Clerk gets probation, restitution

Former Lime Springs City Clerk Larry Gates was sentenced in the Iowa District Court for Howard County on March 19, 2012.

According to court papers, Gates pled guilty to Theft in the First Degree, a Class C felony on Oct. 24, 2010. He was given probation and will have to pay restitution.

An audit was requested by the City of Lime Springs from Hacker, Nelson & Co. of Decorah. Its summary was released to the public after the March 19 sentencing.

The report states, “In November 2009, while the City Clerk was on medical leave, City Officials discovered an envelope in the City Clerk’s desk containing a utility bill marked paid with $50 written on the envelope. The City Officials did not find a deposit into the City’s checking account for the bill payment. They became suspicious and began comparing the deposits recorded on the utility billing software to the deposits which were made to the City’s bank account. It appeared there were many deposits recorded on the utility billing software which did not clear the bank account.”

Only three years of improprieties can be prosecuted according to Iowa law. Gates worked for the City since 1997. Hacker, Nelson found inconsistencies dating back further.

Some of the improper and unsupported items found in the audit include:

• Between July 1, 2006 and June 30, 2009, approximately 186 residents were credited with paying their utility bill in cash, but the cash never made it to the bank. The total for the three-year period was $15,104.25.

• Since 2004, there were duplicate payments made to Larry Gates personally and to Household Credit Services in the amount of $755.90.

• Since 2007, there were $913.74 in payments made to Gates ad HSBC Card Services with no supporting documentation.

• Although the clerk was paid a monthly salary, there were three additional payroll checks made out to Gates on Oct. 8, 2002, April 7, 2003 and Oct. 15, 2003 for a total of $6,189.74.

• Water bills to the Larry Gates household were paid properly until May 31, 2007, when $14.30 up to $103.60 were not paid.

• When going over checks from July 1, 2006 to Sept. 30, 2009, former Mayor Walter McIntosh found $62,185.25 in checks that

 

 

had his name on the signature line, but were not signed by him. These checks were for city expenses, but $52,860.46 had not been approved by the City Council.

No charges were brought up on this as Iowa Code says forgery is the intent to defraud for personal gain.

The City has been paid $25,734.93 for insurance reimbursement. The insurance company will likely go after Gates in districtcourt.

Also in the Hacker, Nelson audit were statements about how these thefts were able to occur. “There was no segregation of duties for the accounting functions of the City, and there were few internal controls put in place. The Clerk worked independently on the City financial records with little oversight by the City Council.”

The report also said, “The City Clerk controlled these documents [cancelled checks and bank statements] and did not allow the Mayor or the City Council to review them.”

The terms of Gates’ sentence include:

• The defendant is placed on supervised probation to 1st Judicial District Department of Correctional Service for a term of two to five years,

• The defendant shall pay all court costs, fees and special surcharges required to be assessed for all of these offenses by state law;

• Defendant shall repay all victims for out-of-pocket losses. Estimate to victim is $12,174.19 (to the City of Lime Springs);

• The clerk of court shall inform the county commissioner of elections of this sentence, because defendant loses the right to vote;

• The defendant shall submit a DNA sample as required by 81.2, Code of Iowa;

• If the defendant has not previously been fingerprinted for this case, the defendant shall immediately report to the county sheriff’s office to be fingerprinted; and

• Counts II, III and IV were dismissed at defendant’s costs on motion of the prosecutor.

Court records show that in pronouncing the sentence, the court gave special consideration to the plea agreement with the prosecutor and the facts and recommendations contained in the presentence investigation.

 

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