As more and more money came in, they idled in slick SUVs, trolled the median strips in riot gear and toted state-of-the-art firepower. Locals gave one the nickname "Rambo" because he slung an AR-15 rifle across his chest.

All to write tickets.

Money generated by the tickets was poured back into law enforcement.

They "were just out there writing tickets galore," recalled Moore, the jailed mayor-for-a-minute. "I mean, you can hear all those sirens all day long -- woo, woo, woo -- lighting up everybody. It got ridiculous."

The American Automobile Association's Auto Club of the South labeled Hampton a "traffic trap" and warned members about the town, along with Lawtey and Waldo, on its maps. The AAA also erected warning billboards along U.S. 301.

People complained that Hampton officers were stopping them without cause, leaving kids and pets in hot cars and impounding cars based on outdated allegations that surfaced in computer searches. The sheriff's department investigated some of the complaints, but those inquiries never went anywhere.

Hodges bristled at the interference. Smith said he asked the chief for a roster of his officers so they could be trained to use the county's radios and computers. He also wanted to verify that people who radioed in and said they were Hampton cops actually were authorized to run criminal records checks.

Hodges handed him a list of four names and indicated that 15 others either worked "undercover" or were assigned to "special details" and would not be named.

The ticket money continued rolling in: $616,960 between 2010 and 2012. Hampton's peak year came in 2011, when 9,515 speeding tickets brought in more than $253,000.

That was the year state Rep. Charles Van Zant got his speeding ticket. He says he drove directly to the courthouse in Starke and paid it. And, he insists, he carries no grudge. But later, he observed, "When I got my ticket, you couldn't hardly pass by Hampton without getting a ticket. You can say that's law enforcement, but no. That's banking using the U.S. highway system."

By 2012, Smith was playing hardball. He questioned whether the city had legally annexed the 1,260-foot stretch of U.S. 301; he said nobody could find a document recording the easement. He also believed that Hampton was illegally tracking cars with its radar outside the city limits.

He persuaded a judge to dismiss Hampton's tickets and cut the city's officers off the county radio and national criminal record database. He ordered his deputies not to accept Hampton's prisoners at the county jail.

Responding to the pressure, Hampton took down its speed trap. The ticket money for 2012 dropped more than 40 percent from the previous year.

Smith and Van Zant weren't finished with Hampton. They wanted to follow the money.

On April Fool's Day 2013, Van Zant asked the state auditor general to step in and go over the city's books. Lots of money was coming in, he observed, and Hampton had plenty of police officers and shiny new cars, but there was no sign that other services had improved.

Hodges did not return CNN's calls requesting comment. He has retired from his $400-a-week job as chief, leaving Hampton without a police force.

The sheriff's department has been patrolling the city for more than a year. Hodges has said he plans to run against Smith in the next election.

He told a local newspaper, The Gainesville Sun, that he considers the audit a one-sided political "witch hunt," even though he acknowledged he didn't read it.

Culture of entitlement

City Hall is locked up tight. Trucks parked out back have been stripped of parts and left to rust. The mail is piling up. There's no money coming in, so the last three employees have walked off the job.

It's as if Hampton has already given up.

Tough times can leave people feeling both deprived and, oddly, entitled. Listen closely, and you can hear that culture of entitlement when some folks from Hampton speak. Moore, the jailed mayor, talks about his disability checks as his "salary."

Smith, the sheriff, believes that folks at City Hall came to treat their government perks in much the same way. He said residents complained to him that police officers and other employees drove city cars home without signing them out. They took them to run personal errands at Walmart. When they filled them up at the BP station, they brought lawnmowers and gas cans from home too and put it all on the city charge card.

The audit was harshest on the former city clerk, Jane Hall. It did not accuse her of any crimes but called into question her handling of some of the city's business.

She acknowledged to CNN that she isn't the most organized person and had no formal training in bookkeeping or accounting. But the books always passed muster with the outside accountants the city hired, she said.

Hall was camera-shy when CNN visited Hampton but later defended herself at length during several phone conversations and e-mail exchanges. She provided spreadsheets and other documentation to support her points. She believes that the case against Hampton has been blown out of proportion.

The money that came in from the tickets went back into the police department, she said. And the police still outspent their budget almost every year.

Hall denies that she was overpaid by $9,000 and says the city's outside auditing company backs her up. The $27,000 on the city's credit card was spent on Christmas parties, flowers, gifts, a fall festival and other events, she said.

The auditors questioned whether parties were an appropriate use of public funds. But she pointed out that the audit never suggested that the card was used for personal expenses.

And she said she provided receipts for the $132,000 charged at the BP. It all went to gas for 10 city vehicles, including police cars, over a three-year span.

The audit also questioned several city checks issued to Hall's family members that were never cashed. Later, a single check in the aggregate amount was made out to Hall herself. She said that the uncashed checks were "payroll" and that if she employed family, it was because nobody else wanted the work. She said she spent hours working with the auditors after she stepped down but was never paid for her time.

Her husband, Charles Norris Hall, served on the City Council for years but didn't take his $125 monthly paycheck when the city was struggling financially, she said. (He resigned from his council seat last week.) It never was the case of a small-town big shot putting his wife on the City Hall payroll. Jane Hall had been a council member as well. She was first elected when she was just 22 years old.

"I think that some of the audit findings have either been misconstrued or deliberately skewed to show me in an unfavorable light," she said. "I do think the move to dissolve Hampton is completely unfair and don't understand who will gain by it."

There is little doubt that Hall has a strong personality and may have intimidated some people in Hampton and angered others. Residents say she spent the days sitting in her City Hall office, chain-smoking. Sometimes she'd turn on the little black-and-white TV and watch soap operas. She is not the type to pull punches.

But if the Halls, Hodges or anyone else in Hampton were getting rich off speeding tickets, they don't have much to show for it.

The Halls' home, a two-block stroll from City Hall, is hardly a palace. As a neighbor described it in a complaint to the sheriff's office, it seems like something from the reality television show "Hoarders":

"This property is full of debris and cars that are not tagged or registered. This yard is very unsafe. They have garbage that is all around their home. There are probably 30 cats and kittens that are running loose in her yard. Looking in her home windows, she is a hoarder."

The complaint describes "unsafe living conditions," including boxes stacked to the ceiling and "a porch so cluttered that a path has been cleared to pass through it all."

Hall responded with a typed, two-page letter asserting that the person making the complaint was doing so out of spite and "using your office as a tool to punish me for her anger against the City of Hampton that she for some reason blames on me." She added that the complainant had her own code violations to worry about and questioned why the county believed it had jurisdiction over the Halls' property, which was within the city limits.

As CNN walked the neighborhood, 81-year-old Jerry Warren grumbled at the nosy strangers about the "vendetta" he thinks is being waged against the Halls. He was quick to defend the couple, describing them as caring neighbors and "honest as the day is long."

Hall said she received three visits in one week from the sheriff's office. Two concerned the feral cats overtaking her yard, and one was to check on a child who came home from school with one of her grandchildren.

She said the visits stirred up the rumor mill. People were sure the police activity was audit-related.

"I certainly do not want any issues with the sheriff's department and have lived my whole life as a law-abiding citizen," she said. She thinks she being made to "look like some kind of criminal mastermind."

"That would be like saying Snoopy is Cujo's twin brother."

'Why is this even a city?'

The politicians in Florida's capital, Tallahassee, were gobsmacked by the audit when it was unveiled February 10 at a public hearing. They used words like "crazy," "outrageous" and "weird" to describe what they heard and struggled to find the right metaphors and points of comparison: Southern Gothic literature, John Grisham novels and Al Capone came to mind.

The city doesn't pay its bills on time, if it pays them at all, the audit says. It doesn't balance the checkbook or withhold employee payroll taxes or hold elections when it should. It doesn't maintain insurance on city vehicles. Record-keeping is hit or miss. The auditors were told that the records they sought were destroyed by an accident or in a flood. The water meter readings? Those were "lost in the swamp."

This was perhaps the most disturbing bit of news to come out of that hearing: City officials acknowledged that petty cash and money from water customers -- the city clerk often demanded payment in cash -- were kept together in a bag. When police said he needed cash to buy drugs for "undercover investigations," it came out of that bag, Smith and Van Zant said.

No records were kept, so nobody had a clue what happened to the money -- or the acquired contraband. This much is clear to Smith: No prosecutions resulted.

In the end, the auditors unearthed a problem far deeper than speed traps and mismanagement. They found evidence of what legislators called "wholesale corruption" and "abuse of the public." The vote was unanimous: request a criminal investigation, a forensic audit and a grand jury and look into getting a special prosecutor.

It was the outraged legislators' idea to take matters a step further and dissolve Hampton. They included Hampton's own representatives in Tallahassee, Van Zant and Sen. Rob Bradley.

"Why is this even a city?" asked Bradley, a former prosecutor whose district also includes the wealthier suburbs of Jacksonville.

It is an unusual step, and no one can recall the last time anyone in Florida pulled the plug on a city for corruption.

Acting Mayor Myrtice McCullough was the only person from Hampton brave enough to travel to Tallahassee and face the legislators in early February, when the audit was released. She looked like a deer in headlights.

"I know that all this stuff looks bad and is bad," she said, adding that most of the council members didn't know what was going on until the audit came back. "We're working really hard to address these issues."

She was asked then whether dissolving the city would have a negative impact on anyone in Hampton.

"I don't know how to answer that," she said.

If this were a script for a Hollywood movie, it would be time to cue the weepy, inspirational music.

McCullough gathered her wits and seemed ready to take on what needed to be done when she addressed the legislators a second time at a recent meeting at the county courthouse in Starke.

She is a lifelong resident of Hampton, and her mother was a popular mayor back in the day. She presented the legislators with a petition to Save Hampton, with about 120 signatures. She asked for their help in teaching Hampton how to function as a city again.

"We have a wonderful bunch of people in Hampton," she said. "I think our people deserve a chance."

Other residents said that they'd been victimized by the monkey business at City Hall and that taking their city away would only victimize them a second time. Two preachers spoke about forgiveness and redemption. One man called Van Zant a "bully" and accused him of "decimating Hampton because you got a speeding ticket."

Van Zant, a God-fearing man himself, denied acting out of spite.

"Read the audit," he retorted. "Enough said."

The first vote was unanimous: dissolve Hampton's 1925 city charter.

Van Zant agreed to delay taking the legislation before the full House to give Hampton a chance to show that it can govern itself. The city has just four weeks to make its case. If it fails, the House will probably pull the plug on Hampton, and the Senate will rubber-stamp its approval. Hampton then would become part of unincorporated Bradford County.

To survive as a city, the good people of Hampton must toss out the old regime at City Hall and bring in new people. Legislators said everyone must go, both elected officials and staff. The city has to get out of the ticket business and give up that finger of annexed land. It has to fix the water system and figure out how to dig itself out of its deep financial hole -- a prospect that could cost every man, woman and child in Hampton at least $500.

It's a tall order. There isn't much time.

"I want to see you succeed," Bradley said. "I want everyone to live in a community they are proud of. But I want everyone to understand that what happened was unacceptable. They should be outraged. I am outraged."

The lawmakers promised to return to Hampton in late March or early April to see for themselves.

Someone will have to find the keys and unlock City Hall, because it could be the biggest crowd since the AAA came to town in 1995 to label Hampton a speed trap.

Can Hampton save itself?

Across from City Hall, behind the BP station where the city ran up $132,000, a typical Hampton house with a No Trespassing sign slowly collapses into itself. Wires run from the house to a camper out back, and three small children play in the tall grass on a broken swing set, among the scavenged toys, bicycles, coolers and car parts.

The children seem happy; their shrieks of delight fill the air when they find a barbell and a wheel rim and make a game of it. Two sluggish men wearing sleeveless undershirts watch from lawn chairs.

This is Hampton, 2014. There's no mortgage on the house; that was paid off years ago. There's no job to go to, no money for this generation to keep the family place fixed up. They don't have anywhere else to go, anyway. This is home.

The malaise that grips the place comes from generations of limited opportunity. It creeps in, takes hold, kills hope and dulls the spirit. When you can't get a break, you learn not to expect one. Hampton looks like a dog that knows what it feels like to be kicked.

The most recent census data show that the average income in Hampton is just under $30,000; about a quarter of the residents live below the poverty line.

"It's just sad, sad that it's getting this bad," said 34-year-old Justis Smith, who has lived in Hampton most of her life. "This is embarrassing for all of us. I think people just got lazy, and nobody was paying attention."

Smith's family runs a successful business fixing up bank-owned houses, and she'd love to fix up Hampton, too, but she thinks the place might be too far gone.

"Right now, honestly, I'd be too ashamed," she said. "It's not all a town of bad people." She believes the current sad state of affairs "isn't necessarily malicious"; people at City Hall just "got a little careless."

For Hampton to make a comeback, "there will have to be a plan that provides confidence quickly," said Krassner, of Integrity Florida. "That community is going to have to find in their 477 residents some strong leadership quickly if their local government is going to continue. There may not be enough time and leadership in that community to restore trust."

But Mitzel, one of the former mayors, echoes the sentiments of many in Hampton when he says a whole city shouldn't die because a state representative got a speeding ticket and two law enforcement officials couldn't get along.

He hopes Tallahassee will give Hampton another chance.

"The government bailed out General Motors. The government bailed out Chrysler. Why can't the state of Florida bail out the City of Hampton?"

He has launched a campaign to "Save our Town of Hampton, Fla." It even has a Facebook page. And 81 followers.