Audit Report For Village of Craig

On December 18, 2017, the Nebraska Auditor of Public Accounts (APA) received a complaint from the “Anonymous citizens of Craig” alleging the mishandling of public funds by the Clerk for the Village of Craig (Village) at that time, Kristie Jensen.

On December 21, 2017, the APA emailed Ms. Jensen to request certain Village financial records, including bank statements, claims listings, treasurer reports, etc. Neb. Rev. Stat. § 84-305 (Supp. 2017) grants the APA “access to any and all information and records, confidential or otherwise, of any public entity” and requires a response within three days to any such record request. Moreover, Neb. Rev. Stat. § 84-305.01 (Cum. Supp. 2016) states the following:

Any person who willfully fails to comply with the provisions of section 84-305 or who otherwise willfully obstructs or hinders the conduct of an audit, examination, or related activity by the Auditor of Public Accounts or who willfully misleads or attempts to mislead any person charged with the duty of conducting such audit, examination, or related activity shall be guilty of a Class II misdemeanor. Nevertheless, despite at least seven repeated attempts by the APA to obtain the requested Village financial records from her, Ms. Jensen continually failed to respond appropriately.


After several months of waiting for Ms. Jensen to comply with the initial request, the APA worked with Village Board member, Chris Swenson, to obtain the Village’s official bank statements from First Northeast Bank of Nebraska. Additionally, Mr. Swenson provided the APA with other financial reports submitted to the Village Board, such as certain approved claims listings, as requested. As a result of our subsequent preliminary work, which included a review of the bank statements and other financial reports obtained through Mr. Swenson, the APA identified specific concerns regarding Ms. Jensen’s handling of Village funds, especially in her role as the sole signatory of all Village checks during the period examined.

Those concerns included the following: 1. A significant number Village checks were payable to credit card companies, banks, or other potential personal vendors, including Visa, Home Depot, Synchrony Bank, Comenity Bank, Wells Fargo Financial, Verizon, and American Family Insurance. These checks did not appear on the claims listings created by Ms. Jensen and submitted to the Village Board for approval.

The APA also questioned the total dollar amounts of certain Village checks signed by Ms. Jensen, including over $80,000 paid to Visa from September 2015 through December 2017. 2. A significant number of Village checks were paid to Ms. Jensen for amounts in excess of her approved monthly salary. 3. A document obtained from Cleo Toelle, a CPA who performed accounting work for the Village, was a September 2016 Village bank statement that Ms. Jensen had provided to him while preparing the Villages’ audit waiver and budget. When compared to the actual September 2016 Village bank statement received from First Northeast Bank of Nebraska, the copy that Ms. Jensen presented to Mr. Toelle appears to have been falsified. Furthermore, the bank statements received from the Village records did not contain the deposit or check images, which had been removed. VILLAGE OF CRAIG – 2 – BACKGROUND (Continued)

These specific concerns led Assistant Deputy Auditor Craig Kubicek, along with two other APA staff members, Dakota Christensen and Marielle Saathoff, to drive from Lincoln, Nebraska, to the Village office on April 9, 2018, to meet with Ms. Jensen on a surprise visit. The purpose of the surprise visit was to interview Ms. Jensen about the financial concerns noted. During that interview, Ms. Jensen admitted to having signed the Village checks made payable to Visa, Home Depot, Comenity Bank, Wells Fargo Financial, Verizon, and American Family Insurance for her own personal expenses; however, she claimed to be unable to recall the purpose of the payments to Synchrony Bank. Ms. Jensen also admitted to writing Village checks to herself in excess of her approved monthly salary. Additionally, Ms. Jensen admitted to manipulating the September 2016 bank statement to try to prevent an audit. Furthermore, Ms. Jensen admitted to removing the deposit and check images from the Village bank statements in an effort to prevent the CPA who was preparing the Village’s audit waiver and budget from discovering her activities. After the interview, Assistant Deputy Auditor Kubicek asked Ms. Jensen if any Village Board members were in town. Ms. Jensen telephoned Melissa Pedersen, a Village Board member, who arrived at the Village office soon thereafter.

Assistant Deputy Auditor Kubicek then described to Ms. Pedersen the activities to which Ms. Jensen had recently admitted. At that time, Ms. Jensen confessed once more to those same activities. Assistant Deputy Auditor Kubicek also telephoned Duane Hinman, the Village Board Chair. With Ms. Jensen participating in the conversation, Assistant Deputy Auditor Kubicek explained the situation to Mr. Hinman over a speaker phone. Ms. Jensen emphasized to Mr. Hinman that no one in her family was aware of the activities to which she had confessed. At the conclusion of these exchanges between Ms. Jensen, Ms. Pedersen, and Mr. Hinman, Assistant Deputy Auditor Kubicek contacted Frank Barron, the Burt County Attorney, to inform him of what had occurred. T

The Burt County Sheriff’s office discussed the case with the APA on April 13, 2018, and the APA provided information on the situation, including an Affidavit completed by Assistant Deputy Auditor Craig Kubicek. On April 19, 2018, an arrest warrant was issued for Ms. Jensen. As a result of her having confessed to the above activities, the APA subpoenaed certain personal records of Ms. Jensen. A municipality located in Burt County, Nebraska, the Village employs a Clerk – who, as permitted by Neb. Rev. Stat. § 17-209.02 (Cum. Supp. 2017), serves also as the Village Treasurer – a maintenance/water operator, and a seasonal part-time worker. According to records obtained by the APA, Ms. Jensen began working as a temporary Clerk for the Village in 1997. On April 12, 2018, only three days after the APA’s surprise visit, the Village Board terminated Ms. Jensen’s employment as the Village’s Clerk. VILLAGE OF CRAIG – 3 – BACKGROUND (Continued) As of March 31, 2018, the Village Board consisted of the following members:  Duane Hinman – Chairman of the Board  Chris Swenson – Trustee  Steve Nesemeier – Trustee  Melissa Pedersen – Trustee  Jean Meyer – Trustee The APA obtained records for the following Village bank accounts from the First Northeast Bank of Nebraska (Bank) in nearby Lyons, Nebraska. The Schedule of Bank Activity for the Village was prepared from these records. For security reasons, the account numbers will not be published in this report, but they are available to the Village or other authorized personnel upon request. Account Owner per Bank Account Name per Bank Village of Craig N.O.W. Account Village of Craig – Sewer Account Regular Savings Village of Craig – Craig School Demo Regular Account The APA has also accumulated the deposit and withdrawal banking details for all three accounts as Exhibits A-F herein.

The Village did not utilize accounting software, and much of the recording of financial activity was done manually by the Clerk. The Village billed for water, sewer, and garbage services provided to its residents. The Village also collected funds from rental of the community center, loan proceeds, Burt County receipts, State highway allocation funding, and other sources. The Village utilized receipt books for funds paid in cash; however, Ms. Jensen claims to have discarded those receipt books dated prior to November 2017. Village Ordinance No. 200, Section 17, “Audit,” which states, in relevant part, the following: The Village Board shall cause an audit of the Village accounts to be made by an independent and qualified accountant once every year beginning with the year 1971. Since the year 2000, the Village has not had an audit conducted by an independent certified public accountant. During that time, however, the Village did have audit waivers completed by independent certified public accountants and filed with the APA.

Although satisfactory for purposes of State law, this failed to meet the above Village ordinance’s requirement that actual annual audits be performed. Based on the information collected, the APA assisted the Village in completing the audit waiver form for the fiscal year 2017. This assistance was provided so the Village would have accurate fund balances going forward. As a result, the fund balances as of September 30, 2017, for the Village are shown in the table below. VILLAGE OF CRAIG – 4 – BACKGROUND (Concluded) Fund Fund Balance General Fund ($23,826.23) Special Revenue Funds – Park & Street $30,849.51 Debt Service Funds – Sweep Account ($13,000.00) Enterprise Funds – Water, Sewer, and Garbage $8,535.57 Total Fund Balance as of September 30, 2017 $2,558.85 The bank balances as of September 30, 2017, are shown in the table below. Bank Bank Balance General Bank Account $1,649.44 School Demo Bank Account $6,763.00 Sewer Bank Account $7,146.41 General Sweep Account ($13,000.00) Total Bank Balances as of September 30, 2017 $2,558.85 The completed Statement of Cash Receipts and Disbursements for the fiscal year 2017.

About katcountryhub
I am a graduate of Northeast Community College with a degree in journalism. I am married to Jeff Gilliland. We have two grown children, Justin and Whitney and four grandchildren, Grayce, Grayhm, Charli and Penelope. I will be covering Lyons, Decatur, Bancroft and Rosalie and am hoping to expand my horizons as time progresses!

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