Trustees: We were fooled
Stevensville elected officials regret missing signs of financial mess
By WILLIAM F. AST III - H-P Staff Writer
Published: Thursday, February 25, 2010 1:09 PM EST
STEVENSVILLE
Critics say Stevensville Village Council members should have noticed the alleged embezzlement of $293,140 that has left them struggling to pay bills and has ravaged the public trust in village government.
But while hindsight is 20/20, actually spotting something gone horribly wrong wasn't so easy, some council members said.
"Looking back on it, the thing is, the lie was so grand, it was so complex, so multi-faceted," Trustee Don Meyer said. "I don't think I could have done anything."
"Looking back, you know, you wonder," said Trustee Ken Hansen, who took office in January 2008. "I was new to the books. I didn't see any books, just the paperwork put in front of me. I guess because I was new, I trusted the person that put it in front of me, that his figures were right."
Former village manager Todd Gardner was indicted Monday in U.S. District Court on charges that he misappropriated the funds from the village, and is scheduled to be arraigned Friday. He faces up to 20 years in prison if convicted, and the government "seeks return of the proceeds and, if the proceeds cannot be recovered, substitute proceeds or property," according to a press release from the U.S. Attorney's office.
Gardner was manager from April 2006 to May 2009, when council members did not renew his contract - amidst growing concerns that something didn't add up, and maybe something was very, very wrong.
"Back in September of '08, we gave (Gardner) a direct order to get the books in order for our audit, and he more or less blew us off," Hansen said. "We then tried to get him to come across, short of asking him to resign. In hindsight, maybe that's what we should have done."
The council had decided to have an audit every two years, which is allowable under state law. Council members say that was Gardner's idea, a move to save $15,000, though he's denied that. But after Gardner's contract wasn't renewed, the village called in accountant Stephen Ross to reconstruct the financial books of the last two fiscal years. And Ross concluded that money had been taken - a lot of it.
Once the books were redone, the Michigan Department of Treasury performed the audit. The audit confirmed the misappropriation, but heavily criticized the council for its failure to adequately keep an eye on what Gardner was doing.
"The Village Council has failed to monitor the internal control activities of the Village," the audit said. "The former Village Manager was given full control of the Village's financial records with no oversight."
At last week's council meeting to accept the audit, auditor Derek Hall said Gardner took the money. He said, "But you, as the council, are just as responsible because you gave him the keys to the kingdom, and provided no oversight."
However, Gardner was very plausible, Meyer said.
"The auditor mentioned we had discrepancies (in the books)," Meyer said. "It's not like those things went unnoticed, but there was always an explanation. In hindsight, you can see it, but he always had an explanation, and it was always based on some form of the truth.
"We all tried to assert ourselves. We're intelligent and educated people. He knew that. He knew there had to be something for us to intellectually grab on to, to make it stand."
"We knew we had to make a change," Hansen said. "We were into May, and nothing was going on with the audit. We knew that was very detrimental. But we were pushing and pushing and pushing and didn't get anywhere."
After the council in May voted not to renew Gardner's contract, "We went in there with the attitude that we gotta find out what's going on," Hansen said. "He was very reluctant. He wouldn't tell us nothing. We couldn't get into the computers, and that's where all the facts were at."
As with Meyer, Hansen acknowledges there were warning signs, but wonders how he could have known what those signs meant.
"He really fooled us," Hansen said. "I'm not sure if I'd have picked up on it. You've seen the paperwork. I really didn't have the expertise to dispute it. ... I didn't get involved in the books. My expertise is in man-to-man working, and I tried to help out with the Department of Public Works."
Meyer also said finance isn't his strength.
"I'm not on the finance committee, and there is a good reason for that," Meyer said. "Those things are a mystery to me. There are things I know a lot about. Finances and government finances are not a strong suit for me. So looking at those papers he handed out, the budgets, basically I'm looking for what's the bottom line and trusting the bottom line is truth. Unfortunately, it wasn't even close."
Trustee Pat Arter wishes she had been more assertive.
"I should have been more vocal," Arter said. "I tried to speak up to the president (Steve Hinrichs at that time). I asked questions. I felt like I did see some things (but) I wasn't privy to finance.
"I just should have spoke louder. I should have been a little pushier. I was already considered a pain to a lot of people there. Hindsight's 20/20. I wish I would have pushed some things harder than I did."
Should anyone resign?
Some upset residents have called on the council to resign. Hansen said he sympathizes, but wonders who is going to take the council members' places.
"Yeah, I get down," Hansen said. "I questioned, 'Should I resign?' Nope. I ran for office and was elected, and I will serve time trying to correct the mistakes that were made."
Hansen said the council would welcome more citizen participation and help.
"We've asked for people's help on committees. We want people's help," Hansen said. "Nobody wants to get involved. ... People said the whole trustee board should resign. What if that happened? Where would that leave the people of this village?"
Arter said she won't resign.
"I wanted to resign many times over the last couple of years," Arter said. "A couple of people who I respect a lot, primarily my husband (Bruce), encouraged me to stay through my term. I'm not a quitter, but I was having a hard time staying."
Now, however, "I felt I could see light at the end of the tunnel," Arter said. "I was there when this happened, and I felt like I could also be there to try to make it right."
However it works out, council members say they feel bad, embarrassed that they got taken in and betrayed by someone they trusted.
"All I can say is I feel really bad about what has happened on my watch," Trustee Don Schlipp said. "We are working very hard to make sure it never happens again. We all care about the village of Stevensville. It's our home, and we think it's a great place to live."
"I guess my biggest disappointment, in me, is that I trusted him," Hansen said. "He was our manager, and he did wrong. I wish that I was more knowledgeable, and more forceful."
Hansen said the council cannot and does not want to escape its ultimate responsibility, but added no one should lose sight of one thing.
"Todd did wrong," Hansen said. "There wouldn't have been no problem if he hadn't done wrong. But he did wrong."
Controls in place
"We've got a huge bump in the road here," Council President Lori Gibson said. "But we're going to come out of this."
Gibson said there are a lot of checks and balances in place now, and a lot of help is available if employees run into problems.
The village has a part-time manager, a part-time clerk, Tiffany Moore, and a part-time treasurer, Dawn Rush, Gibson said, adding that having part-timers in those positions saves $50,000 a year. Moore and Rush may call Ross, the accountant, if they have any questions, she said.
Both have mentors, Gibson said, including Lincoln Township Clerk Stacy Loar-Porter and Treasurer Terri Smith, and Baroda Village Clerk Diane Mensinger and Treasurer Amy Hemphill.
Derek Perry is coming in as part-time manager, replacing interim manager Bret Witkowksi.
Gibson said she and Rush must sign all checks. Bills are attached to each check, and she reads all the bills and the checks aren't released until any questions are answered, she said.
Gibson cited as an example a recent incident in which a public works payroll check had some overtime hours on it.
"I went back to the interim manager, I went to the interim supervisor of DPW, to see if they had approved municipal overtime," Gibson said. "They had not, nor had I. ... Policy said all municipal overtime shall be pre-approved. Even on the check stubs, I'm reading every line to make sure I'm reading that we're living within our guidelines."
The employees did not get compensated for their overtime hours because "it was not pre-approved," Gibson said. Instead, they will get "comp time in lieu of that," and the village discussed the policy with them so there would be no misunderstandings about overtime, she said.
Otherwise, "we're trying to trim the fat, just like every community is doing because state revenue sharing is down," Gibson said. "Another specific way we changed is changing the deductible for health insurance, which saves $4,000 a year.
"And little things like you do at home. We don't have heat in the council room during week. The thermostat is dialed back down to 62. All these little things add up to savings at the end."
The thermostat is set at 68 during meetings, Gibson said.
Trustees Kim Peters and Steve Slavicek did not return calls from The Herald-Palladium.
wast@TheH-P.com
