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December 15, 2005Township might not recoup its lossesSpecial districts investigation to continueTRAVERSE CITY - East Bay Township attorney Chuck Judson painted a bleak picture of the township's prospects for recovering money lost through embezzlement, misuse of township credit cards and collections shortfalls in special assessment districts."There's no place we can go and say 'Aha, here's where we go to recover the money," Judson told the township board Tuesday night. Auditors spent months studying township financial records and uncovered alleged embezzlement, abuse of township credit cards and other problems, including serious shortfalls in township special assessment districts. They estimate the township did not collect enough money in special assessment districts to cover shortfalls of $1.7 million in interest and $670,000 worth of project costs. Judson said there may be reasonable explanations for the $670,000 and said officials will continue to investigate the districts. Special assessment districts are set up to pay for water and sewer main extensions. Residents or developers who benefit from the extension are supposed to pay the cost of the project, plus interest. "My gut feeling is they are not going to find any problems with those districts, but that's not to say the township doesn't have a problem," Judson said. "The money's been spent but not necessarily misspent." If it turns out property owners were under-assessed, Judson said the township can ask a judge to reopen the special assessment district to allow the township to recoup those costs. Judson told the township board he was more disturbed by the uncollected $1.7 million in interest. Auditors said residents paid off their special assessments early to avoid interest payments, but the township still owes interest on the bonds used for the project. "That's a very high number (of early payoffs) even if you spread it out over 11 districts," he said. Township trustee Leroy "Butch" Strait said the township will be short money in several districts next year and that township Treasurer Debora Watson isn't giving the board any answers. Auditors said the township must set up each district as a separate bank account and not commingle funds in one account, the current practice. Watson, who faces a misdemeanor charge of official neglect of duty, was not at Tuesday's meeting to discuss the special assessment account she oversees. "Are you confident there is no other fraud or embezzlement in the special assessment accounting?" township trustee Beth Friend asked the auditor. "No," replied forensic auditor Michelle McHale-Adams, "because of the complexities of the accounting. Until these are broken down into separate accounts, it's impossible to tell what's going on." Auditors also reviewed $24,000 in credit card charges by clerk Janice Gee and former supervisor Joseph Bartko over a two-year period. Judson said it would be difficult to collect reimbursement for questionable credit card charges made by Gee and Bartko if the township filed civil suits. He said criminal convictions against both could result in some, but not complete, financial restitution. Bartko, 75, pleaded guilty Tuesday to official neglect of duty and will be asked to pay about $3,000 in restitution. Gee, 59, goes to trial in January on 14 charges of embezzlement and misconduct in office. Auditors allege Gee embezzled $62,000 from the township since 1995. See Related Stories: Residents are not as forgiving of Bartko as officials - December 15, 2005 Bartko pleads guilty - December 14, 2005 Audit reveals special assessment district mess - December 11, 2005 Gee will stand trial next month - December 10, 2005 Accountants missed many red flags - December 4, 2005 Other townships pondering changes - December 4, 2005 Bartko hears felony counts - November 29, 2005 Two more face charges in financial scandal - November 23, 2005 News Break: Ex-supervisor, current treasurer charged - November 22, 2005 Records show township paid planner from U.P. - November 13, 2005 Signature goal reached for recalls - November 9, 2005 East Bay Township probe widens - October 27, 2005 Bid for state's assistance in removing Gee falls short - October 12, 2005 East Bay recall petition drive thriving - October 11, 2005 Gee trial delayed as prosecution continues to build case - October 1, 2005 Audit: East Bay Township clerk took $62K - September 28, 2005 Residents demand answers from East Bay board - September 16, 2005 Audit may result in more charges - September 14, 2005 East Bay residents to circulate petitions - September 3, 2005 East Bay finances: 'Little stuff' totals thousands - August 28, 2005 Prosecutor says East Bay probe may widen - August 26, 2005 Former supervisor likely purchased personal items - August 21, 2005 East Bay Township clerk is back to work - August 21, 2005 More money may be missing in East Bay - August 16, 2005 Lile suggests shutting down East Bay government - July 22, 2005 East Bay Township supervisor expects 'real ugly' meeting - July 22, 2005 East Bay assessor to be paid as fate is determined - July 12, 2005 Errors pile up in review of East Bay records - July 10, 2005 Public backs East Bay probe leading to arrest of clerk - June 28, 2005 East Bay Township clerk charged with embezzlement - June 23, 2005 Township officials pushed for audit leading to Gee's arrest - June 23, 2005
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