Investigation into Solen School District reveals potential embezzlement
An investigation into the Solen School District's accounting shows a former employee potentially embezzled at least $38,000 from the school district.
The state auditor's office confirms from 2016 to 2018, the employee wrote more than $32,000 in unsupported payroll checks above their contracted salary.
The audit report also shows more than $6,000 in questionable credit card transactions during the same period.
According to documents, the district found an issue on Sept. 15 and filed a bonding claim on Oct. 31, 2018.
A claim must be filed within 60 days of finding the default for the claim to be considered. In a report filed with the claim, the district says the issue started on August 23, 2018 when the Internal Revenue Service served the district with a summons for tax information.
The IRS accuses the district of failing to pay payroll taxes since 2013.
The employee responsible for IRS forms admitted they failed to submit the forms and hadn't paid taxes since 2013. The school board voted to terminate the employee the next day. An audit by an external firm showed the district hadn't paid $2.3 million in payroll taxes from 2013 through 2017.
The State Auditor's office sent a letter in May saying they were taking control of the audits away from the district.
After the employee was fired, the district says it uncovered the employee using the district credit card for personal expenses, reimbursements for non-existent expenses, unauthorized payroll payments, and unrecorded checks. The initial claim amount filed was $500,000.
Your News Leader requested the work papers of the audit to see how far the potential embezzlement stretched.
State Auditor Josh Gallion says the working papers are confidential during the "pendency of any criminal investigation and subsequent litigation by the Federal Bureau of Investigation, Bureau of Indian Affairs, Department of Education, Office of Inspector General, Sioux County State's Attorney or other appropriate state or federal law enforcement agency." Gallion's letter did say the confidentially shall not extend past Dec. 31, 2022.
We reached out to the Solen Public School District for comment. Superintendent Justin Fryer says the district is cooperating with federal investigators and he cannot comment more while the investigation is ongoing.
Superintendent Justin Fryer says as soon as the district found the unpaid taxes, it started working with the IRS to repay the $2.3 million. In the last year, Fryer says the district has paid back $1,442,677.85 and are working to pay back the remainder as quickly as possible.
