Audit reached no conclusions, but shows potentially large errors in water bills
Nicole Aimone, Editor-in-Chief
During public comment at last month’s regular meeting of the Village of Arena Board of Trustees on March 7, board members were handed papers by former Village President Paul Pustina. Those papers contained an “Independent Accountant’s Report” covering current Arena Village Clerk/Treasurer DeNean Naeger’s tenure in Monticello. The report represents the findings of what Monticello Village Board minutes refer to as a forensic audit. Arena officials have stayed quiet since the meeting, but the current Monticello village president insists he saw no evidence of wrongdoing.
Naeger was clerk/treasurer for the Village of Monticello, in Green county, from November 4, 2013 to May 1, 2019, when the village board there voted to “separate employment” with Naeger. Two days later the Monticello board voted to conduct a forensic audit. During a meeting the next month, on June 19, the board formalized that decision by directing their village attorney, William Morgan, to contract with certified public accounting firm Johnson Block. Later that year Arena hired Naeger as their village clerk/treasurer.
Former Monticello Village President Leaora Miller, under whose tenure the audit was started, did not respond to questions for this story. However, public records provided to Valley Sentinel show that the Monticello Village Board had concerns including, but not limited to: financial controls, password security, failure to back up official emails to and from the clerk as done for those of all other village officers, a village certificate of deposit with Naeger as the only authorized official, village budget and tax payment discrepancies as well as water bill discrepancies.
Valley Sentinel has not yet received any records or responses that definitively indicate whether the village officials’ concerns at the time were substantiated.
The report also notes that the procedures used were those agreed to by the Village’s legal counsel and are the responsibility of the Village. The accounting firm stated that it would not stand by those procedures as having been adequate “for the purpose for which the report has been requested or for any other purpose.” Despite this disclaimer, the publicly ordered and funded report provides unique insight into the financial dealings of the Village while Naeger was clerk.
The report lists a release date of January 9, 2020, nearly seven months after Johnson Block was directed to conduct the audit. It’s not clear when or if the full village board in Monticello was presented the audit, with public records indicating a village trustee and a community member both asking if the audit was complete at a November 16, 2022 board meeting. Valley Sentinel spoke with an editor at a newspaper that covers Monticello who stated they had requested the forensic audit report multiple times and never received it until Valley Sentinel shared it with them, despite it being a public record.
In the cover letter of the seven page report, Johnson Block makes it clear they were not contracted to make a conclusion based on their investigation.
“We were not engaged to and did not conduct an audit or review the objective of which would be an expression of an opinion or conclusion,” Johnson Block says in the cover letter. “Accordingly, we do not express an opinion or conclusion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you.”
The report outlines several findings, including a review of the payroll of Naeger as clerk and the police chief from July 1, 2017 through May 1, 2019. The audit aimed to determine whether the correct authorized pay rate was made and whether the correct authorized payroll deductions, including health, retirement and FICA were made. In the case of the clerk, there were four instances of overtime being computed and paid when the total hours for the week included holiday, vacation, and compensatory hours. The audit also found that there were potentially small discrepancies in overtime hours for board meetings. The audit states the village president, Miller, believed the clerk was only to be paid for time spent at the Board meeting, but that overtime hours were computed using the total hours in the office for that day less one hour.
In addition, there was one instance where nothing was withheld for health insurance. The report noted that time sheets were only signed by the village clerk, with no other approval noted anywhere.
The police chief’s payroll had issues as well, with three instances of authorized pay rate changes resulting in incorrect gross pay computation. In each case, the error resulted in the chief receiving slightly less than full pay.
In public records reviewed, community members and business owners in Monticello express concerns about their water/utility bills. The auditors reviewed a sample of 60 randomly selected water/utility bills from 2018 to determine if rates were charged accurately. The forensic audit states these were then recomputed using authorized rates and consumption and compared to what actually got billed. Seventeen of those utility/water bills had discrepancies, ranging from under-billing by $260.12, to over-billing by $570. The discrepancies, including under-billing, add up to a net $2,367.58 of total over-billing.
Legal Analysis: This represents roughly a 50% average overcharge, and would extrapolate to roughly $1.8 million over a five-year period if these discrepancies were typical over that time.
The auditors state they were given no supporting documentation as to how the additional charges were computed.
When asked about the water/utility bill differences the audit reported and where the money ended up, current Monticello Village President Robert LaBarre told Valley Sentinel: “Our records show that any over-billing did go into the village accounts even though we never found out why those few water billing discrepancies occurred. There were no repercussions.”
Pustina, who served in Arena village government as a trustee or village president from 2007 to 2018 and again from 2020 to 2022, ran unsuccessfully against Arena Village President Kate Reimann in the Spring General Election as a registered write-in. Pustina made water bills a central part of his campaign.
At the time Pustina handed the board the forensic audit report in March, the Village of Arena reported that 85% of the utility/water bills (335 out of 394 total meters) had been estimated reads for at least the months of February and March rather than measured reads, due to what Naeger called an antenna technical issue.
Naeger stated the Village had to purchase a new Galaxy reading antenna and that, as of March 20, the new antenna had arrived and was up and working. Valley Sentinel asked if there was a process in place for correcting the previous readings and Naeger stated that the software automatically corrects.
How widespread were the water/utility bill discrepancies in Monticello during Naeger’s tenure? Based on public records Valley Sentinel reviewed, the Monticello Village Board voted on Feb. 3, 2021 to conduct a forensic audit covering all water bills from November 2012 to 2018. This was after, on June 11, 2019, the village attorney directed Johnson Block to audit a year’s worth of water bills. Only a year’s worth of water bills are included in the forensic audit report, dated January 9, 2020.
It’s not clear the full water bill audit was ever done.
“I am not aware of any other forensic audits produced as a result of DaNean Naeger’s tenure,” said current Monticello Clerk/Treasurer Stephanie Adams when asked.
Valley Sentinel has not been able to verify if or where the decision was made to not continue with the full water bill audit and if any decision was made properly with a vote of the board. A request for public records that indicate where the decision was made to not move forward with the full water bill audit was unfulfilled as of press time.
Another request seeking to clarify if Naeger’s emails were retrieved after they were purportedly not being backed up, or if Monticello is missing public records, is also outstanding as of press time.
Valley Sentinel asked current Monticello Village President LaBarre if Monticello had made any changes or taken any action based on the forensic audit’s findings.
“Because the forensic audit showed insignificant evidence, our village attorney advised not to pursue any action,” stated LaBarre.
In Monticello’s November 16, 2022 board meeting minutes, LaBarre characterizes the decision to do the forensic audit as being based simply upon previous officials’ suspicions.
“His suggestion is for the committees to do more due diligence and try to avoid situations that put people in a bad light,” the minutes state.
Naeger and Reimann did not respond to questions about the audit by press time.
Editors’ Note: Valley Sentinel has no information that suggests there are financial discrepancies in the Village of Arena currently, or that the Village of Monticello took any action as a result of any forensic audit findings. No information Valley Sentinel has reviewed as of press time suggests any deliberate impropriety on behalf of anyone named in the story.