Audit raises more township 'trustee trust' questions

A new state audit raises new questions about ‘trustee trust’ in another St. Joseph County township.

The audit alleges that Olive Township’s bank account was tapped from ATM’s located in casinos.

The report further alleges that it was the elected township trustee who made multiple withdrawals.

The sum isn’t huge--$1,634.74—and all the money has since been repaid out of the personal pocket of Olive Township Trustee John Michalski. Yet the situation is being reviewed by the prosecutor’s office for possible criminal charges.

When Michalski was asked about the withdrawal of township funds from gambling establishments today at his office in New Carlisle he told News Center 16, “Yeah that was my mistake.”

According to Ryan Preston, Supervisor for Schools and Townships for the Indiana State Board of Accounts, “We reviewed bank statements and we determined that there were seven ATM withdrawals, they happened to come from three different casinos located in Michigan City, Hammond, and then Prior Lake, Minnesota.”

The seven withdrawals took place between December of 2009 and November of 2011. The largest was $304.99 and came on March 31, 2010 at the Horseshoe in Hammond.

In its report, the Indiana State Board of Accounts writes that the “Seven ATM withdrawals and seven ATM fees had been altered to appear these were legitimate township expenses. No receipts and/or invoices were provided to substantiate they were township expenses.”

“And again, we asked the trustee to repay those, because it was not determined, nor he could not provide documentation that those were legitimate township expenses,” said Preston.

In July, Michalski actually paid more than $7,600 out of his own pocket to reimburse township accounts.

The sum makes up for the casino withdrawals, and pays for a host of undocumented and/or poorly documented purchases at the likes of drug and grocery stores. Michalski today insisted that those expenditures were legitimate.

The state is seeking another $7,600 to cover the costs of the audit, which took more time than it should have because of “poor and non-existent” records.

Michalski is being asked to pay a grand total of $15,342.58 as a result of the audit. That’s more than his annual trustee’s salary of some $12,000.

The report does identify township funds being used to buy a personal prescription for Michalski in November of 2010. The total cost was $14.30.

The report also alleges that Michalski improperly received $639.49 in August of 2010 for the maintenance of vacant lot owned by the township. The report concluded that “No taxes were withheld and reported on the proper payroll tax forms, and the payment was not included on his W-2.”

The report also identifies $120.99 in township funds used to purchase non-township related items including coin wrappers, a mechanical pencil, and markers.

The report gives Michalski an opportunity to respond to its contents. Michalski wrote, “I have a real concern about the cost of the audit. What I am concerned about is the cost of a supervisor and auditor. These people are in the state budget as a line item.”

Earlier this week, former Penn Township Trustee Jeff Dean was sentenced on charges that included Official Misconduct.

Dean was ordered to spend three months in jail, and spend 15 months on probation.


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