Targeting stolen money

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The Office of the Indiana Attorney General has filed more than three-dozen lawsuits against public officials accused of misappropriating taxpayer money, and local courts and clerks are not immune to those issues.

More claims have been filed since Greg Zoeller took office as compared to previous AG administrations, in part because of a law enacted in 2009. The statutory change has given the state’s top attorney more scrutiny of these situations earlier in the process, allowing for the attorney general to freeze a person’s assets until a final audit report is completed and any legal action is decided. The statutory change also increased the surety bond amounts that local governments carry, meaning that bond can be used to reimburse public funds after a theft or fraud.

greg zoeller Zoeller

Zoeller’s increased attention on public office conduct continues his track record of targeting public corruption and making sure public money is used properly. His efforts have also opened up discussion about how misappropriations are happening in the first place.

“Employee theft and embezzlement is all the more serious when the person is a public servant,” Zoeller said. “Our office zealously pursues those officials who violate the public’s trust to recover for the taxpayers the public funds owed to them.”

Since Zoeller took office in January 2009, he’s filed 37 suits against former public employees to recover more than $1 million. Those suits range from school, police and fire officials to local government officials at county and township offices.

The State Board of Accounts reports that these situations don’t seem to be happening more, but that the new state statute is allowing the AG to file more actions in court to recover money. Often, the audits find local officials don’t keep adequate records. It’s only when the audits show clear evidence that a pattern exists or someone intended to misappropriate money that the AG is brought in to file suit and recover money.

Four cases have been filed as a result of audits showing problems in some small town Indiana courts and clerks’ offices relating to court operations.

The most recent examples came within a week of each other in late September and early October, involving local court operations in Martinsville and Merrillville.

On Sept. 27, Zoeller filed a suit against Cathy Neal, former court clerk of the Martinsville City Court who’s accused of misappropriating $35,569. Neal was responsible for receiving court money such as bond payments and fines, but a state audit found she delayed depositing money for significant lengths of time – on average 62 days. An audit showed the unpaid balance once receipts were reconciled with deposits, and the State Board of Accounts seeks that amount plus $14,265.62 in auditing costs.

On Oct. 4, Zoeller filed a civil suit against former Merrillville Town County Clerk Virlissa Crenshaw to recover funds that had been diverted inappropriately. Crenshaw, as town court clerk, was responsible for collecting bond money, turning it over to the court and keeping records of those amounts. But a State Board of Accounts audit found that for more than five years, Crenshaw appeared to have diverted $310,325 in cash and surety bonds from 456 cases, and some records were entered incorrectly to conceal the loss.

In July, the AG filed a case involving the incumbent LaGrange County Clerk Beverly S. Elliott. According to the state audit, between September and December 2008, the clerk’s office received $6,401 in court fines and fees by credit card, but records show that amount was never deposited into the bank. Another problem found in the state audit involved a trust fund that had been earning interest, and after the trust fund was closed, the clerk overpaid the recipient by $1,600 out of the wrong account. Other bank account shortages were also found, reflecting a total of $18,387 that Elliott owes.

The civil lawsuits against Neal, Crenshaw and Elliott are pending.

misappropriationPrior to Elliott’s case, the last court-related misappropriation suit was in late 2009 and that was one of the first filed under the state’s revised statute.

Non-attorney Bicknell City Court Judge David Andrew Moreland was the sitting judge at the time he was accused and eventually convicted of theft of nearly $21,000 in court funds. A State Board of Accounts audit found Moreland began pocketing the money when he became a judge in January 2008.

The civil suit accused Moreland of failing to enter motorists’ traffic violation payments into the court’s cash book; that he and his wife wrote themselves checks for personal use from the court-fees account; and Moreland used his sole key to a lockbox to conceal fines that people had paid to the police department when the court office was closed. A total of 93 infractions tickets weren’t entered into the system and that money was misappropriated, the suit said.

Moreland was ultimately removed from the bench and the Knox Circuit lawsuit recovered the money and court costs. He and his wife were also convicted of theft in a separate criminal lawsuit.

While those four cases may seem small in comparison to the 37 total, the AG’s office says they reflect a systematic flaw that must be fixed. Those public offices are supposed to be held more accountable because they’re responsible for administering justice. AG spokesman Bryan Corbin said accurate numbers weren’t kept before Zoeller took office on the amount of public misappropriation cases, but he said the sense from those in the office is that these suits are happening more often because of Zoeller’s continuing effort to combat public corruption statewide.

“This has been a trend only in the sense that misappropriation occurs in various city, county, town and township offices all across the state,” Corbin said. “Regardless of the level of government or geography, what these cases typically have in common is there was insufficient oversight.”

That oversight is a focus for Zoeller during the next legislative session. He’s recommending legislation that would require additional safeguards such as dual signatures on expenditures and involvement by multiple people during the bookkeeping process.

No draft bill has been prepared at this time, according to Corbin, but he said the AG plans to push that effort once the session begins.

“We must do more to protect against breaches of public responsibility and reassure the public that this will not be tolerated,” Zoeller said. “This is why I will be asking the Indiana General Assembly next session to pass a bill that would deter such embezzlements.”•


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  1. I think the cops are doing a great job locking up criminals. The Murder rates in the inner cities are skyrocketing and you think that too any people are being incarcerated. Maybe we need to lock up more of them. We have the ACLU, BLM, NAACP, Civil right Division of the DOJ, the innocent Project etc. We have court system with an appeal process that can go on for years, with attorneys supplied by the government. I'm confused as to how that translates into the idea that the defendants are not being represented properly. Maybe the attorneys need to do more Pro-Bono work

  2. We do not have 10% of our population (which would mean about 32 million) incarcerated. It's closer to 2%.

  3. If a class action suit or other manner of retribution is possible, count me in. I have email and voicemail from the man. He colluded with opposing counsel, I am certain. My case was damaged so severely it nearly lost me everything and I am still paying dearly.

  4. There's probably a lot of blame that can be cast around for Indiana Tech's abysmal bar passage rate this last February. The folks who decided that Indiana, a state with roughly 16,000 to 18,000 attorneys, needs a fifth law school need to question the motives that drove their support of this project. Others, who have been "strong supporters" of the law school, should likewise ask themselves why they believe this institution should be supported. Is it because it fills some real need in the state? Or is it, instead, nothing more than a resume builder for those who teach there part-time? And others who make excuses for the students' poor performance, especially those who offer nothing more than conspiracy theories to back up their claims--who are they helping? What evidence do they have to support their posturing? Ultimately, though, like most everything in life, whether one succeeds or fails is entirely within one's own hands. At least one student from Indiana Tech proved this when he/she took and passed the February bar. A second Indiana Tech student proved this when they took the bar in another state and passed. As for the remaining 9 who took the bar and didn't pass (apparently, one of the students successfully appealed his/her original score), it's now up to them (and nobody else) to ensure that they pass on their second attempt. These folks should feel no shame; many currently successful practicing attorneys failed the bar exam on their first try. These same attorneys picked themselves up, dusted themselves off, and got back to the rigorous study needed to ensure they would pass on their second go 'round. This is what the Indiana Tech students who didn't pass the first time need to do. Of course, none of this answers such questions as whether Indiana Tech should be accredited by the ABA, whether the school should keep its doors open, or, most importantly, whether it should have even opened its doors in the first place. Those who promoted the idea of a fifth law school in Indiana need to do a lot of soul-searching regarding their decisions. These same people should never be allowed, again, to have a say about the future of legal education in this state or anywhere else. Indiana already has four law schools. That's probably one more than it really needs. But it's more than enough.

  5. This man Steve Hubbard goes on any online post or forum he can find and tries to push his company. He said court reporters would be obsolete a few years ago, yet here we are. How does he have time to search out every single post about court reporters and even spy in private court reporting forums if his company is so successful???? Dude, get a life. And back to what this post was about, I agree that some national firms cause a huge problem.