State seeks to recover more than $259,000 defrauded from town government by employees
INDIANAPOLIS – Today Indiana Attorney General Greg Zoeller filed a lawsuit demanding that five former officials of the town of Chesterfield – including the former clerk-treasurer and former town marshal — repay more than $259,000 in public funds they allegedly defrauded from the town government. The Attorney General also is seeking temporary restraining orders against the defendants to protect assets from being disposed of or sold.
The lawsuit, filed in Madison County Circuit Court, is part of a stepped-up effort by Zoeller to combat public corruption and misuse of tax dollars by elected officials and government employees.
“The claim that the town’s former top fiscal officer and the town’s former police chief hatched a scheme to defraud the taxpayers who employed them appears to be the ultimate betrayal of the public’s trust,” Zoeller said.
The case stems from an Oct. 26, 2009, certified audit by State Board of Account examiners who found that five individuals, individually or together, allegedly defrauded the town government out of a total $259,626.07 by getting paid for false mileage reimbursement claims, phony automotive-repair and building-repair claims, and for hours never worked during 2007 and 2008.
Named as defendants in the Attorney General’s civil suit seeking recovery of public funds are:
* Former town clerk-treasurer and town manager Christopher Parrish. The lawsuit alleges Parrish paid himself $31,535.91 in fictitious travel expenses and approved phony claims and improperly issued reimbursement checks for four other defendants. Parrish resigned from his town positions in January 2009.
* Former town marshal James Kimm. The complaint alleges Kimm submitted falsified mileage reimbursement claims to Parrish for destinations to which he didn’t travel and was paid $52,553.06. He also allegedly received $1,700 in petty cash reimbursements from Parrish. The State Board of Accounts audit noted that Kimm’s description for most of the out-of-state travel was to pick up military surplus from the U.S. Defense Reutilization and Marketing Office. When examiners checked with the DRMO, they reportedly found no record of anyone from Chesterfield, including Kimm, obtaining equipment from a DRMO location, the audit said. Kimm resigned as town marshal in January 2009.
* Joseph Brown, a former part-time police officer for Chesterfield who is half-brother of Kimm. The lawsuit alleges Brown participated in a scheme with Parrish and Kimm where Brown submitted phony claims for automotive repairs to town-owned vehicles that never were performed. The State Board of Accounts examiners reported that the street address of “Brown’s Automotive” listed on the invoices is a home in a residential neighborhood where there was no indication of commercial automotive work taking place. Brown received 24 checks totaling $115,391.44 between January 2007 and March 2008, the audit found.
* Christopher Walters, a former town maintenance superintendent, and his brother James Walters, a former town maintenance employee. The suit alleges the two former employees were part of a scheme with Parrish where they were paid $37,600 for repair work to town government buildings that never occurred, according to the audit. The suit alleges James Walters owes $13,002.88 for hours he was paid but didn’t work and owes $2,850 for tools improperly purchased with town funds. Christopher Walters allegedly was overpaid by $4,992.76 for hours he didn’t work.
‘The audit claims this fraud was brazen in its audacity and proportionately large in its scope. The quarter-million-dollar fraud represents a very sizeable portion of the town’s entire operating budget. That’s why we will be moving quickly in pursuing the defendants’ assets in order to protect the taxpayers and restore to the Chesterfield town treasury what was wrongfully taken,” Zoeller said.
The State Board of Accounts audit found that Parrish and the others executed the scheme without the knowledge of the Chesterfield Town Council. Parrish issued “manual” checks the council did not see, the audit found.
The complaint asking the court to order Parrish and the other defendants to return the public funds is a civil suit, not a criminal case. The Attorney General’s office has jurisdiction to file civil cases.
Beyond demanding repayment from the defendants, the lawsuit also seeks payment of the employee-theft insurance the town took out on the employees in 2007 and 2008 and to redeem surety bonds obtained on Parrish and Kimm. The suit seeks $60,000 from Fidelity and Deposit Company of Maryland and another $8,500 from Ohio Casualty Insurance Company.
If State Board of Accounts examiners audit a government office and discover theft, fraud or malfeasance, they refer the certified audit to the Attorney General’s office, which acts as collection agent to recover the missing funds.
Earlier this year, the Indiana General Assembly passed a new state law on public accountability that Zoeller had advocated, House Enrolled Act 1514. It requires public employees who handle money to carry larger bond amounts — $30,000 – and brings the Attorney General’s office into the investigation process earlier when the State Board of Accounts discovers money is missing.
‘The new law will allow us to freeze assets at the first indication public funds are at risk of being stolen, so they can’t be transferred while the audit is being completed,” Zoeller said. The Chesterfield case occurred before the new law took effect July 1.
