For immediate release: Jan 30, 2012
Posted by: [Attorney General]
Contact: Bryan Corbin
Phone: 317.233.3970

AG files suit to recover $34K in public funds owed to Warrick County

Zoeller seeks repayment by ex-bookkeeper to reimburse public treasury

BOONVILLE, Ind. - Indiana Attorney General Greg Zoeller filed a lawsuit today against a former Warrick County parks bookkeeper that seeks to freeze the ex-employee's assets in an effort to recover more than $34,000 in public funds misspent by the bookkeeper.

Named as a defendant in the lawsuit the Attorney General filed is Kristi L. Gates, the former bookkeeper of the Warrick County Parks and Recreation Department. The State's lawsuit seeks $34,393.14 as well as treble damages, costs and attorneys fees from Gates, a Boonville resident.

In an audit report issued December 2, 2011, the State Board of Accounts (SBoA) found that Gates owes $34,393.14 for repeated acts of misappropriation of public funds during her employment as parks department bookkeeper that must be repaid.

"Families who enjoy local parks assume the property taxes and admission fees that they pay will be used to benefit park facilities. According to the audit, this bookkeeper betrayed the public trust by pocketing park funds and using public dollars for her own personal expenses - not once, not a few times, but repeatedly. We have filed this lawsuit to make this individual reimburse the public treasury for the amounts she owes," Zoeller said.

Between December 1, 2009, to May 15, 2011, the SBoA audit found, Gates misappropriated public funds in the following ways:
. The ex-bookkeeper failed to deposit all money collected for the parks and recreation department. The audit found that park gate receipts were often not recorded at all, or recorded at amounts lower than those visitors paid to enter. Money from fees and transactions was not recorded or deposited properly, creating a net cash shortage of $18,025.75, the audit said.

. The audit found five instances where Gates used the park's credit card processing system to create unsubstantiated refunds on her personal credit or debit cards, in effect transferring public money into her personal accounts, totaling $2,252.

. Gates also used the parks department's Sam's Club credit card at least 45 times to make personal household purchases not allowed with public funds, including buying miscellaneous groceries, fuel, a twin mattress and box spring, bed frame, diapers, baby wipes and clothing, totaling $1,778.62, the audit found.

. By failing to file the parks department's sales tax returns to the Department of Revenue, the ex-bookkeeper also incurred $769.58 in penalties and interest, the audit said.

Moreover, it cost the State Board of Accounts another $11,567.19 to conduct the audit of the department's finances, for which the lawsuit also seeks repayment from Gates.

Today the Attorney General filed a motion for a temporary restraining order that asks the Warrick County Circuit Court to freeze Gates' assets - including her four vehicles and any pension or retirement accounts - until a hearing can be held on the State's motion for a preliminary injunction. If granted, the injunction would prevent Gates from selling, transferring or concealing the property until the underlying lawsuit is resolved to preserve assets that could be recovered later to reimburse the county for the amounts misappropriated.

In the State's underlying complaint to recover public funds, Zoeller asks the court to enter a civil judgment against Gates. The Attorney General then could pursue a monetary judgment through collections, and could seek to attach liens on property, garnish wages or take any other actions a creditor could take against a debtor to collect on a debt.

Also named as a defendant is a bonding company, Fidelity and Deposit Company of Maryland, which wrote a $10,000 surety bond on Gates in 2009 and 2010 and a $15,000 bond in 2011 as an insurance policy against theft. By naming the company in the lawsuit, the State seeks to redeem the surety bond to partially reimburse the county for the amount owed. Any portion not covered by bonds would be Gates' personal responsibility.

In October, the Warrick County Prosecutor filed criminal charges against Gates including five counts of theft and two counts of fraud, all Class D felonies. Gates awaits trial, set for March 27. Decisions about filing criminal charges in audit cases are solely the jurisdiction of county prosecutors, not the Attorney General. Whether a public official 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 seeking to reimburse the public treasury, the Attorney General has legal jurisdiction in such cases to file civil lawsuits. Since January 2009, Zoeller's office has filed 41 civil lawsuits around the state seeking to recover public funds based on State Board of Accounts certified audits.

In 2009, the Legislature at Zoeller's recommendation passed House Enrolled Act 1514-2009 that allowed the Attorney General's Office to intervene earlier if misappropriation is suspected in government offices. So that one individual is not left with the sole ability to charge expenses to taxpayers without some oversight or accountability, Zoeller now recommends that dual approvals be required in a government office from at least two employees to authorize expenditures of public funds.

NOTE: The lawsuit the Attorney General filed in Warrick County court is at this link. An audio clip of Attorney General Zoeller's comment on the case is at this link. The State Board of Accounts certified audit report is at this link: http://www.in.gov/sboa/WebReports/B39860.pdf

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