Monday, January 18, 2016

Janesville School District mum on embezzlement impact


The Janesville School District refuses to discuss how it has changed its money-handling procedures in response to the embezzlement of more than $300,000 from Craig High School over 10 years.
Superintendent Karen Schulte said Friday that she would not speak "at all" about how employees handle money, how procedures were changed to prevent future losses, how much money was transferred to student organizations to compensate for their losses, who authorized the transfers and what accounts were involved, among other things.
Janesville police believe that Jessica Warner-Reed, who was arrested Tuesday, stole more than $300,000 while she was the “banker” for Craig from 2006 to 2015.
Warner-Reed started as a clerical worker in December 2004 and became “the banker” in 2006.
The missing money came from student clubs, sports teams and other organizations whose money Warner-Reed collected and deposited.
Warner-Reed is scheduled to be in court Jan. 25.
When asked why she would not respond to general questions about district money-handling procedures, Schulte said it's "because so many things are related to the case."
"I think it's really important to follow what the district attorney has asked of us," Schulte said. "I don't think that that's much to ask. We want justice to prevail, so we certainly comply with all of our partners, just like we complied with the police investigation. Remember how everybody was hounding us about 'What's going on? There's rumors at Craig High School'?
"The police have it," she said. "Let them do their investigation. And I think they have the ability to do a better, cleaner investigation if we keep our fingers out of it. They're the experts, not me."
Schulte said Rock County District Attorney David O'Leary told her specifically to be cautious about how she talks about the case.
"If there are particular questions that come up or areas of comment, (O'Leary advised) that discussions either go to him or our own attorneys," Schulte said. "We've had many discussions with them lately because we want to comply with the law."
The Gazette contacted O'Leary via email Wednesday, asking how long the request that Schulte not comment would continue. O'Leary responded by citing these statutes:
—Supreme Court Rule 20:3.6: Trial Publicity states that a lawyer who is participating or has participated in the investigation or litigation of a matter shall not make an extra judicial statement that the lawyer knows or reasonably should know will be disseminated by means of public communication and will have a substantial likelihood of materially prejudicing an adjudicative proceeding in the matter.
—Supreme Court Rule 20:3.8(f)(2): Special responsibilities of a prosecutor states that a prosecutor in a criminal case or a proceeding that could result in deprivation of liberty shall exercise reasonable care to prevent investigators, law enforcement personnel, employees or other persons assisting or associated with the prosecutor in a criminal case from making an extra judicial statement that the prosecutor would be prohibited from making under SCR 20:3.6.
"These ethical obligations continue while the criminal matter is under investigation and/or pending before the court," O'Leary said in the email.
The Gazette reporter responded by saying he was not asking about the case, but rather how long Schulte will be under a gag order.
O'Leary responded Thursday, saying:
"Of course you are asking about the case. Your how the thefts affected the victims of the crime. There is no gag order, only the prosecutor's ethical obligations to prevent bias to a potential jury as set forth below."
The Gazette reporter responded Thursday, asking what specifically O'Leary told Schulte not to say. As of Friday afternoon, The Gazette had not received a response.
Janesville police Detective Chris Buescher said Friday that the police department would have no new information until Warner-Reed makes an initial court appearance or a criminal complaint is issued.
"Eventually, all of it will get out," Buescher said. "Right now, with the court proceedings, we're really limited in what we can say."
The school district made its student activity accounts whole last summer by transferring money to them, according to a news release issued Wednesday by the district. It is unclear how that affected district operations.
Board member Bill Sodemann said the school board never voted on replenishing any accounts. It was done internally, he said.
"We never took a vote at all," Sodemann said. "Obviously, that would be an open session item and on the agenda."
Sodemann said he is unsure of the amount the district spent to refill the accounts. He said he didn't learn of the amount missing until recently.
"I'm guessing they're not going to tell us the entire amount," Sodemann said. "They don't want to be specific so they can catch as much as they can catch."
"The money raised by clubs had to be replenished, so the district has to cover that," he said. "I wouldn't expect a vote on that. Replenish it, then go after her, and maybe money comes back from insurance."
Sodemann said he is unaware of what new procedures, if any, the district is using to manage funds besides tweaks to the handbook.
"I'm not sure which points are new compared to which parts are being emphasized from before," Sodemann said.
"But I'm going to have more questions," he said. "I don't want to impede on the investigation, but I want to dig in when we can to find out what happened, what could have been avoided and how to avoid this in the future."
The Gazette filed an open records request Thursday, asking the school district for internal audits of Craig's finances, emails between district administrators about the embezzlement and memos to staff advising them not to speak publicly about the issue.
The request was denied Friday morning. School district attorney Julie Lewis said in a written response that "the requested records are related to a pending criminal investigation and are exempt" under state statutes.

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