State: Employee stole $13K from Smith Center

October 12, 2018

MICHIGAN CITY – The former treasurer of the A.K. Smith Center is being charged with public corruption for allegedly stealing more than $13,000 from the Michigan City Area Schools facility.

Nicole DeMunck, 35, was secretary/treasurer of the Smith Center from Dec. 14, 2015, until she resigned effective Feb. 15, 2018, according to Betsy Kohn, spokeswoman for MCAS.

Michigan City Police said she was arrested Wednesday in La Porte and charged with theft and official misconduct.

The accusations were outlined in an audit report from the State Board of Accounts. Kohn said MCAS turned the matter over to the state after discovering financial discrepancies.

“Our internal controls identified financial concerns at A.K. Smith in February 2018, and we promptly reported the matter to the State Board of Accounts for investigation,” she said.

“It’s unfortunate that an employee entrusted with financial responsibility took these actions. Our district’s insurance coverage ensured that students and families were not impacted.”

The accusations were announced at a press conference in Indianapolis on Thursday, at which authorities said DeMunck was among 15 local government employees from around the state facing charges for government losses totaling more than $1 million.

Federal prosecutors announced charges against five people, including treasurers of three fire departments, who allegedly bilked local governments out of a total of more than $380,000. State charges are pending against DeMunck and nine others, who allegedly stole a collective $400,000.

U.S. Attorney Josh Minkler said his office worked with the FBI, State Board of Accounts, Indiana State Police and local prosecutors on “Operation Public Accountability.” He said in a statement: “All citizens deserve better from their public officials.”

The State Board of Accounts performed audits that provided prosecutors with evidence in the cases.

According to the SBA report, revenue generated by the Smith Center was mainly from class fees, automotive services, salon services and fundraisers. DeMunck was “solely responsible for the accounting of cash collected, including issuing receipts, preparing bank deposits, taking deposits to the bank, and processing accounts payable vouchers.”

The collection process for some of the revenue originated with classroom instructors, who would give the money to DeMunck for deposit to the bank with a signed “ECA Account Deposit Slip for Teachers” form. Revenue from testing fees, uniform fees, cosmetology beauty kits, textbook rental fees and welding gear packs were collected by DeMunck.

She was also responsible for issuing receipts for the money collected and remitting the testing fees to the MCAS office. All other revenue, after deposit, was reported to the High School Extracurricular Treasurer for recording.

The SBA said the total unaccounted for is $13,296.76, and they have also asked for $8,737.75 for the cost of the investigation.

A certified letter was sent to DeMunck on Aug. 22, 2018, asking for reimbursement of $22,034.51, and inviting her to meet with the board to discuss its finding. “Ms. DeMunck was unresponsive to our request,” the report said.

The contents of the SBA report were discussed on Sept. 17 with MCAS officials and School Board members.

“In recent years, the Board of Accounts has emphasized the importance of effective internal controls that detect and mitigate fraud risks. The vast majority of local units of government have enhanced their procedures to incorporate stronger internal controls,” Paul Joyce, state examiner, said in a statement.

“Some officials and employees, however, still take advantage of system gaps and succumb to the temptation to use public funds for personal gain. We take those fraud cases seriously. These cases are good illustrations of the importance of our collaboration with law enforcement and prosecutors to hold these individuals accountable for violating the public trust.”

Two others in Northwest Indiana are also facing charges: Nichole Lowry is charged with stealing nearly $40,000 from the Pulaski County EMS; and Cheryl Pruitt is charged with stealing more than $7,000 from the Gary Community School Corporation.

“These cases address core local government functions that impact the quality of life for residents of these communities – from public safety to after-school activities to utility services – and erode public confidence in those trusted with public funds,” said Grant Mendenhall, special agent in charge of the FBI’s Indianapolis Division.

Indiana State Police Supt. Doug Carter added, “To say the least, it’s disheartening when public officials violate the public trust, which is why it is important ... to hold them accountable for their alleged criminal acts.”

Missing Smith Center funds

Over the course of her employment, about 26 months, the State Board of Accounts claims Nicole DeMunck misappropriated more than $13,000 from the A.K. Smith Center:

n $384 from the Health Occupational Students of America fund;

n $246 from Culinary Operations;

n $1,701 from the auto mechanics program;

n $1,953 from the Cosmetology program, plus $600 from cosmetology kit sales;

n $220 from welding gear pack sales;

n $996 from student uniform sales;

n $163 from pancake breakfast ticket sales; and

n $7,032 in High School Equivalency test fees.

The board is also seeking $8,737.75 for the cost of the investigation.

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