On first day of Stevensville embezzlement trial, U.S. assistant attorney calls eight to stand, including St. Joe accountant and present, former village officials
By WILLIAM F. AST III - H-P Staff Writer
Published: Wednesday, July 14, 2010 1:08 PM EDT
GRAND RAPIDS - The prosecution in U.S. District Court on Tuesday appeared to tighten its net around former Stevensville village manager Todd Gardner.
U.S. Assistant Attorney Matthew Borgula on the opening day of the trial laid out a paper trail that appeared to show that Gardner had embezzled $271,696 from village funds.
According to testimony by certified public accountant Stephen Ross of St. Joseph, Gardner transferred the money to his own accounts, obtained a debit card for village funds, and used village funds for mortgage payments, a car, television service, electronic goods, groceries, bills from restaurants (including some in Florida), flowers, health care, clothes, dry cleaning and a $700 outing at Four Winds Casino in New Buffalo.
Gardner used the money "for a lifestyle he couldn't afford," Borgula said in his opening statement. Gardner was indicted in February on wire fraud charges.
Borgula called eight witnesses Tuesday, including Stevensville Village Council President Lori Gibson, some former village officials and bank officials. Borgula expects to call eight more witnesses today, and then it will be the defense's turn at bat.
Borgula and Gardner's lawyers, Sean Tilton and David Kaczor, both of the federal public defender's office in Grand Rapids, agreed they may be ready to make closing statements Thursday morning.
"We're moving really fast," Borgula told presiding U.S. District Court Judge Janet Neff.
Ross during lengthy testimony appeared to do the most damage to Gardner.
At Borgula's direction, he explained copies of bank records - displayed on a screen so the jury could see them - showing how the money was allegedly transferred from village accounts to Gardner's accounts.
Gardner had also obtained a debit card for village funds and had created new accounts, Ross said. He found the village had 18 checking accounts and four investment accounts.
Tilton cross-examined Ross briefly, but appeared content to get him off the stand.
Ross had reconstructed the village's books so they could be subjected to a state audit. The books "were in total disarray," he said on Tuesday.
The state audit showed that money had been taken, and the auditor who presented the findings to the Stevensville Village Council in February said Gardner had been responsible.
Gardner was village manager from April 2006 to May 2009, when the council did not renew his contract.
Gibson was also on the stand for some time. When asked by Borgula, she conceded she had voted in favor of hiring Gardner in 2006, when she was still a trustee.
"I was very impressed at his interview," Gibson said. "He spoke eloquently and he seemed to have a passion for Stevensville and Lincoln Township."
Tilton pecked away at why Gibson hadn't insisted on an audit, or insisted that a new treasurer be hired after Jan Lausch-Zilke resigned in November 2006. "We tried to," Gibson replied.
The indictment charges that Gardner had convinced council members to have an audit every two years, instead of annually, as state law allows for villages. Gardner has denied that, as well as denying he was ever the village's acting treasurer.
"Our manager was acting as treasurer," Gibson replied to a question from Tilton.
"It was a 'yes' or 'no' question," Tilton replied shortly.
Former village clerk Deborah Narregan testified she resigned in February 2007.
Lausch-Zilke testified that Gardner had "locked us (her and Narregan) out of the office, and locked us out of the computer, and that's when I resigned." Gardner had also collected the mail each day, making it nearly impossible to pay bills, she said.
Kaczor made the opening statement for the defense, and painted a very different picture. Kaczor said Gardner, who is 49 years old, has been married to his wife, Barbara, for 25 years, and they have "four lovely children."
Gardner "had some ideas, some very good ideas, for Stevensville," Kaczor said. "He likened Stevensville to a diamond in the rough."
However, "there were a lot of politics going on in that small town," Kaczor continued. "He found he was walking into a hornet's nest. ... He was a full-time manager hired to do a job, but was thwarted by a part-time clerk and treasurer who told him, 'That's not how we do things here.' ... People just didn't like this outsider coming in and telling them what to do."
The council supported Gardner, Kaczor continued.
"There came a time he tried to resign, but they didn't want him to resign," Kaczor said. Before the jury was selected Tuesday morning, Gardner asked for a continuance.
"I don't believe I've had adequate preparation time," Gardner said. He also told the judge he hadn't had enough time to meet with Kaczor, and the prosecution had been late in delivering some documents.
"We've complied with all our prosecutorial obligations," Borgula told Neff.
Even Tilton didn't agree with Gardner.
"I believe we are adequately prepared," Tilton said, adding he's spent some 250 hours preparing for the case.
Neff didn't buy Gardner's arguments, and denied the motions. She added she was confident in Tilton's reputation and experience.
wast@TheH-P.com