Coalition announces legislative agenda aimed at public fraud

By Lesley Weidenbener
TheStatehouseFile.com

INDIANAPOLIS – A group of officials representing local, state and federal governments will push a series of legislative proposals meant to protect public funds and speed the recovery of taxpayers dollars lost to fraud.

The Public Integrity Coalition announced a 2015 agenda on Friday that includes additional whistleblower protections for public employees who report misappropriated funds and changes to insurance policies that cover losses due to employee theft.

“The vast majority of our public servants are honest and trustworthy,” said Indiana Attorney General Greg Zoeller in a statement. “But there are a few who violate the public trust and steal from taxpayers which gives everyone in government a bad reputation.”

Zoeller is among state members of the coalition, which also includes officials at the county, city, town, township and school level as well as the U.S. attorney for Northern Indiana and others.

The group organized in April and developed its agenda throughout the summer. Sen. Ed Charbonneau, R-Valparaiso, plans to carry the coalition’s legislation.

The coalition focused in part on recovering taxpayer funds. When the State Board of Accounts requires an official to repay funds after a misappropriation, the attorney general’s office serves as the state’s collection agent and seeks to recover the money. Since January 2009, state audits have sought repayment of nearly $8 million at all levels of local and state government. Any part of a loss not covered by a surety bond or crime insurance policy is a defendant’s personal responsibility to repay.

“The Public Integrity Coalition’s review found gaps in insurance or bond coverage that tightening up state laws would fix,” Zoeller said. “Deterring wrongdoing is important, and public employees who know that misappropriation is taking place can help. The coalition wants to remove barriers to employees reporting their suspicions so the theft or embezzlement can be halted before it snowballs into a huge loss.”

The proposals include:

Whistleblower protection. Whistleblowers who are terminated, demoted or discriminated against for their efforts would be entitled to receive reinstatement with the same seniority, twice the amount of back pay lost, interest and attorneys’ fees.
Bonds and insurance coverage. Any employee in a public office or school who handles money – including clerical staff – would be required to have a bond or a crime insurance policy. Currently, elected officials already must obtain $30,000 surety bonds, which serve as a type of insurance policy against employee theft. If an audit discovers misappropriation, bonds can be redeemed to reimburse government for the loss.
Searchable bonds. All officials’ bonds would be filed with the State Board of Accounts – in addition to local county recorders’ offices – to make them searchable and more transparent.
Better chance of full recovery, earlier. The law regulating official bonds would be clarified to ensure that enough coverage is in place to protect taxpayers. The bill would also would make the state a party in the insurance policies that local governments and schools purchase.
Town clerk-treasurers and vacancies. Towns would have the ability to sign interlocal agreements with other communities to handle the duties of clerk-treasurers if the office holder dies or resigns. The bill would allow a town to contract with a certified public accountant to fill the vacancy on an interim basis until a new clerk-treasurer is elected.
Charbonneau called the proposals “common-sense business safeguards” and said they will allow “all Hoosiers to have confidence their tax dollars are being used appropriately.”

Since January 2009, more than 250 certified audits identifying nearly $8 million in misappropriation have been referred to the attorney general’s office for collection. In total, the office has sought to collect more than $14 million, including amounts from certified audits that pre-date Zoeller’s administration.

Lesley Weidenbener is executive editor of TheStatehouseFile.com, a news website powered by Franklin College journalism students.