Gardner pleads not guilty
Stevensville's ex-manager arraigned in U.S. District Court in Grand Rapids; has a court-appointed lawyer
By WILLIAM F. AST III - H-P Staff Writer
Published: Saturday, February 27, 2010 1:08 PM EST
GRAND RAPIDS - Former Stevensville Village Manager Todd Gardner in U.S. District Court on Friday pleaded not guilty to charges of taking $293,140 from the village.
U.S. Magistrate Judge Joseph Scoville read the charges against Gardner and the potential penalties and asked Gardner whether he understood them. In each instance, Gardner replied, "Yes, sir," or "I do, sir."
U.S. Assistant Attorney Matthew Borgula, the prosecutor, said outside the courtroom that a trial date has not been set, but added he expects it to be set shortly as the trial has to held within 70 days. Gardner is free on $25,000 bond.
Scoville told Gardner that, if convicted, he faces up to 20 years in prison, three years' probation afterwards and a $50,000 fine and other costs.
If found guilty, Gardner also would have to pay restitution of the $293,140 he allegedly took, Scoville said. If he can't pay, the government "shall be entitled to forfeiture of substitute property," the charges against him said.
Gardner, dressed in a white shirt and not wearing a tie, appeared attentive but impassive as Scoville spoke. Gardner is being represented by Sean Tilton, an assistant federal public defender from Grand Rapids appointed by the court to defend him.
After the arraignment, both Gardner and Tilton declined to make any comment.
In court, Borgula told Judge Scoville that the evidence against Gardner is mostly in paper form. He said he will get together with Tilton next week to give the public defender any evidence he wants to see.
The Stevensville Village Council hired Gardner in April 2006. In May 2009, the council did not renew his contract.
Gardner is charged with making unauthorized wire transfers of money and taking money in other ways while he was manager. The indictment identifies him as the village's treasurer as well as its manager, though Gardner has denied being treasurer.
Some of the money was allegedly used to pay down a mortgage on his house.
The indictment says Gardner made an unauthorized withdrawal of $22,064 from the village's construction administration account, an account he had created, then got a cashier's check for that amount payable to Countrywide Mortgage. He used the transaction "to pay down a mortgage on his personal residence," the indictment said.
Gardner also allegedly took $25,844 from a village Downtown Development Authority account and gave a cashier's check for $23,294 to Homecomings Financial to pay the mortgage down, the indictment said. A second cashier's check for $2,250 went to R&B Rentals, the indictment said. In both cases, Gardner "concealed his unauthorized withdrawals by failing to record the unauthorized withdrawals in the Village's accounting record," the indictment said.
The indictment also said Gardner:
-- Made at least 15 unauthorized wire transfers totaling $145,795 from the village's building and major street funds to his own bank account under the name of Southshore Marketing, Gardner's former business;
-- Drafted five paychecks for himself totaling $6,888, when he'd already gotten paychecks for those periods;
-- Withdrew $77,989 from a public works bank account he had created, granted himself ATM privileges on that account and concealed it by not recording withdrawals in the village account;
-- Made unauthorized purchases with village funds totaling $14,557 at Lowe's and Office Depot, using the items "for his personal benefit."
The indictment claims that Gardner "convinced members of the Village of Stevensville Village Council that an audit of the Village's books and records was unnecessary. When an audit was finally commenced, Defendant refused to disclose certain documents and records material to the auditors."
Stevensville's books hadn't been audited since fiscal 2006. State law allows villages to have their books audited every two years instead of annually. Council members have said Gardner talked them into having an audit every two years to save money, though he has denied doing that.
In November 2006, several months after Gardner was hired, Treasurer Jan Lausch-Zilke resigned, reportedly after run-ins with Gardner.
Gardner told The Herald-Palladium he'd made several attempts to resign, and each time the council talked him into staying. In a Sept. 6, 2006, letter to then council President Steve Hinrichs, Gardner said, "The persistent lack of cooperation, professionalism and accountability from certain employees and interference from other officials has made the environment and circumstances of my employment as Village Manager intolerable."
At a meeting with the council last week, state auditor Derek Hall said, "Once the previous treasurer resigned, the illegal activity began within a month."
Gardner in the Sept. 6, 2006, letter also wrote that he "repeatedly identified and presented a number of serious deficiencies in the Village recordkeeping, accounting systems, controls and procedures, payroll, investments, cash management, expense and payable disbursements to name a few." An audit showed those issues dated back to 2001 "and still remain unaddressed," Gardner wrote.
Council members have said in 2009 they pressed Gardner to get the books ready for an audit, but he did not cooperate.
Once Gardner left the village's employment, officials found the financial books were in disarray. Officials called in a certified public accountant to rebuild the books, and CPA Stephen Ross found that money had disappeared.
The Michigan Department of Treasury then audited the village's books for the past two fiscal years and said $277,647 was missing. The audit refers several times to "misappropriation" of funds but does not name Gardner. Auditor Hall, who presented the audit to the council at a special meeting, did name Gardner, however.
The council hired Berrien County Treasurer and former Stevensville Village Manager Bret Witkowski to be interim manager. Witkowski has limited the village to paying no more than $35,000 a month in bills until the shortfall is made up in 17 to 27 months.
Witkowksi said a much worse problem is the $691,435 in loans that the village's DDA owes for buying lots to expand the downtown.
wast@TheH-P.com
