City promises to pursue restitution
City officials are discussing restitution with the Waupaca County district attorney’s office in preparation for next month’s sentencing of former Parks and Recreation Director Jim Ash.
“You know, this is tough. We’re mad. We’re mad that this could happen to our community. Even though I feel sorry for the kids, Lisa and even Jim, we will work to get that money back, and we will work to get the restitution for the organizations also,” Mayor Brian Smith said Tuesday, May 3, during a special meeting of the Common Council.
All 10 members of the council were present, as well as about a dozen local residents. The public was not invited to address the council.
The meeting was held to discuss the investigation of Ash.
The 47-year-old Ash, who resigned in May 2010, entered a plea of no contest to felony theft on April 21.
He is accused of stealing almost $150,000 from the city since April 15, 2005. Ash was the city’s parks and recreation director for 20 years.
The funds were channeled through the Waupaca Recreation Participants account, which was not a city account.
During the special council meeting, the city’s elected officials asked the questions that have been not only on their minds but on the minds of those they represent.
“The question I have been asked the most,” Ald. Deb Fenske said, “is if someone sets up a separate account outside the city, how could we have not known when we have an outside auditor come in every year?”
Smith said, “The account was originally set up in 1992 to do fundraising. At that time, they applied for a separate federal identification number.”
As a result, the account would not have been part of the city’s account, he said.
City Administrator Henry Veleker said the annual audit of the city identifies what the city’s financial situation is at the end of each year. “The purpose is not to seek out fraud,” he said.
The meeting began with Smith explaining how the city learned about that account.
“Back in April of last year, a city employee who worked in the Park and Rec Department told another city employee who worked in the Park and Rec Department that $400 was missing out of a cash drawer in the recreation office, and they suspected that Jim Ash had taken that money,” Smith said.
He said the “second employee” informed City Treasurer Jean Peterson.
Peterson immediately contacted Police Chief Tim Goke. The mayor and City Administrator Henry Veleker were also contacted.
“Jean gave me the specifics of what she heard. I immediately left my mayor’s office and went to the Park and Rec and talked to Jim Ash,” Smith said.
The mayor told Ash that he had been accused of stealing $400 and that he needed to put “something together to see why he was being accused.”
Smith said that was on a Tuesday. He told Ash he wanted that information by the Friday of that week so “they could work through this.”
At that same time, the mayor met with City Attorney John Hart to discuss the accusation.
Friday came, and Ash did not have what Smith had requested.
“Shortly after, he asked to be relieved of his duties and resigned,” Smith said. “In the meantime, while that was going on, and even before he resigned, we were doing an internal investigation.”
He said it was called the “mayor’s investigation.” At that time city officials discovered the checking account for the Waupaca Recreation Association Participants, “and the discrepancies, to say the least,” Smith said.
After looking at just a few items, the mayor said they knew it was too much for himself and Peterson to investigate.
Smith asked Goke what would be the best step. The police chief suggested that it be an internal investigation, saying a member of the department could do it.
“Not long after, we had a closed session,” Smith said.
During that closed session meeting, council members discussed such options as an audit of the association’s checking account, getting an outside investigator and doing the investigation internally.
“The council unanimously agreed to do it internally,” Smith said.
At that point, it became a criminal investigation.
The investigation began last June.
Smith said the investigation was in-depth and eventually reached the point where Ash had no choice but to plea no contest.
The mayor applauded the city’s police department for showing how the money in the account had been spent.
Some community members have questioned the city’s decision to do the investigation internally. Goke explained that Ash was no longer a city employee and that Sgt. Brian Hoelzel, of the city’s police department, had worked on white collar crime in the past.
While this investigation involved significantly more money, the nature of the crime was similar, Goke said.
The police chief and Lieutenant Geoff Johnson monitored how Hoelzel was doing, and the city received assistance from the state.
During the meeting, Ald. Dave Shambeau said he understands how donated money could have been stolen but not how city funds could have been taken.
Smith said that if someone was paying a fee to play men’s softball, the assumption would be that the fee would go toward the cost of such things as softballs and to pay the umpires, but that did not happen.
Goke said he saw a number of checks payable to the city that were double stamped, accepted by a bank and put into that outside checking account. “The city never saw it,” he said.
Ald. Paul Lehman said it sounded like some employees had an inkling for some time that something was going on in the department.
Lehman received an email from an employee who said that in 2006, two employees talked to Parks Superintendent Russ Montgomery who then talked to Ash.
According to what Lehman was told, Ash then asked the employee why he was being accused of stealing money.
Lehman asked why someone did not look further into it, and when he asked Montgomery about it, Montgomery said he would talk to him in private about it.
Veleker said, “You have employees who are loyal and afraid of retribution.”
At that time, there was no mechanism in place as to what level employees should go with such concerns, he said.
While ethics is discussed each year at the council level, following the April election, Veleker said it is disappointing that the city’s own employees did not understand the chain of command and that they could go over Ash’s head with such concerns.
“Maybe, we didn’t give the employees the tools,” he said, adding that going forward, they should provide ethics training for employees.
Smith said the city is putting things in place so that employees know they can take concerns to their superiors and members of the council.
Also in the last year, the city has worked with the various organizations, such as youth baseball and girls softball, on written policies, so that they know what they can expect of the city and what the city can expect of them, he said.
The city knows exactly how much money is going into vending machines and into concessions at South Park and Swan Park, he said.
Other questions from the council were related to the severance package that Ash received, which included $4,975.20 in accrued vacation, $359.32 in floating holiday and $22,264.02 in sick pay.
Veleker said when Ash resigned, the city was dealing with the information it had at that time.
Ash resigned in good standing, and it is common in the public sector to give employees such a package. Another option would have been to put him on administrative leave with pay, he said.
Veleker said the investigation would then have had to be an outside one. Paying Ash’s salary and for an outside investigation would have cost more than what the city paid him in severance, he said.
“In the end, justice was served,” Veleker said. “I know it seemed very wrong in some level, but I think it was the best decision given what we had.”
Fenske said, “You didn’t know then what you know now. I don’t think anyone wanted to believe it.”
Ald. Jim Boyer asked Veleker if he knew Ash was embezzling money at the time that Ash resigned.
“No,” Veleker replied.
Ald. Paul Hagen asked why the city paid unemployment for Ash.
“With a resignation, you usually don’t get unemployment. That’s where the confusion comes, how he was allowed to get unemployment if he resigned. If he’s still collecting, can we stop that?” Hagen asked.
Veleker addressed Hagen’s question by saying, “We paid our portion for six months, and we’re done. It was $9,000.”
Lehman asked if the city has any liability to the outside groups that Ash stole money from, and the mayor said that the restitution being sought will include the amounts taken from outside groups.
Smith said that some associations or groups donated money for lights at the fourth field at Swan Park.
“That money is gone,” he said. “It never made it to the city.”
Fenske said many of the questions they asked are sensitive in nature but that they wanted to get to the truth to dispel rumors in the community.
“Is Lisa Ash (Ash’s wife) being investigated?” she asked.
When Hoelzel reviewed the check register of the outside account, he learned that a large number of the checks were made out to her.
Hoelzel said that she was part of his investigation. “I spoke to Jim. I spoke to Lisa. I do not believe she had any idea. All the checks written in her name were forged.”
The special council meeting also included a discussion about what the council believes it is owed for restitution.
“The amount lost to the city is yet to be determined,” Goke said. “We’re looking for an impact statement, how you think it has impacted you and the city.”
The mayor said, “Obviously, the city wants and deserves to get all the restitution back and then some.”
Smith said in addition to the monetary impact, this has affected the city’s workforce and the trust of the city.
He told the council they could write their own letters to present to the judge at the sentencing or a letter could be drafted on behalf of the whole council.
“I think we were elected to represent a group of people. I think if we present one letter, it looks like a rubberstamp,” Fenske said.
She said there may be things she wants to say to Ash that other council members do not want to say. She would also like to include comments from the public.
Shambeau asked if anyone knows about Ash’s assets and liabilities.
Goke said there has been a preliminary check but the numbers are not official. The documentation received showed few assets, he said.
Earlier in the meeting, Goke said the city will continue discussing Ash’s pension with the district attorney. “We’re looking at every possibility out there. That’s one,” he said.
The special council meeting was shown live on WIN TV and will be rebroadcast. The mayor did not know the specific date.
It was also digitally taped, he said, explaining they want to make the information available to the public.
“We have a lot to do, people – council members. It’s nothing that we did, but we have a lot of work to do. We have to regain the trust of ourselves and the city of Waupaca. We’re going to try to do as much as we can to live up to that,” Smith said.
He said the city and its residents are mad.
“Let’s not forget – there is one person to blame for this and one person only, and that person is not in this room,” Smith said.