Civil action taken against former Floyd highway department head [The Evening News and the Tribune, Jeffersonville, Ind.]

Dec. 29--NEW ALBANY -- Indiana Attorney General Greg Zoeller filed a lawsuit Thursday in Floyd County Circuit Court seeking to recover missing highway funds.

The suit names Ronald Quakenbush, who recently retired as Floyd County Highway Department superintendent, and Western Surety Co., which wrote a $15,000 surety bond covering county government employees.

The state is seeking $17,745.34 to reimburse the public treasury for funds the attorney general alleges were misappropriated, plus the costs incurred by the State Board of Accounts in conducting the audit.

Attorney Rebecca L. Lockard, of Jeffersonville, who represents Quakenbush, responded in an exit interview that Quakenbush may have used poor record keeping but did not misappropriate county funds. Quakenbush said he was simply following the practice that had always been used in the county.

Zoeller said at a press conference Thursday that those practices were not in compliance with the procedures outlined by the State Board of Accounts. Quakenbush is accused of failing to record or deposit receipts to the county auditor's office and deposited county money into a private savings accounts. Zoeller said public officials must be able to account for how they spend money, whether it is for legitimate purposes or not.

"It's the obligation of the office-holder to know how to account for the public's money," Zoeller said. "This is something we take very seriously."

Floyd County Commissioners President Mark Seabrook said Highway Department employees contacted the State Board of Accounts about Quakenbush's alleged actions. The State Board of Accounts then contacted the county about the matter and then the commissioners launched an investigation, which included an executive session.

"We called [the state] and asked for an audit immediately," Seabrook said.

He added Quakenbush was placed on administrative leave as the investigation began, though he would later retire before the audit was released.

"What we've done is allowed the process to work and this is the next step in the process," Commissioner Steve Bush said. "We wanted to be transparent on what was going on, especially with the allegations. It was unfortunate, but we want the public trust as well. We feel like we've handled it properly and above the board."

Zoeller said the first step will be to attempt to collect the $15,000 bond, which is an insurance policy against theft or misconduct. Quakenbush will be personally responsible for any amount not covered by the bond. The state also will seek treble damages -- or three times the amount of the state's loss -- but must prove malfeasance to do so. Zoeller specified that they do not have to prove Quakenbush's intent or that theft occurred.

The State Board of Accounts forwarded the audit to the Attorney General's Office to review for civil action and the Floyd County Prosecutor's Office to review for criminal action. Erynn McInnis, public information officer for the prosecutor's office, confirmed that Prosecutor Keith Henderson had received a copy of the audit. She said there is nothing pending criminally.

According to the audit released Dec. 5, highway department drivers hauled metals -- old culverts, guard rails and other salvageable items -- to various recycling companies that paid for the scrap, and then the cash and receipts were supposed to be turned over to Quakenbush to be remitted to the county auditor.

The audit found Quakenbush failed to remit $12,526.67 in cash payments from the recyclers during his time in charge from Jan. 1, 2006, through Aug. 31, 2011. Some of the money, $1,482, was stored in a locked drawer in the highway department office to be used for miscellaneous purchases for the department. The money in the locker was turned over to the county auditor in September, but that still left $11,034.67 unaccounted.

The audit also found Quakenbush opened a private interest-bearing savings account at a Harrison County bank March 3, 2006, with an initial deposit of $1,712.03. Until the account was closed earlier this year, more than $5,600 was deposited and more than $7,500 taken out during 24 withdrawals during a 4 1/2-year period.

The state requested that Quakenbush reimburse the initial deposit plus interest and a deposit not included on recycling printouts for a total of $1,863.79. The state also asked for $4,846.88 for the cost of the audit.

According to the audit, Quakenbush said he kept some of the receipts from the sale of scrap so he could purchase items for the department in emergency situations. Quakenbush said he did not take money from the drawer for himself but used it to purchase items such as a vacuum cleaner, camera, snacks and drinks.

Zoeller said Quakenbush said he was just doing things the way they had always been done. However, the Attorney General said there are seminars and opportunities for public officials to educate themselves on property procedures.

The Attorney General's Office has filed 40 lawsuits in Indiana since January 2009 seeking to recover public funds based on state audits. Zoeller will recommend in the next state legislative session that a new law be passed requiring signatures from at least two employees in a government office to authorize expenditures of public funds. Zoeller said that requirement only exists for larger cities.

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