In Noble County, fewer than 300 people live in Red Rock. From Jan. 2019 to late May 2024, the state auditor and inspector’s office found about $336,169 was misappropriated from the Town of Red Rock and the Public Works Authority.
So far this year, the office has released several forensic and investigative audits. Cindy Byrd, state auditor & inspector, said the office has seen an uptick in forensic audit requests for small towns.
She said the impact of losing the funds can be felt for years in a small town like Red Rock.
“A lot of our small cities and towns are struggling for revenue streams to just keep basic functions in operation, and whenever you have such a large misappropriation of funds as this, it could take a decade for this small town to get back on its feet,” Byrd said.
District Attorney Brian Hermanson asked for the audit because citizens were concerned about possible wrongdoing.
Byrd said her office found town officials were being overpaid and writing blank checks. Officials did not keep records of ordinance violations, and the town did not calculate and withhold payroll taxes from the town board members and employees’ wages.
The audit shows the town board members got $46,122 more than their allowable pay. Members were paid a $75-monthly stipend, and no ordinance for the stipend could be found. Some members also received holiday bonuses and payments for special meetings for work done for the water department and a board member’s family received $1,000 in grievance pay, according to the report.
The audit shows Jolavon Childs, the town's former clerk and treasurer, misappropriated about $241,752 through 368 transactions from 2019 to the end of 2023. The audit report shows this included checks written to herself, making cash withdrawals from the bank, and the total contains undeposited utility revenue.
“Childs was unable to provide a satisfactory explanation for the excessive number of payments she received,” according to the audit. “She claimed that, on some occasions, she paid herself additional amounts without realizing she had already issued paychecks for the month.”
In the report, auditors noted Childs said some extra payments were for expenses and mileage reimbursements.
As an elected official, Childs’ pay is required to be documented in an ordinance, but auditors could not find the ordinances where the board approved her pay for 2019 through 2023.
The clerk’s spouse, Roy Childs, got $42,595 improper payments from 2019-2023, according to the audit. Byrd said this would have not been allowed by law because of the relation. In the report, auditors noted some of the checks or check stubs indicating the payment was for lawn care per an agreement, but they could not find the agreement.
Byrd said another clerk, Michelle Cline-Cameron, also received $5,700 in excess of her allowable pay. The town board continued to sign blank checks.
“The board wasn't paying attention during the first clerk treasurer's term, and despite the town being very low on funds, and knowing there was a misappropriation, they did not take any action going forward to make sure this wouldn't happen again,” Byrd said.
The report notes the findings show lapses in oversight and lack of good management by the board that could have been addressed through training.
“None of the board members participated in training during their tenure in office,” according to the report.
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