The Louisiana Legislative Auditor issued its final report in the audit of Oakdale’s finances this week and indicated former City Clerk Melissa Schaefer manipulated payments, wrote checks to herself and paid two of her credit cards.
In its summary of the audit, information indicated Schaefer did three things that appear to have violated the state’s laws, according to the report released to the public by Louisiana Legislative Auditor Michael J. “Mike” Waguespack.
•Schaefer manipulated Automated Clearing House (ACH) transfers to pay herself $769,136 more than her authorized salary from January 1, 2014, to March 17, 2021.
•Schaefer signed and received 93 city checks totaling $59,945 from January 1, 2014, to March 17, 2021. City records show she was not entitled to receive $13,378 of the payments.
•City funds were used to make 63 payments totaling $115,304 to two credit card accounts of Schaefer from August 26, 2014, to December 30, 2019. The city does not have any documentation to show she was entitled to receive the benefit of the payments, or that the purchases were made to benefit the city, according to the audit.
The audit was initiated after the state received “a complaint from the City of Oakdale’s (City) auditor regarding improper transfers to the former city clerk’s personal bank account.”
Mayor Gene Paul said the council will have to decide how to proceed forward. In a statement after the report was released, Paul said, “I have spoken with our attorney and discussed what action we need to take. We will continue our discussion this week. The council will have to make a decision as to what their wishes are in moving forward.”
Paul didn’t know if they would have to call a special meeting or discuss the matter at the city’s designated meeting in February. He said they would speak with their attorney.
“We are going to try to recover every penny that is legally possible,” Paul said.
The report explains how the missing funds were taken and how it was determined. It also includes recommendations on how the city needs to move forward to prevent this from occurring.
The audit explains between January 1, 2014, to March 17, 2021, it appears Schaefer was able to divert city funds to herself by manipulating ACH transfers to pay herself $769,136 more than her authorized salary. The report also indicates Schaefer signed and received 93 city checks totaling $59,945 in that time frame. City records showed she was entitled to receive $13,378 of the payments.
And finally, between August 26, 2014, and December 30, 2019, city funds were used to make 63 payments totaling $115,304 to two of her credit card accounts. She had made some purchases for the city with her credit card, but there were no receipts to show documentation in the city’s records.
The audit explains that the investigation led authorities to learn how the funds were taken. “The mayor and the former accounts payable clerk told us that Ms. Schaefer often bought items for the city when the city did not have cash to purchase the items. Once these items were ordered, Ms. Schaefer submitted a reimbursement request and received a city check. The mayor said he was not aware Ms. Schaefer was reimbursed for so many purchases; however, his approval initials were on 28 of the 29 invoices we found in the City’s records.”
Schaefer was employed by the city as clerk on October 17, 2002, until her death on March 11, 2021.
The state’s audit made several recommendations including spliting duties between two different employees when dealing with payroll, etc. It also suggests the employee that reconciles the city’s bank statements should not be authorized to post entries to the accounting system or authorize payments. Other recommendations include creating policies for reimbursing employees, prohibiting employees from using their personal funds to make routine purchases and requiring invoices and other documentation prior to authorizing payments.
In a letter to Waguespack, Paul said the city accepted the findings and were taking measures to prevent this type of fraud from occurring in the future. The mayor noted the city also filed claims on surety bonds and has collected $105,000 to recover excess payments and intends to pursue all causes of action to recover the remaining monies, Paul said.
More information on the audit can be found at the auditor’s site at www.lla.la.gov.
