Lax oversight may have led to $279,000 misappropriation, auditor says

By Paul Brennan | Iowa Watchdog

DES MOINES, Iowa — For anyone wondering how Jessica Strasser, a secretary of the Mahaska County Soil and Water Conservation District, might have drained more than $279,000 out of the district’s bank account, Warren Jenkins has a simple answer. Her bosses made it easy.

“The commissioners of the conservation district provided no oversight,” Jenkins, chief deputy auditor of the State of Iowa, told Iowa Watchdog.

“They did not look at the bank statements. They did not look at any of the transaction activity.”

Like the other 99 soil and water conservation districts in the state, the district is part of the Iowa Department of Agriculture and Land Stewardship‘s Division of Soil Conservation, but it is governed by a board of five commissioners. The commissioners are elected officials who serve four-year terms.

As the secretary of soil and water, Strasser was an employee of the IDALS but was supposed to be supervised by the district’s commissioners.

In addition to her other clerical duties, Strasser was in charge of the district’s bookkeeping.

A new report from the Office of the Iowa State Auditor details how Strasser, hired in 2006, might have started misappropriating district funds in 2007.

Strasser’s activities did not come to light until 2013, when it was discovered the district no longer had enough money in its bank account to cover checks it had issued.

Strasser resigned and sent a letter to her former colleagues claiming she took the money as a result of the stress and depression caused by her husbands repeated deployments overseas as a member of the Iowa National Guard.

“My actions are not excusable and I take full responsibility for them,” Strasser wrote.

The Mahaska County Attorney is reviewing the audit’s findings but is not commenting on the case.

Iowa Watchdog contacted the district to ask why its commissioners didn’t review any of the district’s bank statements during the six years Strasser allegedly was siphoning money out of its account.

The district is not commenting on any aspect on the case, referring all questions to IDALS Communications Director Dustin Vande Hoef.

“We don’t have any specific information about what went on in the district,” Vande Hoef told Iowa Watchdog. “The auditor’s office is the one that’s been looking into the aberrations in that district.”

“We’ve been trying to create general policies to prevent things like this from happening in the future.”

Following the revelations of the state audit, IDLAS issued new regulations restricting the ability of secretaries to access a district’s bank account.

As for the particulars of what happened in MCSWCD, Vande Hoef suggested contacting Robert Oldham, director of the state soil and water conservation district that contains Mahaska County.

Oldham did not response to a request for an interview left on his voicemail.

The only thing Jenkins and his fellow auditors found surprising about what happened in Mahaska County is how blatant Strasser’s alleged actions were.

Of the $279,344 in misappropriated funds auditors identified, $242,103 were in the form of cash withdrawals from the district’s account.

“Usually the person is writing checks and disguising what the checks are for,” Jenkins explained.

“Had anyone looked at the bank statements and seen the cash withdrawals, this could have been stopped long ago.”

But what Strasser allegedly did isn’t that unique, even if the alleged method was.

“It is a common situation,” Jenkins said.

In rural Iowa, small city governments and other small government agencies often have just one person in charge of finances.

The results are all too frequently disastrous.

Since the beginning of the year, the state auditor’s office has uncovered five other cases in which unsupervised employees in small city governments misappropriated funds.

In 2012, former State Auditor David Vaudt announced that misappropriation of funds in cities of fewer than 700 had increase by more than 300 percent from 2006 to 2011.

The problem usually isn’t discovered until checks start bouncing.

“Unfortunately, we don’t know in how many other cases this might be happening, but it just hasn’t gotten to point where the checks are bouncing,” Jenkins said.

The solution is simple, according to Jenkins.

“It’s important to get more than one person involved. We constantly recommend having bank statements sent to a board chair, or a city council member, or someone like that before they are sent on to the person in charge of handling the bank account. That second set of eyes would help prevent the temptation that gets a person to start embezzling,” Jenkins said.

“You want to make sure you’re being proactive to prevent a problem, instead of reacting to a problem you have.”

But based on experience, Jenkins isn’t hopeful such a common sense precaution will become standard across Iowa.

“Officials in these small localities read about situations such as occurred at Mahaska County and they always think that that’s something that happens to somebody else, not us,” Jenkins said.

Contact Paul Brennan at pbrennan@watchdog.org