SYRACUSE — Indiana Attorney General Todd Rokita filed a complaint to recover public funds against the town of Syracuse on Wednesday, April 2.
The court has agreed to consolidate Rosita’s complaint with one filed by the town of Syracuse against the State Board of Accounts in December 2024.
Both matters will be heard on May 8 by Judge Christopher Kehler in Kosciusko Superior Court IV. In addition to defendants Cynthia Kaiser, Brent Kaiser, William Muster, Margaret Muster, Larry Siegel, Matthew Siegel, Sharon Siegel, Paul Stoelting, Martha Stoelting, Thomas Hoover, Mary Martindale, Julie Kline, Paula Kehr-Wicker, Robert Wicker, Henry DeJulia, Esther DeJulia, Kathleen and Robert Goodyear, Kenneth Plikerd, Don and Kathleen Robinson, Rokita added Western Surety Company and Employers Mutual Casualty Company as defendants.
Western Surety Company provides insurance and bonds for public employees including Kline, Kehr-Wicker and Henry DeJulia for various amounts and Employers Mutual Casualty Company, which issued a commercial crime insurance policy for the town of Syracuse covering its employees dishonesty, providing $10,000 in annual coverage during the audit period.
In his complaint, Rokita explained during an audit the SBOA found town funds were used to pay and/or reimburse insurance premiums for private insurance polices, other than the town’s group insurance plan, Medicare premiums deducted from Social Security benefits and Medicare supplement plan premiums in a manner inconsistent with the required and specific manner set by the state.
Rokita alleges “the audit report disclosed malfeasance, misfeasance, and/or nonfeasance on the part of public officials, public employees, entity and/or other proper persons and was placed by the state examiner with the attorney general pursuant to IC 5-11-5-1(a).”
The audit also disclosed public funds the state seeks to recover were either:
• Misappropriated, diverted or unaccounted.
• Illegally received.
• Illegally retained.
• Unaccountable for or not paid over any money so received.
• Obtained by fraud or in any unlawful manner wrongfully withheld from the public treasury.
Rokita’s complaint explained the town purchased a group health insurance plan and associated health savings account which provides coverage for full-time employees only. “Current or former town council members and clerk-treasurers are not eligible under the town’s group health plan and associated HSA because they are not considered full-time employees.”
The town council passed ordinance 2019-19 which repealed portions of the prior versions. The amended ordinance provided all full-time employees of the town and their dependents and town council members and their dependents health insurance at the cost of $1 per year. … “In addition, spouses of full-time employees and spouses of town council members shall be eligible for health insurance coverage through the town’s plan unless he/she is eligible for health insurance coverage through his or her place of employment, at the cost of $1 per year. Health insurance shall include, but not be limited to, the payment of reimbursement of Medicare insurance premiums and supplemental insurance premiums incurred by an employee or town council member on and after the date of amended Ordinance No. 2014-17.“
“SBOA found that Ordinance 2019-19 improperly extends health insurance to those who are otherwise ineligible for participation in the town’s group health plan.
“Therefore, SBOA found Ordinance No. 2019-19 exceeds and is outside the ‘specific manner’ that is authorized and/or required by IC 5-10-8-2.6, which is limited to ‘purchasing policies of group insurance’ or ‘establishing self-insurance programs.’”
The SBOA also found the salary ordinances provided each year by the town council did not include as compensation to Medicare premiums, Medicare supplement premiums and private insurance premiums (other than the town’s group insurance) at issue for the town council members and town employees.
“Units are required to comply with all grant agreements, rules, regulations, bulletins, directives, letters, rulings, court decisions and filing requirements concerning reports and other procedural matters of federal and state agencies. Units use file accurate reports required by federal and state agencies,” the complaint stated.
In the summary of charges, the complaint states “the town suffered a pecuniary loss in the total amount of $617,466.37 as provided in the audit report. … SBOA incurred additional special investigations costs in the total amount of $74,075.67.”
Rokita noted in his complaint some of the defendants had paid some or all of the charges against them. Those who did were: Cynthia Kaiser, $11,135.79; Cynthia and Brent Kaiser, $10,835.70; Paul and Martha Stoelting jointly and severally, $19,943.66; and Don and Kathleen Robinson, $16,969.10.
In the complaint, Rokita turned his attention to Western Surety Company and Employee Mutual Casualty Co.
He noted during the audit period Western Surety issued official public bonds for faithful performance of official duties for former Clerk-Treasurers Kline, $240,000; Kehr-Wicker, $241,842.44 and former town manager DeJulia, $50,000.
“Henry DeJulia misappropriated, diverted or misapplied funds during the terms and time frames of the Bond for DeJulia in the amount of $24,825.08. … The amount of funds misappropriated, diverted or misapplied by Kehr-Wicker during the terms and time frames of the bonds for DeJulia is $9,946.50. … The amount of funds misappropriated, diverted or misapplied by Kline during the terms and time frame of the bond for Kline is $11,886.18.”
Rokita went on to demand Western Surety’s blanket bond, which was for $15,000, cover the entire $617,466.37.
As for EMC, in his filing Rokita stated, “During the term of EMC’s policy, the employees failed to honestly and faithfully perform the duties of their respective offices by inappropriately, wrongfully or negligently: 1) failing to comply with the Uniform Compliance Guidelines for Examination of Entities Receiving Financial Assistance from Governmental Sources; 2) failing to comply with all relevant laws and rules while engaged in the performance of their duties; 3) misappropriating public funds for the personal benefit and unjust enrichment of the employees; and/or 4) otherwise committing acts of malfeasance, misfeasance and nonfeasance which resulted in the misappropriation, diversion and misapplication of public funds.
“The amount of funds misappropriated, diverted or misapplied by the defendant during the terms and time frames of the EMC Policy is $617,466.37.”
Rokita requests a judgement be entered against each defendant, defendants be ordered to “disgorge any and all ill-gotten gains and/or any diverted funds under IC 5-11-5-4 as a result of their wrongful misappropriation of public funds.
“The town is included as a defendant to answer as to any interest it has herein.
“Award judgements against Western Surety and EMC on each cause asserted in the complaint, award the state reasonable attorney fees and grant the state all other just and proper relief.”