CROWN POINT, Ind. – Indiana Attorney General Greg Zoeller’s office filed a lawsuit today against a former school extracurricular treasurer who according to state audits collected more than she deposited, misappropriating more than $22,000 from two schools in Cedar Lake, Ind. The Attorney General’s lawsuit filed in Lake County demands that ex-treasurer Jennifer Grcich repay the amount and reimburse audit costs.
Grcich was extracurricular treasurer at two schools in the Hanover Community School Corporation in Cedar Lake: first at Lincoln Elementary School from July 2010 to December 2011 and then at Hanover Central High School from December 2011 until her termination in November 2012.
In two separate State Board of Accounts audits issued April 4, examiners found that Grcich failed to deposit some textbook rental fees and other payments she received from parents at both schools where she was employed. At the high school, she also received but failed to deposit some payments that families made for gym uniforms, athletics transportation fees, parking permits and payments sponsors made for cheerleading fund-raising. The audit concluded Grcich misappropriated the money and is obligated to repay it.
“What a poor example it sets for students when a school employee entrusted with parents’ hard-earned money decides to pocket those funds instead. My office will make every effort to recoup misappropriated funds from this defendant who violated the public trust and return that money to the school treasury,” Zoeller said.
According to the two SBoA audits, the amount of textbook rental and other fees that Grcich collected at Lincoln Elementary but failed to deposit in the school corporation’s account was $10,060.35. The amount Grcich collected at Hanover Central but failed to deposit was $12,128.75. The State Board of Accounts is seeking equivalent amounts as reimbursement for its costs to audit the school records, for a total $44,378.20 sought from Grcich, a Cedar Lake resident.
By issuing certified audit reports, the SBoA authorizes the Attorney General’s Office to collect from defendants in order to reimburse the public treasury. The lawsuit the Attorney General filed against Grcich today – called a complaint to recover public funds -- seeks $44,378.20 from Grcich, as well as treble damages, attorneys’ fees and costs.
Today the Attorney General’s Office also filed a motion for a temporary restraining order that asked the Lake County court to freeze Grcich’s assets – including four vehicles and any bank accounts and pension or retirement accounts – until a hearing can be held on the State’s motion for a preliminary injunction would prevent her from selling, transferring or concealing the property until the underlying lawsuit is resolved to preserve assets that could be recovered later to reimburse Hanover Community Schools for the amounts misappropriated. Judge Diane K. Schneider in Lake County Superior Court 11 today granted the temporary restraining order and scheduled a hearing on the State’s motion for a preliminary injunction for 11 a.m. April 23.
In the State’s underlying complaint to recover public funds, Zoeller asks the court to enter a civil judgment against Grcich. The Attorney General then could pursue a monetary judgment through collections, and could seek to attach liens on her property, garnish wages or take any other actions a creditor could take against a debtor to collect on a debt.
Also named as defendant in the lawsuit is Ohio Casualty Insurance Company of Fairfield, Ohio, which wrote two bonds of $12,000 each on the extracurricular treasurer position in 2010 and 2011 and a separate $15,000 bond on the position in 2011, as insurance against employee theft. By naming the company in the lawsuit, the State seeks to redeem the bonds to partially reimburse the school corporation for the amount owed. Any portion not covered by bonds would be Grcich’s personal responsibility.
Decisions about filing criminal charges in audit cases are solely the jurisdiction of county prosecutors, not the Attorney General. Whether a public employee is civilly responsible for repaying misappropriated funds is a separate issue from whether they are criminally responsible for a loss. Through his role as collection agent for the State, the Attorney General has legal jurisdiction to file civil lawsuits to recover public funds based on SBoA certified audit reports.
Since January 2009, the Attorney General's Office has collected approximately $2.4 million from former government officials whom the State Board of Accounts found had misappropriated public money. Many of the acts of misappropriation occurred because an individual had the ability to divert or embezzle public funds with no oversight or supervision. Zoeller recommends the Legislature pass House Bill 1333, legislation to expand the SBoA’s authority to require separation of duties and other internal controls on all categories of local government offices where audits have revealed accounting problems, to make misappropriation more difficult for defendants to commit.
NOTE: The complaint to recover public funds and motion for temporary restraining order and preliminary injunction the Attorney General filed today in Lake County Superior Court is attached. The State Board of Accounts certified audit reports are at these links:
Lincoln Elementary School, audit report B42047:
Hanover Central High School audit report B42408: