Auditor: Former Delhi city clerk improperly spent over $66,000 of city funds

The former city clerk of Delhi is involved in an investigation of tens of thousands of dollars in improper spending of city funds, according to the state auditor. (Photo via Google Maps)

Iowa Auditor Rob Sand said Tuesday a special investigation of the eastern Iowa city of Delhi revealed about $66,000 in improper payments and about $13,000 in unsupported spending from January 2015 to June 2022.

The audit came from a request by city officials following concerns about financial transactions made by former Delhi City Clerk Lori Tucker, according to the audit report. The investigation period covers nearly Tucker’s entire tenure as Delhi city clerk.

“This is another example of why it is so important for government entities to have policies in place and procedures in place that allow for and encourage proper oversight of your tax dollars,” Sand said in a press conference after the audit’s release. “It’s also important that then they follow those policies and procedures to try to help minimize the risk of things like this happening.”

Because city records were not sufficiently maintained, Sand said there may be more improperly spent funds outside the $66,000 identified in the audit report.

Upon review of city hall security footage, state officials discovered Tucker telling the former mayor of Delhi that she would “leave Delhi high and dry,” according to the audit report.

Sand said results of the investigation have been reported to the Delaware County attorney and the state attorney general’s office for potential criminal charges.

City officials were also concerned that Tucker, who also worked at the nearby City of Ryan, was on the clock for Delhi while working at Ryan and that she did not properly split reimbursements between the two cities, according to the audit report.

There is another ongoing investigation into the City of Ryan which is nearing completion, Sand said.

$66,000 of improper payments

As city clerk, Tucker was responsible for issuing her own payroll as well as disbursements for the city.

Of the 160 timesheets reviewed by the auditor’s department, 130 of them included excess hours which resulted in Tucker earning over $21,000 in excess wages, according to the audit report.

As a result of those excess hours put on her payroll, Tucker accrued around $8,000 of improper disbursements from unearned vacation hours, unapproved insurance stipends and excess longevity payments, the audit report alleged.

According to the audit report, Tucker awarded herself 56 hours of paid time off (PTO) per year when she was only entitled to 40 hours of PTO per year.

In interviews with state officials, Tucker defended herself and said she never put more hours on her timesheet that she didn’t work, according to the audit report.

“Unless there was work to do, I wasn’t working more hours to go over, I had other things to do, I had two other jobs,” Tucker said in an interview with state officials, the audit report stated. “There wasn’t anybody there to do the job when I wasn’t there.”

Tucker also improperly issued around $21,000 to a Health Savings Account (HSA) by directly transferring funds from the city’s checking account to her HSA, the audit report alleged. Per Internal Revenue Service (IRS) rules, payments to an HSA should have been a pre-tax deduction from Tucker’s gross payroll.

The audit report also noted $1,300 in excess insurance premiums which should have been paid by Tucker directly but instead were paid by the city.

The audit report also found about $600 of improper purchases made with the city’s credit card. Because Tucker failed to pay the balance of the credit card on time, Tucker paid multiple late fees using the city’s credit card.

While Tucker was entitled to reimbursements for travel, the reimbursements were supposed to be preapproved and related to her work as the city clerk, according to the audit report.

The audit report found 19 different improper reimbursement checks worth over $300 which allegedly came from Tucker over-reporting her car mileage, reimbursing travel costs from her home to city hall, and purchases of snacks and drinks for city council meetings.

Unrelated to Tucker’s case, the city paid a former maintenance employee around $250 more than it should have in excess insurance premiums, Sand said.

The same former maintenance employee also established an HSA and, in several instances, avoided pre-tax deductions while the city still paid into the employee’s HSA, according to the audit report. The report estimates around $7,000 in costs.

A former maintenance employee also had three improperly disbursed medical payments for which the city paid over $5,000, according to the audit report. The employee disbursed out-of-pocket costs associated with a baby delivery of the employee’s spouse, a chest X-ray and type of CT scan, and the medical balance of a dependent of the former employee.

The remaining improper disbursements came from late fees and interest made to pension funds because reports were not filed in a timely manner, according to the audit report.

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$13,000 in unsupported payments

Unlike the improper disbursement, the $13,000 unsupported disbursements lack documentation for the state auditor’s department to conclude whether the payments were proper. Sand said there was no evidence to suggest that documents were intentionally destroyed to hide evidence.

More than $6,000 in purchases via the city’s credit card and over $5,000 of disbursements from the city’s checking account to individuals or vendors were identified as unsupported in the audit report.

Sand also said the audit found nearly $1,600 of unsupported disbursements which stem from Tucker failing to list a reason for the payment.

A former maintenance employee was also issued around $83 in unsupported disbursements, according to the audit report.

Other findings and conclusions of the report

A review of security footage showed the former mayor of Delhi signing off on Tucker’s time-off request despite not being Delhi’s mayor at the time, according to the audit report.

The audit report also noted numerous instances of Tucker working for the City of Ryan on Delhi’s computer.

According to the audit report, the city violated state law on multiple occasions by donating money to private non-profits.

At the end of the audit report, state officials called on the city to make changes. Among those changes were to have more internal and external reviews of the city’s disbursements, payrolls, credit cards and donations.

Audit officials in the report also called on Delhi city officials to do a better job segregating city duties. The report also asked city officials to tie the city’s checking account history to the city’s monthly accounting records.

Sand’s office in the report also requested that all purchases made via the city’s credit card be pre-approved, include documentation and be reviewed by an independent person.

Furthermore, the audit report called for all disbursements to have supporting documentation, be pre-approved and have a “public purpose.”

In the press conference about the investigation, Sand said to prevent the embezzlement of tax dollars from happening again, the state needs to pass stricter criminal legislation for embezzlement.

“We are years past due for the Legislature to make it a mandatory prison sentence, period. I’ve been asking them to do that since I was first elected in 2018, they still haven’t done it,” Sand said.

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