Former Carlos city treasurer charged with felony theft
More money than you know what to do with, could be the case in Carlos. The equivalent of an average person's salary went missing between February 2011 and June 2012.
After reviewing financial records for the city of Carlos, the Minnesota Office of the State Auditor (OSA) discovered that the former city treasurer, Bambi Alexander, received a total of $34,585.31 in unauthorized city checks. Alexander was terminated after more than four years working for the city of Carlos.
Alexander, 37, of Carlos, has been charged with one count of felony theft, which carries a maximum sentence of 10 years imprisonment and a $20,000 fine. A February 25 court appearance has been scheduled.
The OSA investigation revealed that $32,983.17 in checks were written to Alexander that were not paychecks and were not included on registers presented to the council for approval. A total of $1,111.62 in duplicate paychecks were written to the treasurer, $208.60 in inflated paychecks were written and a check written to the treasurer for $281.92 more than the authorized amount was also discovered, according to the OSA.
In June 2012, the mayor of Carlos, Ervin Dahl, contacted the state auditor's office to begin an audit process based on allegations of embezzlement, as stated in the criminal complaint. Upon receipt of the OSA's findings in September 2012, the city of Carlos requested that Douglas County investigate the matter, said Thomas Klecker, city of Carlos attorney.
Douglas County Sheriff's Office Investigator Ron Boyden interviewed Alexander, during which time she admitted to taking money from the city of Carlos, according to court documents. Alexander stated financial difficulties as the reason for embezzlement. She had no idea how much she had taken from the city of Carlos, the criminal complaint said. One of the larger portions of money stolen, $1,500, was to claim her vehicle after it had been repossessed. Alexander planned to give the money back but was unable to do so.
The OSA identified a number of weaknesses in the city's internal control management practices. Recommendations have been made to better protect the city funds in the future.
"The city has implemented a number of changes to prevent this from occurring again," Klecker said.
Checks for the city of Carlos require three signatures, the mayor's, the clerk's and the treasurer's. The OSA found that some checks did not contain all three signatures and some were signed prior to the monthly council meetings. Generally, Minnesota statute prohibits the disbursement of city funds prior to council approval.
Alexander told Boyden that the Carlos city clerk, Marcia Okerlund, worked on Monday evenings while Alexander worked Wednesday evenings. Alexander would inform Okerlund how many check blanks she needed for invoices and Okerlund would leave the signed checks for Alexander. Once Alexander had the signed checks, she would make them out to herself and claim the cash. The complaint stated that Alexander would enter a false vendor name in the handwritten ledger and computer system, "knowing that no one in the city would check to see if they matched."
During the investigation, Alexander was "adamant that Ms. Okerlund had no knowledge of what [Alexander] was doing nor did anyone else with the city of Carlos."
Boyden also interviewed Okerlund regarding the embezzlement. She confirmed that the signatures were in fact hers, not forgeries, and was surprised to hear that Alexander was taking money from the city.
The OSA recognized that a challenge is presented in the segregation of accounting functions with a staff as small as that in Carlos. The state auditor's office said responsibilities among employees should be separated so no single employee can authorize a transaction, record the transaction in the city's accounts and be responsible for the receipts resulting from the transaction.
While the city of Carlos did have a separation of duties regarding bank reconciliations, the OSA found fault in the process. Okerlund reported to the OSA that she performed reconciliations on the handwritten ledger. However the OSA said the reconciliations performed were not adequate.
City of Carlos staff includes a treasurer and a clerk. The treasurer vacancy was filled on January 3, 2013. The treasurer is responsible for handling the city's financial matters. The clerk is primarily responsible for city council meeting minutes, maintaining a list of addresses for city residents and city mailings.
Both the clerk and treasurer are part-time city employees working approximately three hours per week plus special meetings. Klecker said Alexander's salary was not available, but that the unauthorized checks written were not part of her compensation.
The OSA recommended that the city keep a written record of employees' pay. In review of the council meeting minutes, the OSA couldn't find an hourly rate or monthly amount to be paid to the clerk and treasurer. A written contract also could not be found.
Carlos city council meetings are held once a month on the first Thursday. During these meetings, the minutes would be approved and generally would note if the treasurer's report was approved. Computer printouts and a hand-written disbursement register of all checks issued and money transfers during the prior month are included in the treasurer's report.
The city of Carlos uses the Small City and Town Accounting System (CTAS). In May 2012, Alexander informed the council that there was a problem with the software and that she was working with the state to resolve the issue, according to the approved council meeting minutes from May 3.
The OSA found that not all receipts and disbursements for the general fund, utility fund and 4M fund (an investment account) had been recorded in CTAS. Between January 2011 and April 2012, the balance of the city's 4M fund dropped from $136,803.47 to $159.69. Money was transferred from the 4M fund to the utility fund and was used for fire truck payments and a bond payment. Because these entries were not made in CTAS, the city's accounting system was not accurate.
"I don't believe the specific problem was with the software," Klecker said. "The state's software wasn't the primary concern."
Alexander spoke with the Echo Press but was not able to make an official comment pending prior consultation with her attorney.
Crystal Dey Crystal Dey is a staff reporter for the Echo Press. Originally from Minnesota's Iron Range, Dey worked for newspapers in North Dakota, Florida and Connecticut before returning to her home state to join the Echo Press in October 2011. Dey studied Mass Communications at Minnesota State University Moorhead with an emphasis in Online Journalism. Follow Staff Reporter Crystal Dey on Twitter at @CrystalDey_Echo.