State auditor accuses former housing authority head of ‘bizarre abuse of the public trust’

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LINCOLN — The former head of a northwest Nebraska public housing agency faces possible criminal consequences for what the state auditor described Monday as a “not-so-clever and bizarre abuse of the public trust” that he said purloined tens of thousands of dollars.

“Just when you think you’ve seen it all…,” State Auditor Mike Foley said, when laying out the series of allegations against Krystal Freeseman, who served about 13 years as executive director of the Rushville Housing Authority in Sheridan County.

Allegations include the use of agency funds for carpeting in Freeseman’s house, property tax payments on a home owned by her husband and questionable transactions at Walmart, Menard’s and Family Dollar.

Agency serves low-income

Funded primarily through the federal government and rent payments, the housing authority in the Sandhills area is tasked with providing housing for low-income residents.

Foley’s office launched the audit after receiving tips about wrongdoing. In all, the auditing team accounted for $31,016 that it believes Freeseman “purloined” from the agency.

Around the time she was dismissed in February, Foley said, Freeseman reimbursed the authority for about $13,000. That prompted the auditor to say, “One cannot rob a bank on Monday and, when caught, partially repay the bank on Tuesday and expect no consequences.”

Foley said he is working with authorities and is in the process of forwarding documentation and audit results to the Nebraska State Patrol, Nebraska Attorney General’s Office, Sheridan County Attorney’s Office, Nebraska Accountability and Disclosure Commission, Nebraska Department of Revenue, Internal Revenue Service and  U.S. Department of Housing and Urban Development.

Freeseman declined to comment when reached by the Nebraska Examiner.

Housing board responds

The 26-page audit report, publicly released Monday, included a response from the governing board of the Rushville Housing Authority. The board said it had become suspicious of its executive director in January 2024 and began its own internal investigation the following month.

That probe, it said, uncovered irregularities in bank statements. After firing the director, the board hired an interim director and a CPA firm to help reconcile bank statements and to “get the authority back on the right track.”

A permanent executive director has since been hired. Several safeguards were implemented, the board said, including that the executive director is no longer authorized to sign agency checks. Instead, the director can fill out checks and two board members are authorized to sign them.

Among findings in the audit:

• For multiple years, Freeseman allegedly provided false information to the Housing Authority’s accounting firm, which in turn reportedly issued wage and tax statements omitting nearly $10,000 in wages paid to her.
• Freeseman allegedly manipulated the agency’s accounting system to have an electronic check issued to Dawes County for payment of nearly $1,388 in property taxes on a home owned by her husband. Using the same technique, she allegedly transferred public funds to cover personal credit card balances totaling $7,297.
• Freeseman allegedly used $2,612 of agency funds for the purchase and installation of carpet in her family home.
• Freeseman allegedly used the agency’s credit card to cover expenses including $180 for her son’s dorm room rental charge and $469 to benefit her husband’s chiropractic practice.
• Twenty-two checks that were written to or for the executive director appeared to contain a forged signature of a board member.

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