OOLITIC—The Town of Oolitic has received the State Board of Accounts Special Investigation Report into former Town Clerk-Treasuerer Jessica Staggs’s handling of town funds.
According to the report, they have forwarded the information to the Indiana Attorney General and Lawrence County Prosecutor’s Office so that charges can be filed against Staggs.
The investigation concluded Staggs was malfeasance, misfeasance, and nonfeasance in her duties. Staggs resigned as Lawrence County Auditor in December 2023.
Investigators found Staggs did not deposit more than $79,816.88 in utility receipts.
The investigation covers January 1, 2015, to December 1, 2020.
“We performed procedures to determine compliance with applicable Indiana laws and uniform compliance guidelines established by the Indiana State Board of Accounts and were limited to records associated with customer utility records,” wrote State Examiner Paul D. Joyce, CPA. “The Results and Comments contained herein describe the identified reportable instances of noncompliance found as a result of these procedures. Our tests were not designed to identify all instances of noncompliance; therefore, unidentified noncompliance may exist.”
Jessica Staggs was elected Clerk-Treasurer during the examination period, and Allison Lewis was employed as the Utility Clerk. Both Staggs and Lewis accepted utility payments and posted the utility payments to customer accounts, prepared the utility deposits, and took the utility deposits to the bank.
Starting July 31, 2015, the State Board of Accounts compared the utility cash and the utility checks deposited on a given day to the utility cash payments and the utility check payments posted to the system on that same day to ensure payments were deposited intact. Investigators noted 99 days that utility payments were not deposited intact.
The schedule below documents the date and discrepancy amounts:
| Years | Amount | Number of Occurrences |
| 2015 | $13,538.15 | 15 |
| 2016 | $22,330.77 | 23 |
| 2017 | $24,184.61 | 26 |
| 2018 | $11,049.52 | 23 |
| 2019 | $7,972.11 | 11 |
| 2020 | $741.32 | 1 |
| Totals | $79,816.88 | 98 |
“For each ninety-nine days, we reviewed the cash and individual checks that made up the day’s deposit. We compared the checks deposited to the utility check payments posted for the same day. We found one hundred and fifty-seven checks deposited that did not reflect what was recorded. Eighty-one of those checks came from three specific customers.
Customer 1 typically paid a flat amount each month with a check over the amount due on the bill. Customer 1’s check was deposited but only received partial credit. The additional payment was never posted to Customer 1’s account; instead, it was posted to other customers’ accounts that paid with cash or were posted as paid by check, but no check was in the deposit.
Staggs is accused of playing a shell game with customers’ utility bills to deliberately deceive people, for example, by changing things or pretending to change things to gain an advantage.
Customer 2 had three accounts that were paid for with one monthly check. However, in reviewing all three account histories from the computer system from January 2015 through August 2017, November 2019, and December 2019, the computer system showed only two of their three accounts were billed and payments received. Investigators contacted Customer 2 to ask if they retained any utility bill cards for that period. Customer 2 provided most of the utility bill cards for all three accounts, proving all three accounts were billed and that all three accounts agreed to the checks deposited.
Since the bills for one of the accounts were deleted from the system, the payment for that account was posted to other customers’ accounts that paid with cash or were posted as paid by check, but no check was in the deposit.
Customer 3, like customer 1, typically paid a flat amount each month with a check over the amount due on the bill. Customer 3’s check was deposited but only received partial credit. The additional payment was never posted to Customer 3’s account; instead, it was posted to other customers’ accounts that paid with cash or were posted as paid by check, but no check was in the deposit.
The remaining seventy-six checks were non-utility customer checks deposited with utility customer payments and posted to customers’ accounts that were paid with cash or were posted as paid by check, but no check was in the deposit. The town or utility received these checks for other purposes, such as income from rentals, refunds, insurance claims, donations, etc.
Substituted Checks
| Payee | Numbers | Totals |
| Customer 1 | 29 | $3,557.00 |
| Customer 2 | 27 | $36,727.44 |
| Customer 3 | 25 | $2,750.00 |
| Other Non-Utility Customer Collections | 76 | $36,782.44 |
| Totals | 81 | $79,816.88 |
The following items were noted during our review of the days with discrepancies:
- There were no days with discrepancies related to Lewis’ utility customer account.
- Out of the ninety-nine days with discrepancies, twenty-nine days contained issues with
- Staggs’ account.
- Twenty-eight days contained utility payments for Staggs’ account that were posted as paid by check, but no check was in the deposit. Instead, a substituted check was deposited in place of Staggs’ check.
- One day contained utility payment for Staggs’ account that was posted as paid by cash. The utility bill stub was also marked it was paid by cash. However, that day’s deposit was not intact. A substituted check was deposited in place of cash.
- On February 1, 2017, Staggs substituted her own check into the deposit. The check was not credited to her utility account and instead was substituted in place of utility payments posted as paid by check when no check was deposited.
Investigators interviewed Staggs on two occasions about the discrepancies. Staggs confirmed that she and Lewis were the only two people working in the utility office during the examination period. She stated they both would accept utility payments, post them to customer accounts, and deposit them. Staggs also confirmed her own handwriting after being presented with a sample utility bill stub.
Based on the interview, investigators performed additional work to determine Staggs’s level of involvement in the discrepancies:
- Reviewed the handwriting on the deposit tickets to determine who filled out the deposit for the day. For all days, Staggs’ handwriting was on the deposit ticket.
- We reviewed payroll records to determine who worked the days with discrepancies. Being an elected official, Staggs is not required to keep timecards or service records. In reviewing Lewis’ payroll records, she did not work nineteen of the ninety-nine days with discrepancies.
- Reviewed mileage claims to determine who claimed mileage to the bank to deposit on the days with discrepancies. Lewis did not claim mileage on any day with a discrepancy. However, Staggs claimed mileage on ninety-seven of the ninety-nine days with discrepancies.
Investigators interviewed Lewis on multiple occasions, and she stated that she had no explanation for the substitute checks. Lewis stated she only dealt with customer payments and would not have handled any checks unrelated to customer payments. Lewis explained that she and Staggs prepared the utility deposits, but Staggs usually took the deposits to the bank. Lewis explained that sometimes Staggs offered to make her deposit, which Lewis would be amenable to. Lewis also stated she never claimed mileage for going to the bank.
Investigators reviewed the handwriting on utility bill cards and deposit tickets for the days wit discrepancies. After being presented with some samples, Lewis attested that it was not her handwriting on any of the deposit tickets. She also attested that she did not delete, manipulate, or change any utility billings without just cause and that she had no knowledge of any theft or criminal activity while she served as Utility Clerk.
This investigation DID NOT suggest that Lewis had any direct involvement or knowledge of the utility receipts that were not deposited.
Investigators determined Staggs misappropriated, diverted, or unaccounted funds through malfeasance, misfeasance, or nonfeasance.
The State Board of Accounts requested that Staggs reimburse the Town of Oolitic $79,816.88 for utility receipts not deposited and pay $44,943.33 for the cost of the audit due to theft or shortage, which is the responsibility of the official or employee, for a total of $124,760.21.
Investigators also found no segregation of duties or internal controls over utility payments, deposits, and postings to utility customer accounts. Both Staggs and Lewis accepted utility payments, posted them to customer accounts, prepared the utility deposits, and took the utility deposits to the bank. There was only one login for the utility system, so both used the same login to make any changes to the utility system.
Therefore, there was no documentation of oversight, review, or approval process for utility payments, deposits, and posting to utility customer accounts.
The lack of segregation of duties and internal controls allowed for:
- Utility receipts to be deposited in a different form than received.
- Utility accounts to be altered after utility bills had been mailed to customers.
- Checks that were not for utility customer payments, to be deposited in place of customer payments.
“Control activities are the actions and tools established through policies and procedures that help to detect, prevent, or reduce the identified risks that interfere with achieving objectives. Detection activities are designed to identify unfavorable events in a timely manner, whereas prevention activities are designed to deter the occurrence of an unfavorable event. Examples of these activities include reconciliations, authorizations, approval processes, performance reviews, and verification processes.
An integral part of the control activity component is the segregation of duties. There is an expectation of segregation of duties. If compensating controls are necessary, documentation should exist to identify the areas where segregation of duties is not feasible or practical and the compensating controls implemented to mitigate the risk.”
