- Associated Press - Monday, June 8, 2015

LINCOLN, Neb. (AP) - An audit that found widespread financial problems in the Nebraska village of Riverton has been turned over to prosecutors for a criminal investigation, State Auditor Charlie Janssen said Monday.

Janssen said his office referred the case to the Nebraska attorney general’s office and local authorities after his staff uncovered more than $30,000 in “questionable and possibly fraudulent” payments.

Most of the money went to former village clerk Kelly Jackson and her husband, Jeremy Jackson, a former water operator, according to the audit.

The potentially fraudulent payments included $15,830 to Kelly Jackson beyond her approved $400-a-month salary and $10,250 to her husband. Auditors also documented more than $2,600 in overpayments to Kelly Jackson from years prior to the audit and $1,600 in cash utility payments that were never deposited.

Auditors said Kelly Jackson responded to one inquiry with what appeared to be an altered bank statement and claimed to have repaid money that she had not.

The Jacksons could not be reached to comment on the audit; a listed phone number was disconnected and no other numbers could be found. Village board chairman Mike Lammers declined to comment, saying the audit was “a sore subject.”

Auditors blamed the village board for insufficient monitoring and oversight. According to the report, the village had no receipt books, employee timesheets, personnel files, invoices or customer utility listings to track payments. It also failed to distribute W-2 forms to employees and didn’t withhold payroll taxes during the audit period from Oct. 1, 2013, through Jan. 31, 2015.

As of Jan. 31, the village owed nearly $33,700 to various creditors. About $9,400 of that was at least 90 days overdue, according to the audit.

Auditors said the village provided water, sewer and garbage services to residents for a flat rate of $77.80 per month, but never provided invoices for the services and didn’t record money when it was received. At least one resident received a discount based on a verbal agreement with Kelly Jackson, auditors said.

Current village clerk Audrey Beaty, who was hired in January, said she’s working to correct the problems.

“We’ve been working closely with our village attorney to ensure it’s done right,” she said.

The village also purchased 250 gallons of bleach, purportedly to purify its water supply. But state water tests suggested the chemical hadn’t been used for that purpose, and village officials couldn’t account for it, according to the audit report.

“This gives rise to serious safety concerns, as such large amounts of bleach can not only pose health and environmental risks but can also be used for illegal activities, including the manufacture of methamphetamine,” the report said.

Auditors said all of the bleach purchases were made by Jackson except for two made by former village board member Carolyn Jackson. At the time of the purchases, auditors said Carolyn Jackson had resigned from office and had no authority to buy the bleach on the village’s behalf. Auditors were not able to determine whether Carolyn Jackson is related to Kelly and Jeremy Jackson.

Janssen said he plans to increase the number of random audits on villages.

“We’re seeing more and more problems,” he said.

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