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Citizen Reprimands Council, Finance Committee for “Lack of Oversight”

April 1st, 2012 by Diana Matus

Filed under Featured, Paonia

The finance committee’s report to the Paonia Town Council on February 28 started with some positive news. Lucien Pevec and Blake Kinser reported that they have completed their research into investment options for the Town’s money, and they recommended that the Town move the Colorado Trust Fund money into investment accounts overseen by Peak Public Investment Advisors (PPIA).

The $823,000 in the Colorado Trust Fund account has been earning returns of only .11% – .17%. The new investments have a potential rate of return of 1.3% to 1.7%, which, while still low, represent a vast improvement in earnings.

Ayers said many other Colorado municipalities use PPIA as their investment advisors, and Jim Ventrillo, Delta County Treasurer, recommended the firm. Ayers also noted that, although PPIA will make investment strategy recommendations, the finance committee and the Town’s financial officer will have oversight on all trades made through the firm.

The Council voted to move all of the funds from the Colorado Trust Fund to investment accounts under the direction of PPIA.

The financial discussion then took on a darker tone. Dave Weber reported that the personnel committee has interviewed 13 applicants to fill the finance director position left vacant by the removal of Kristin Chesnik. Weber said that he was impressed with the quality of the candidates, and the personnel committee has selected one of the candidates, with a second as a backup.

Weber went on to say that, because Chesnik “embezzled the town for a substantial amount of money and is facing criminal charges,” the Town needs to take steps to prevent such an occurrence in the future. Weber said that the embezzlement occurred because Chesnik was left alone without any oversight.

“Kristin reported to the mayor and the finance committee. They were remiss in not reviewing the bank statements… Kristin also didn’t do her job for six months. The Town had to pay a substantial IRS penalty because she didn’t file with the IRS for six months. It’s the job of the mayor to oversee this.”

Weber said that both the 2008 and 2009 financial audits noted that protocol changes were needed so that the finance officer would not be able to make ledger entries and electronic transfers without authorization. “I suspect that the 2010 audit will show that the same problems were not fixed,” said Weber. “We need to pay attention to our auditor and make changes. This is systemic. We need to fix the system so that nobody can get away with it again. We are the trustees of the public money.”

Weber softened his criticism by saying that he realizes there is no manual for the trustees, and he suggested that each committee write a description of duties for the incoming council which will be elected in April.

Pevec, one of the two members of the finance committee, said he “absolutely agreed” with Weber’s comments. He said that the finance committee did adopt the protocols recommended by the auditor, but “I expected Kristin to follow those protocols, which she didn’t do, and I didn’t follow up to hold her to it.”

Ayers explained, “We’re not CPAs. I’m not familiar with the software we use. There were numerous times that I asked the finance officer for information and never got it.”

Bill Bruner, a former Paonia trustee did not accept the finance committee’s excuses. “I find your explanations of what went on shocking. It is your fundamental duty to protect the finances – especially the Mayor.” Bruner said that he approached the Council and the Mayor in 2008 over the problems revealed by the audit, and he was assured at that time that the recommended procedures would be implemented.

“To say that there wasn’t a manual or ‘I asked her to give me something and she didn’t’ is shocking,” said Bruner. He called for apologies and resignations from the Council, and concluded, “Your inattention borders on aiding and abetting a crime.”

Pevec responded, “I can’t take responsibility for someone committing crimes. I do take responsibility for not taking sufficient follow-through with her.” He added that he is working with the Town’s accountant, Pete Blair to develop and implement new protocols, which will include revisions of the way credit card charges will be itemized and reviewed.

Pete Blair, who is qualified as a forensic accountant, has reportedly cleared all other parties of involvement in the matter. No charges have yet been filed against Chesnik. The investigation is ongoing and is expected to take several more weeks. The trustees declined to state the amount of the funds that were allegedly embezzled.

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