Dispute over restitution delays Two Harbors, Minnesota school district embezzlement sentencing

Sherry Udenberg was charged with embezzlement of an estimated $65,275 from the district from 2007 to 2009. A dispute over how much restitution should be paid has held up court proceedings for a woman accused of stealing $65,000 in food service money at Two Harbors High School.
Sherry Rae Udenberg was scheduled to appear for formal sentencing Monday in Lake County District Court after reaching a plea agreement last month with the county attorney’s office. Her attorney is disputing the amount of money his client is said to have stolen from the school district. Court documents state she embezzled more than $65,000 in a three-year span that ended with her sudden resignation last fall as a financial assistant and food service coordinator in the district. She had been a 13-year employee.
Attorney Arthur Albertson said his client doesn’t deny wrongdoing but she thinks the district’s figure on how much money she took is incorrect. He said he needed more information from the school district about how much money was owed. He questioned how the district came up with the $65,000 figure.
Udenberg faced three felony counts related to how she handled money coming into the high school office for student lunch accounts. She admitted to police that she created a fake accounting program to cover up money she was supposed to deposit in the district’s bank account. Student accounts were credited and the money the district lost is covered by insurance.
Albertson said the amount the district wants for restitution might include accounting mistakes made by other staff in calculating how much students paid for lunches.
Superintendent Phil Minkkinen disagrees. He said the restitution numbers are based on data from cash receipts to deposits made at the bank.
Udenberg told police she deposited checks and coins but pocketed cash when making deposits. She avoided detection from state audits by applying the program she created. Under district policy, Udenberg was supposed to count money brought in for student lunch accounts after it was counted by the high school office. She was supposed to return the money to that office for deposit but, instead, according to the complaint, she did the deposits herself.
Lunch money collected from district students in Silver Bay and Minnehaha Elementary in Two Harbors was directly deposited into the bank and didn’t go through Udenberg.
Udenberg pleaded guilty to one felony count of theft with counts of felony embezzlement of public money and felony forgery dismissed depending on a review of the plea agreement.
She was expected to avoid what could have been a 10-year sentence and spend six months at the Duluth Bethel female offenders program and/or 90 days in jail and 60 days of electronic monitoring. Details on her punishment and the restitution were expected Monday before the dispute came up. There is no date set for Uden-berg’s next appearance in court. She was not jailed upon her arrest.
A stay agreement means an offender must comply with conditions established by the court or be sentenced under the offense guidelines. In Udenberg’s case, felony theft is punishable with a 10-year prison sentence and/or a $20,000 fine. If Udenberg complies, the recommended sentence is dropped and the offender has a record of a misdemeanor rather than a felony.
A probation officer looks over the plea and investigates a defendant’s past and either abides with the plea agreement or offers another arrangement. Udenberg could back out of her guilty plea if the officer disagrees with any new conditions.
She probably will serve time at Duluth Bethel — the only other option would be jail. According to Bethel’s Web site, it provides “individuals dignity, hope and the opportunity to improve their quality of life through chemical dependency rehabilitation and community correction services.”