State audit finds $500,000 misused by former ICAD office manager

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IOWA CITY, Iowa (KWWL) — A recently released special investigation by the Iowa State Auditor revealed a little more than half a million dollars had been misused by an employee at the Iowa City Area Development Group for more than 10 years.

The 971-page report focuses on the former Office Manager, Sheri Jelinek after the Iowa State Auditors Office said it received a tip.

Iowa City Area Development, President, Mark Nolte said they first learned about the mismanagement a few months after Jelinek had left.

“We were in shock we felt incredibly betrayed… just stunned this could happen to an organization of this size,” said Nolte.

Since the revelation, the organization has made changes to prevent it from happening again.

“Her last day was in January of that year (2017) so it was a couple of months after her last day that we started to find these and we pulled the string,” said Nolte.

Iowa Auditor of State, Rob Sand, and his office launched an investigation into Jelinek.

“A lot of what we were looking at were credit card transactions that would end up going to things where you expect to see personal spendings, Walmart, gas for cars,” said Auditor Sand.

The investigation found from December 2003 to March 2017 $513,777.99 was being mismanaged. Of that, $466,874.73 was improperly spent on personal purchases. According to the report, many of those purchases went to places such as Verizon, Rural Linn County Electric Cooperative, Allstate Insurance, and Hulu under accounts in her or her husband’s name.

The investigation also found that $46,903.26 couldn’t be reconciled as office expensive but where from places such as Walmart and The Shopping Network.

“We did not see that any money was coming back into the accounts in this situation,” said Auditor Sand.

Jelinek was asked several times during the investigation, according to documents about the mismanagement. In one case Jelinek outright denied any knowledge of purchases unrelated to ICAD on her company card.

In another case when asked why her company card was used to pay for her husband’s vehicle registration, documents reflect that Jelinek said, “The only thing I can think of is if I grabbed the wrong card to do it and I
should have, I guess, caught it on the thing but, I guess, maybe I thought I was looking at my
own? But that’s the only thing I can think of. Because I had a card, a personal card, through the
credit union as well.”

However, the charges went on for years. The amount of money spent slowly increased over the years. The investigation revealed Jelinek spent taxpayer money at Amazon, DirecTV, Barnes and Noble, Hulu, among others.

“This person had a deep understanding of how the budgeting and finances worked in the organization and again this is something that the past president and former board members, it was very well hidden from them,” said Nolte, “But we do take full responsibility for it and hope to move forward. The organization is in a strong financial position we were able to recover some of those proceeds through insurance.”

Auditor Sand said he is working on other investigations like this one to restore trust in those who handle taxpayer dollars, “We need to trust but verify. We always have to actually do the work to take a look to make sure people are doing what they are supposed to be doing and not acting inappropriately.”

Nolte said ICAD has put in place financial controls such as forming their own audit committee. The organization has also outsourced budgeting and financing to a third party and will continue to participate in audits.

The results of the special investigation have been passed along to the county prosecutor, attorney general, and U.S. Attorney’s Office. Sand said criminal charges are likely in this case.

Ashley Neighbor

Ashley Neighbor

Reporter, Cedar Rapids
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