Ohio Auditor of State Dave Yost - Press Releases - Special Investigations

Special Audit Confirms Payroll Tampering

Thu, 09 May 2013 12:00:00 -0400

Columbus – A human resources manager at the Columbiana County Engineer’s office tinkered with her husband’s timesheets to increase his pay by $5,200, according to a special audit released today by Auditor of State Dave Yost.

“In the case of this couple, the vow to take each other “for richer” shouldn’t make the taxpayers poorer,” Auditor Yost said. “The people of Columbiana County shelled out money for hours that were never worked, and they should be repaid immediately.”

In August 2012, Columbiana County Engineer Bert Dawson contacted the Auditor of State’s office requesting a review of a possible theft of funds by Human Resources Manager and Chief Financial Officer Christina Phillips. Phillips made false entries into the office’s payroll system to reflect a higher amount of hours worked by her husband, Jordan Phillips, a temporary, part-time employee. The special audit was initiated by the Auditor of State’s office on September 5, 2012 and reviewed records for the period of January 1, 2009 through August 17, 2012.

Mrs. Phillips was responsible for payroll reporting and was the payroll clerk for the engineer’s water and sewer department. In this capacity, she had access to her husband’s payroll information and had the ability to change time clock punches. System audit trail reports found 71 improper adjustments to Mr. Phillips’ timesheet records. Of those adjustments, there were 52 occasions where Mrs. Phillips entered a time in and time out for her husband without evidence that he actually worked the hours. Auditors also identified 19 instances where Mrs. Phillips modified her husband’s hours and those records did not match the actual time recorded by his time clock punches. These adjustments resulted in increases of 394.25 regular hours and five overtime hours that added $5,273 to Mr. Phillips’ compensation.

A finding for recovery in the amount of $5,273 was issued against Christina Phillips and Jordan Phillips. When confronted by the county engineer, Mrs. Phillips denied any wrongdoing, but offered restitution and later resigned from her position.

A full copy of this special audit, including specifics on the findings for recovery, may be accessed online.

###

The Auditor of State’s office, one of five independently elected statewide offices in Ohio, is responsible for auditing more than 5,700 state and local government agencies. Under the direction of Auditor Dave Yost, the office also provides financial services to local governments, investigates and prevents fraud in public agencies and promotes transparency in government.

Contact:
Carrie Bartunek
Press Secretary
614-644-1111

Special Audit of Cleveland Charter School Racks Up $1.3 Million in Findings

Tue, 23 Apr 2013 12:00:00 -0400

Columbus – Employees’ illegal relationships with vendors and shoddy bookkeeping led to more than $1.3 million in findings for recovery issued in the special audit of the Cleveland Academy of Scholarship, Technology, and Leadership Enterprise (CASTLE) released today by Auditor of State Dave Yost.

“The rules are clear -- you can’t be on both sides of the transaction,” Auditor Yost said. “In our schools, the top priority should be the children, not the pocketbooks of the administrators.”

The audit reviewed records from July 1, 2004 through June 14, 2010, and auditors sought to determine whether payments to selected vendors were proper. Auditors also examined any unexplained or unusual bank activity to determine whether transactions were related to school operations.

The review of payments to 134 vendors found numerous occasions where CASTLE failed to provide appropriate documentation to support expenditures and even paid for goods or services for other community schools. There were also instances where board members or employees did not disclose relationships with private companies that conducted business with the school.

A total of 18 findings for recovery were issued in the special audit, totaling $1,352,501. The individuals below are liable for the following amounts (including joint and several liability):

Former CEO William Peterson: $857,963
Partial owner of CASTLE’s management company Dennis Stewart: $367,344
Former Board Member Stanley Jackson: $200,000
Former Treasurer Carl Shye: $144,905
Current CEO Rolando Peterson: $8,829

Additional findings for recovery totaling $135,829 were issued against various vendors due to the inability to confirm that the vendors actually provided goods or services to CASTLE.

The audit findings have been turned over to the Cuyahoga County Prosecutor. In 2012, former CASTLE treasurer Carl Shye was sentenced to two years in prison and ordered to pay restitution for embezzlement related to his work in numerous Ohio community schools.

A full copy of this special audit, including specifics on the findings for recovery, may be accessed online at www.ohioauditor.gov.

###

The Auditor of State’s office, one of five independently elected statewide offices in Ohio, is responsible for auditing more than 5,600 state and local government agencies. Under the direction of Auditor Dave Yost, the office also provides financial services to local governments, investigates and prevents fraud in public agencies and promotes transparency in government.

Contact:
Carrie Bartunek
Press Secretary
614-644-1111

Audit: $31,000 Stolen by Sheriff’s Lieutenant

Thu, 04 Apr 2013 12:00:00 -0400

Columbus – Surveillance video helped establish several counts of theft in office against a Coshocton County Sheriff’s lieutenant, James MacDonald, who was sentenced in January to six months in jail. The findings, including an unreimbursed amount of $10,000 in stolen funds, were reported in a special audit released today by Auditor of State Dave Yost.

“Stealing from the taxpayers is about as bad as it gets—until you see a sworn law enforcement officer doing it,” Yost said. “The credit goes to Sheriff Rogers, who discovered the crime and did good work bringing the theft to light.”

Accounting discrepancies led the sheriff’s office to put its cash register under surveillance, and MacDonald was observed six times taking cash from the register. An investigation of receipts found shortages amounting to $31,290 from collections for WebCheck background checks, eSORN registration fees for sex offenders, and fees for concealed carry permits. Court-ordered restitution of $21,137 was made, leaving a balance of $10,153 owed to Coshocton County taxpayers.

The audit also found that MacDonald improperly wrote two checks totaling $1,532 from an account used to hold personal funds for inmates of the county jail, resulting in an additional finding for recovery.

A full copy of this audit can be found online.

###

Contact:
Carrie Bartunek
Press Secretary
614-644-1111

Columbus Man Charged with Fraud Involving Federally Funded Tutoring Program

Wed, 13 Mar 2013 12:00:00 -0400

Columbus – A federal grand jury has indicted Ashkir Ali, 45, of Columbus alleging that he defrauded the U.S. Department of Education’s Supplemental Education Services Program by billing the program for tutoring sessions that were never provided.

Carter M. Stewart, United States Attorney for the Southern District of Ohio, Thomas D. Utz, Jr., Special Agent in Charge for the North Central Region of the U.S. Department of Education, Office of Inspector General and Ohio Auditor of State Dave Yost announced the indictment which was unsealed today following Ali’s arrest yesterday at his place of business by an agent with the U.S. Department of Education.

“We must protect the integrity of all federally funded programs, such as those established to provide low-income families with educational services that help improve their lives,” U.S. Attorney Stewart said.

“By stealing from the SES Program, these ‘phantom tutors’ are stealing opportunities from the children who need them most,” Auditor Yost said. “Once again, I’m proud of the work we’ve done with our partners on the federal side to ensure that these education dollars go to children.”

Ali owned WAISS Network Technologies and in 2007 signed the first of four annual contracts with Columbus City Schools to provide tutoring for eligible students through the Supplemental Education Services program funded by the U.S. Department of Education. The contract required WAISS to submit student attendance forms with the names of the students, the hours of tutoring services they received, the dates the services were provided and the names of the tutors providing services. Student attendance forms had to be signed by tutors and the student’s parents.

Allegations surfaced of possible misconduct by providers of the Supplemental Education Services Program in 2011. A special audit of the Columbus City School District began in June 2011 after a request was made by Superintendent Gene Harris. The Ali case is the first prosecution to result from the Auditor of State’s special audit, which is ongoing.

The indictment alleges that Ali submitted more than $50,000 in fraudulent claims. The indictment alleges that Ali submitted forms with forged tutor and parent signatures and submitted written claims for payments which falsely represented the number of tutoring hours WAISS provided.

Ali is charged with two counts of making false statements, each punishable by up to five years in prison, and two counts of aggravated identity theft, each of which is punishable by two years to be served consecutive to any other sentence.

Ali appeared before U.S. Magistrate Judge Norah McCann King on March 12 and was released on his own recognizance. Future court appearances will be scheduled by U.S. District Judge Edmund A. Sargus Jr., who is presiding over the case.

U.S. Attorney Stewart commended the investigation by the U.S. Department of Education Office of Inspector General and State Auditor Yost’s Office, as well as Assistant U.S. Attorney Kenneth Affeldt who is representing the United States in this case.

An indictment merely contains allegations, and the defendant is presumed innocent unless proven guilty in a court of law.

###

Contact:
Carrie Bartunek
Press Secretary
614-644-1111

Cincinnati Charter School Superintendent and Treasurer Indicted

Wed, 06 Mar 2013 12:00:00 -0400

Columbus – “Girls weekends” in Chicago, sightseeing tours through California and Europe, and a trip to Boston to see Oprah prompted today’s indictments of the superintendent and treasurer of the Cincinnati College Preparatory Academy (CCPA). Both were indicted on 26 counts of theft in office, unauthorized use of property, tampering with evidence and tampering with records. The indictments’ allegations total more than $148,000 in stolen taxpayer dollars.

“The audacity of these school officials is appalling,” Auditor Yost said. “The good work by our auditors and investigators has built the strongest possible case to ensure they can never use the public treasury as their personal travel account again.”

Today’s indictment includes nine of the most egregious of the more than 20 trips that Superintendent Dr. Lisa Hamm took with staff and family members. Some were for training purposes, but the rest were for “best practice visits.” Most trips tacked on an extra five to ten days beyond the approved training days and spent funds beyond the amounts approved by the board. Stephanie Millard, the school’s contracted treasurer, paid each month’s credit card bills without the knowledge of board members.

Among Hamm’s trips is a $20,000, 10-day tour through California, which included a rental car with a hired driver, as well as countless extravagant meals and hotel stays above and beyond what was required for her training in San Diego. On another occasion, Hamm was supposed to make visits to Chicago charter schools, but instead attended a Tina Turner concert with other female school employees. Hamm also coordinated a trip to Boston for the school’s administrative staff to see Oprah Winfrey. In addition, she took sightseeing tours of Europe with staff members when the purpose of her trip was to fulfill residency requirements for her doctorate program through Walden University.

The Auditor of State’s office received an anonymous tip in November 2006 alleging credit card abuse by Hamm. The complaint was forwarded to the independent auditing firm conducting the school’s 2006 audit. Upon the firm’s review, auditors forwarded documentation to support questionable credit card expenditures to the Auditor of State’s office.

A review of transactions prompted the Auditor of State’s office to initiate a special audit on December 22, 2009, which reviews information from July 1, 2006 through May 31, 2010. The special audit’s scope initially included credit card charges and CCPA payments and was expanded to include a review of non-payroll expenditures for payments unrelated to school operations, as well as a review of certain employees’ compensation to ensure payments were in accordance with board-approved amounts. The special audit is ongoing.

Hamm and Millard were indicted today by Hamilton County Prosecutor Joseph Deters.

###

Contact:
Carrie Bartunek
Press Secretary
614-644-1111

Continued Mismanagement Found at Richard Allen Community Schools

Thu, 28 Feb 2013 12:00:00 -0400

Columbus – Nearly $860,000 is owed to Ohio’s taxpayers due to uncollected money and unlawful contract changes at the Richard Allen Academy Community Schools. Audits of the four Dayton-area community schools were released today by Auditor of State Dave Yost.

“It doesn’t appear that much has changed at the Richard Allen schools,” Auditor Yost said. “Once again, mismanagement of public dollars was found. Ohio’s taxpayers and our children deserve better.”

In response to findings for recovery issued in a prior special audit of the Richard Allen schools, all four schools amended their original contracts with the management company, IMR (Institute of Management and Resources, Inc.). Per an attorney general opinion, retroactive approval of their management company contract is not permitted. Based on the original contracts, IMR was overpaid in the following amounts:

$82,939 by Richard Allen Academy Community School
$282,388 by Richard Allen Academy II Community School
$142, 997 by Richard Allen Academy III Community School
$215,643 by Richard Allen Preparatory Academy Community School

Findings for recovery in these amounts were issued against IMR. Felix O’Aku, who served as treasurer of all four schools during the audit period, is held jointly and severally liable.

The Richard Allen Academy, Richard Allen Academy II and Richard Allen Academy III Community Schools reported accounts receivable balances due from IMR at the end of fiscal year 2010. In each school, IMR repaid portions of the receivable amounts, but there was no evidence that IMR repaid the remaining amounts during fiscal year 2011. Findings for recovery were issued against IMR in the following amounts:

$101,632 for Richard Allen Academy Community School
$18,743 for Richard Allen Academy II Community School
$9,365 for Richard Allen Academy III Community School

At June 30, 2010, Richard Allen Preparatory Academy Community School reported $5,320 in reconciling items that were due from IMR. These items consisted of revenues that were deposited into the IMR bank account instead of the school’s account. There was no evidence that IMR repaid the reconciling items, and a finding for recovery was issued against IMR in the total amount.

Full copies of these audits may be accessed online.

###

Contact:
Carrie Bartunek
Press Secretary
614-644-1111

Statement from Auditor of State Dave Yost

Wed, 27 Feb 2013 12:00:00 -0400

Columbus – The following statement may be attributed to Auditor of State Dave Yost regarding the Ohio Department of Education’s actions following the release of the statewide audit of student attendance data:

"These corrective plans are the right first step, and I commend the Department for taking quick action," Auditor Yost said. "But this will do nothing to fix the weak, 'just trust me' system of self-reporting that opened the door to these practices in the first place. It's time for ODE to design a brand-new system so that parents, children and educators alike will be confident that information is true and resources go where they should.

"The new system needs to be run on the ‘three I's’:

“Information — all the necessary information to make good decisions
Independence — external accountability and validation of the data
Integrity — Measurements need to all be of the same thing, with the same yardstick, and not be able to be easily changed by a single actor.”

###

Contact:
Carrie Bartunek
Press Secretary
614-644-1111

Former Clinton Township Fiscal Officer Sentenced

Fri, 15 Feb 2013 12:00:00 -0400

Columbus – Former Clinton Township (Franklin County) Fiscal Officer Rebecca Christian was sentenced today to four years in prison for her theft of nearly $138,000 in township funds.

"Theft in office deserves time in prison," Auditor Yost said. "Judge Hogan's sentence will send a message to all public employees: Keep your hands out of the till."

The investigation into Christian’s theft began when the Clinton Township Police Department contacted the Auditor of State’s Special Investigations Unit in July 2012. A review of township and Christian’s personal bank records showed numerous transfers of public dollars into Christian’s personal account, totaling nearly $138,000 over and above her set pay.

Christian pled guilty to a bill of information and waived her right to an indictment on November 20, 2012. She was charged with one count of theft in office and one count of tampering with records and was sentenced today by Franklin County Court of Common Pleas Judge Daniel T. Hogan. Christian will serve two years of incarceration for the theft in office charge and another two years for the tampering with records charge. She was also ordered to repay $137,818.33 as restitution.

###

Contact:
Carrie Bartunek
Press Secretary
614-644-1111

Nine Schools “Scrubbers” in Statewide Attendance Audit

Mon, 11 Feb 2013 12:00:00 -0400

Columbus – Four additional school districts were identified as having manipulated attendance data in the final statewide student attendance audit report released today by Auditor of State Dave Yost: Canton City Schools, Cincinnati City Schools, Northridge Local Schools (Montgomery County) and Winton Woods City Schools (Hamilton County). Added to five districts identified in October, a total of nine districts statewide have been found to have “scrubbed” student attendance data.

The Auditor of State also made recommendations to the Ohio Department of Education and the General Assembly to improve the state’s system of accountability and data reporting.

Yost said the Ohio Department of Education should stop its current practice of passive oversight and instead actively monitor district reporting, with support from the General Assembly where necessary. Yost was particularly critical of state policy that leads to focusing on a single “count week” in October, and subsequent practices by districts to boost attendance during only that week, rather than through the entire year.

"Kids count every day, all year long," Yost said. "They deserve better than what we're giving them — Ohio's current system for measuring attendance and performance is obsolete and in too many places, filled with error and bad information and even outright fraud. It's amazing that it works at all, and sometimes, it doesn't.”

In addition to changing count week from a one-time October practice to a year-long continuing practice, Yost also charged the Ohio Department of Education with the duty of more closely monitoring data collection and reporting. Currently, ODE relies upon an honor system of district self-reporting.

The report’s 13 recommendations are the following:

Base State Funding on Year-long Attendance Counts
Increase Oversight of School Districts
Monitor Programs for At-Risk Students
Increase EMIS Training
Increase Use of Automation to Protect Data and Process Integrity
Statewide Monitoring of Student Withdrawals
Allow ODE access to Student Names (SSID) with privacy protections
Establish Separate Tracking for Community School Withdrawals
Protect Report Card Results from Security Vulnerabilities
Centralize Accountability Resources Online
Statewide Standards for Student Information System (SIS)
Document Student Withdrawals
Clarify Rules Over Withdrawal of Foreign Exchange Students

Campbell, Cleveland, Columbus, Marion and Toledo school districts were identified in October as manipulating or scrubbing student attendance data. The recommendation to bring the statewide student identifier system in house at the Ohio Department of Education was also made in October, as part of the ongoing performance audit of the agency.

Auditor Yost’s audit of attendance practices in Ohio’s schools began when results of an internal audit at Columbus City Schools revealed irregular attendance and enrollment practices and similar allegations surfaced at Toledo Public Schools and Lockland City Schools. Today’s report is the third and final phase of the investigation. A separate investigation of Columbus City Schools is ongoing.

###

Contact:
Carrie Bartunek
Press Secretary
614-644-1111

Expected Release of Statewide School Attendance Audit

Fri, 25 Jan 2013 12:00:00 -0400

Columbus — The Auditor of State’s office final report on the statewide school attendance audit will be released February 11.

Fieldwork has been completed and consultations are being held with the Ohio Department of Education and additional school districts found to show evidence of “scrubbing” attendance data.

Auditor Yost’s audit of attendance practices in Ohio’s schools began when results of an internal audit at Columbus City Schools revealed irregular attendance and enrollment practices and similar allegations surfaced at Toledo Public Schools and Lockland City Schools. The first phase of the audit revealed questionable practices at five school districts.

###

Contact:
Carrie Bartunek
Press Secretary
614-644-1111

Former Painesville Schools Employee Bought Personal Items on Taxpayer Dime

Tue, 15 Jan 2013 12:00:00 -0400

Columbus – A former Painesville Local Schools (Lake County) employee filled her kitchen cupboards with $1,777 in food paid for by taxpayers, according to the 2012 audit of the district released today by Auditor of State Dave Yost.

“This audit serves as a perfect example of the importance of internal controls in an organization.” Auditor Yost said. “Beefed-up supervision could have prevented these personal purchases from being made in the first place.”

During the 2012 fiscal year, former Dining Services Director Patricia Weindel purchased $1,422 food items from the Gordon Food Service Marketplace Store in Mentor, Ohio. A review of the purchase revealed that the items were personal in nature and not related to district operations.

While reviewing the Gordon purchases, it was determined that two additional purchases were made for district retirement parties. District documentation showed collections of $1,835 for the retirement parties. Weindel only made deposits for the parties totaling $1,480 – a shortage of $355.

A finding for recovery in the total amount of $1,777 was issued against Weindel. These findings were referred to the Lake County Prosecutor.

A full copy of this audit may be accessed online.

###

Contact:
Carrie Bartunek
Press Secretary
614-644-1111

Special Audit Confirms Missing Money at Ashland County-City Health Department

Thu, 20 Dec 2012 12:00:00 -0400

Columbus – Nearly $90,000 in payments for health services went missing under the watch of a former Ashland County-City Health Department administrative assistant, as confirmed by a special audit released today by Auditor of State Dave Yost.

“It’s no coincidence when $90,000 goes missing,” Auditor Yost said. “Thanks to the teamwork between state and local officials, this former staff member will have her day in court.”

The Ashland County-City Health Department routinely holds flu clinics and provides vaccinations and other services throughout the county. Records are maintained to document the services provided and method of payment. After a specific immunization administered in December 2011, a customer called the health department to inquire about their payment and requested a receipt. While looking into the customer’s request, a nurse found that this immunization was not recorded in the computer.

The nurse notified the department administrator of the missing payment and the administrator notified the Ashland County Sheriff’s Office and Prosecutor. An internal investigation found that there were missing receipts of nearly $90,000. Ashland County Prosecutor Ramona Rogers continued her investigation, and on March 13, 2012, she requested a special audit be conducted by the Auditor of State’s office. The information was presented to the Auditor of State’s Special Audit Task Force, and the special audit was initiated on March 14, 2012.

The special audit reviewed the daily records kept by the health department for the period of October 1, 2006 through December 31, 2011 to determine if nursing receipt collections were paid into Ashland County intact. Auditors found that $89,061 received by the nursing department was not receipted into the county’s computer system or paid to the county. Former Administrative Assistant Heather Drotleff was responsible for recording the receipts into the computer system and making the deposits. A finding for recovery in the full amount was issued against Drotleff.

Through the joint efforts of the Auditor of State’s office, the Ashland County Prosecutor’s Office, the Ashland County Sheriff’s Office and the Ohio Bureau of Criminal Investigation and Identification, Drotleff was charged with 42 counts of theft in office, 21 counts of forgery and two counts of engaging in a pattern of corrupt activity. She is scheduled to stand trial for the charges on March 5, 2013.

A full copy of this audit may be accessed online.

###

Contact:
Carrie Bartunek
Press Secretary
614-644-1111

Audit Rejects $200,000 in Medicaid Psychology Charges

Tue, 18 Dec 2012 12:00:00 -0400

Columbus – By coding assistants as licensed psychologists in bills submitted to Ohio Medicaid, provider Dr. George Serednesky (Franklin County) improperly charged the state more than $186,000 over four years, according to an audit released today by Auditor of State Dave Yost.

“Regulations require that if you bill for psychologists, you provide psychologists,” Auditor Yost said. “You can’t leverage your business operation by shortchanging the rules.”

The audit identified $186,192.32 in services provided from July 1, 2007 to June 30, 2011 that either did not have proper documentation or were not provided by licensed psychologists. Medicaid does not cover services provided by psychology assistants; the provider billed Medicaid and was reimbursed as if the services were provided by licensed psychologists. Interest in the amount of $14,355.97, along with incidental findings, brings the total due to $200,963.11.

The Auditor of State’s office performs audits of Medicaid providers to ensure compliance with reimbursement rules and to confirm that services billed to Ohio Medicaid are properly documented and consistent with professional standards of care, medical necessity, and sound fiscal, business, or medical practices.

A full copy of this audit can be found online.

###

Contact:
Carrie Bartunek
Press Secretary
614-644-1111

Bellaire Audit Confirms Former Utility Clerk’s Theft

Thu, 13 Dec 2012 12:00:00 -0400

Columbus – More than $18,000 in utility payments went into the pockets of the Village of Bellaire’s (Belmont County) former utility clerk, as confirmed in an audit of the village released today by Auditor of State Dave Yost.

“As former Governor and State Auditor James Rhodes once said, ‘Don’t lie to the people and keep your hands out of the till’,” Auditor Yost said. “Thanks to the good work of local law enforcement and my staff, Flaherty is doing the time for her crimes against taxpayers.”

Former Utility Clerk Lisa Flaherty was responsible for collecting and posting utility payments and preparing deposits to the village’s utility bank account. During the course of the village’s financial audit, auditors from the firm Rea & Associates found that some utility collection bank deposits did not match the amounts posted to the department’s computer system. Further work by the firm determined that $18,125 in collections were not deposited in the village’s utility bank account.

Auditors found 87 instances of shortages in customer accounts – 61 shortages totaling $10,835 in 2011 and 26 shortages totaling $7,290 in 2012. Of these amounts, a total of $333 were posted to Flaherty’s personal utility account.

A finding for recovery in the total amount of $18,125 was issued against Flaherty. In conjunction with Belmont County Prosecutor Christopher Berhalter and Bellaire Police Chief Mike Kovalyk, the Auditor of State’s office conducted a formal investigation. Flaherty failed to report to work on April 7, 2012, the day after the Auditor of State’s office was notified of the missing funds.

On May 24, 2012, the Auditor of State’s office sent two officers from the Special Investigations Unit to Binghamton, New York and they worked with local law enforcement to apprehend Flaherty. She faced three charges: 1) a third degree felony of tampering with evidence; 2) a third degree felony of theft in office; and 3) a forth degree felony of tampering with records. On November 19, 2012, she was sentenced to 18 months in jail. In addition, Flaherty’s OPERS account was frozen, and the funds will be used to pay a large portion of the findings.

A full copy of this audit may be accessed online.

###

Contact:
Carrie Bartunek
Press Secretary
614-644-1111

Statement from Auditor of State Dave Yost

Mon, 19 Nov 2012 12:00:00 -0400

Columbus –Auditor of State Dave Yost issues the following statement regarding the sentencing today in the Belmont County Court of Common Pleas of former Bellaire water clerk Lisa Flaherty:

“Congratulations to Prosecutor Berhalter for an effective and efficient prosecution,” Auditor Yost said. “I’m delighted that the court imposed prison time. Theft is always the first priority when it comes to public money.”

In April, Flaherty fled the state following an investigation by the Auditor of State’s Special Investigations Unit into missing funds from the village water department. The SIU worked with Belmont County Prosecutor Christopher Berhalter and Bellaire Police Chief Mike Kovalyk to conduct a formal investigation on the allegations. Flaherty was later arrested in Binghamton, New York.

###

Contact:
Carrie Bartunek
Press Secretary
614-644-1111

Former Fiscal Officer Indicted on 30 Counts of Theft in Office

Thu, 08 Nov 2012 12:00:00 -0400

Columbus – Former Augusta Township (Carroll County) fiscal officer Darla Turnipseed (now Darla Murray) was indicted Wednesday by the Carroll County Grand Jury on 30 counts of theft in office.

The case was presented by Carroll County Prosecutor Don Burns. Irregularities in the township’s accounts were discovered by auditors during the township’s regular financial audit, and Auditor of State’s office investigator Andrew Bodzak investigated the case on behalf of the AOS Special Investigations Unit.

“Congratulations to Prosecutor Burns and to the auditors who discovered this theft,” Auditor Yost said. “The people of Augusta Township deserve better than to have already limited funds stolen from them.”

During a several year period from 2009 to 2012, Turnipseed is alleged to have forged signatures, falsified records and used public funds to pay personal expenses. The charges include both fourth and fifth degree felonies. Approximately $25,000 is alleged to have been stolen.

###

Contact:
Carrie Bartunek
Press Secretary
614-644-1111

Statement from Auditor of State Dave Yost

Wed, 31 Oct 2012 12:00:00 -0400

Columbus – Auditor of State Dave Yost issues the following statement regarding the sentencing today in U.S. District Court of former community school treasurer Carl W. Shye, Jr.:

“Apart from the obvious exception of violence, there is no worse crime than what Carl Shye did: He abused a position of trust,” Auditor Yost said. “His actions not only took resources away from the students in the schools where he took advantage, he damaged a great program in the minds of Ohio parents and taxpayers alike.”

In June 2012, Shye pled guilty to one count of embezzlement from a program receiving federal funds. Shye admitted stealing $472,579.90 in federal funds between 2005 and 2011 while serving as treasurer for four community schools in Ohio.

###

Contact:
Carrie Bartunek
Press Secretary
614-644-1111

Audit Identifies $9,700 in Missing Funds at Village of Jerusalem

Tue, 23 Oct 2012 12:00:00 -0400

Columbus – Falsified authorization to increase her own pay and writing checks to her own family members—then endorsing them herself—were among findings in excess of $9,700 issued against the former clerk of the Village of Jerusalem (Monroe County), according to a special audit released today by Auditor of State Dave Yost.

Michelle Kurtz was indicted in August by the Monroe County Grand Jury on charges of theft in office and tampering with records. The theft was discovered by village officials, who contacted the Auditor of State’s office.

“It is hard to police your own, and I commend the village for flagging the problem as they did,” Auditor Yost said. “As much as we all want to believe in the good faith of our government officials, the truth is too many are too susceptible to the fraud triangle of opportunity, need and rationalization.”

During a three-year period, Kurtz received authorized compensation of approximately $4,800 annually. Among her duties were preparing minutes of meetings and issuing checks for payroll and other village expenditures. During a regular financial audit, Kurtz presented to auditors minutes and an ordinance authorizing an increase in her salary; village officials identified the minutes and ordinance as fraudulent.

Non-payroll checks totaling $9,052 written to Kurtz were not authorized by council. Kurtz repaid $500 to the village prior to the initiation of the special audit and an additional $3,000 during the audit, resulting in a finding for recovery in the amount of $5,552.

Kurtz also wrote checks to her son totaling $4,150 that village officials said were not authorized, resulting in a second finding for recovery against Kurtz in the amount of $4,150.

A full copy of this audit can be found online.

###

The Auditor of State is one of five independently elected statewide offices under the Ohio Constitution. Auditor Yost’s office is responsible for auditing over 5,600 state and local government agencies. Staff also works in partnership with state and local governments to deal effectively with financial, accounting and budgetary issues.

Contact
Public Affairs
(614) 644-1111

No Evidence of Scrubbing Found in Second Phase of Attendance Data Audit

Tue, 23 Oct 2012 12:00:00 -0400

Columbus – No new instance of potential record “scrubbing” was found in the second interim report concerning the review of school attendance practices in Ohio, released today by Auditor of State Dave Yost.

“I’m surprised and pleased,” Auditor Yost said. “To have zero incidents of ‘scrubbing’ is encouraging news.”

This November, 184 school districts in Ohio have levies or bond issues on the ballot. The Auditor of State’s office selected 81 school buildings in 47 districts to test for questionable student attendance practices in this second phase of the statewide audit. The schools tested in the first phase of the audit were excluded from the second phase sample.

53 buildings were considered “clean” with no issues identified to date;
20 buildings had records containing sporadic errors; and
8 buildings still have testing ongoing and are considered “indeterminate” at this time.

The Auditor of State’s office also excluded an additional 26 districts from testing based on their low percentage of tested students “rolled-up” to the state for the 2010-2011 school year.

Auditor Yost’s audit of attendance practices in Ohio’s schools began when results of an internal audit at Columbus City Schools revealed irregular attendance and enrollment practices and similar allegations surfaced at Toledo Public Schools and Lockland City Schools. The first phase of the audit revealed questionable practices at five school districts.

A full copy of this interim report may be accessed online.

###

Contact:
Carrie Bartunek
Press Secretary
614-644-1111

Nearly $4.2 Million Stolen from Cuyahoga Heights Schools

Tue, 16 Oct 2012 12:00:00 -0400

Columbus – Nearly $4.2 million was stolen from the Cuyahoga Heights School District by a former IT director according to a special audit of the district released today by Auditor of State Dave Yost. In a press conference today, Auditor Yost and Superintendent Dr. Edwin Holland outlined the findings.

“What the Palazzo brothers did stuns the conscience – money for nothing,” Auditor Yost said. “We are sending this to the prosecutor for consideration of criminal charges.”

This special audit focused on payments made to vendors for IT equipment by former district IT Director Joseph Palazzo. Auditors reviewed records for the period of July 1, 2007 through February 22, 2011.

According to audit findings, Palazzo authorized 436 payments for a total of $3,844,155 to seven companies for which the district received no goods or services. These payments were made to seven vendors, all of which were owned or operated by family members or friends of Palazzo. Ten findings for recovery were issued against various vendors and individuals for the total amount of $3,844,155.

Another 179 transactions totaling $336,495 were found to be made for goods or services that cannot be located by the district. For example, certain individuals not employed by the district received equipment, cellular phones, accessories and service plans, all paid for by the district. A finding for recovery was issued against Joseph Palazzo in the amount of $336,495, with additional individuals held jointly and severally liable for portions of the amount.

Additionally, a review of bank records revealed payments totaling $1,308,194 were made directly to Joseph Palazzo from four of the seven vendors after they received their payments from the District.

The findings in this special audit have been forwarded to the Cuyahoga County Prosecutor’s office.

In February 2011, a Cuyahoga Heights School Board member contacted the Auditor of State’s office to express concerns over district IT purchases. Auditor of State staff also met with the district’s treasurer, who expressed similar concerns. A preliminary examination of records was conducted and reviewed by the Auditor of State’s Special Audit Task Force. The special audit was launched on March 1, 2011.

A full copy of this special audit may be accessed online.

###

Contact:
Carrie Bartunek
Press Secretary
614-644-1111