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July 01, 2014 | 04:44 PM
Discovery of a secret slush fund and the trade of city road salt and sand for materials and services from two area landscaping companies still evokes hurt and anger with Lake Geneva City Council members.

In a series of interviews, more than one city council member said the incident is a “black mark” against the city council.

At this point, no one on the council nor the mayor admitted to having a solution to the shortcomings uncovered in street department operations or city hall oversight of that department.

However, they said they were determined to fix the problem and make sure it won’t happen again.

Alderwoman Sarah Hill issued an apology to city residents and taxpayers for the city’s apparent lack of effective management of the street department.

According to a criminal complaint released June 23, the top two street department managers, former Street Superintendent Ron Carstensen and foreman Don Hoeft face multiple felony and misdemeanor charges, including theft from a business setting and misconduct in office.

Salt and sand purchased by municipalities to improve traction on ice-covered roads cannot be sold for private use under state law and county ordinance.

In addition, the two are accused of putting cash from the sale of recyclable metals and used motor oil into a department slush fund for street department staff and to pay Carstensen’s monthly cell phone bill.

The charges were the result of a monthslong investigation into the department’s operations carried out by the Lake Geneva police, the Walworth County Sheriff’s Department and the state Attorney General’s office.

Carstensen, 55, retired in December. Hoeft, 64, retired in June.

Their first court appearance is scheduled for July 22.

Cash returned

According to City Comptroller Peg Pollitt, $863.71 was returned from the street department to city hall, allegedly from the slush fund.

Mayor Jim Connors said that over the next 30 to 60 days, the city staff and city council’s personnel committee will examine the management structure of the street department.

One change has already been accomplished. The old street superintendent position was abolished and replaced with the assistant public works director position.

Tom Earle, formerly public works director for the town of Genesee, Waukesha County, was hired for that position.

In addition, Neil Waswo, a street department employee, was promoted to foreman. The promotion was recommended by the personnel committee and approved by the city council on Friday, June 27. Waswo is the husband of Sabrina Waswo, who is temporary city clerk.

City Administrator Dennis Jordan said the relationship was not an issue, because the street department is not under the city clerk’s office.

Connors said council members and staff will look into improved management of city materials, especially sand and salt.

The city also needs to “shorten the reporting line” from the street department to the city hall, Connors said.

The transfer of funds from sale of recyclable materials by the street department to the city comptroller needs to be more direct, he said.

“We’ll certainly look at best practices,” Connors said.

Beyond that Connors didn’t want to comment further.

Too much trust

Alderman Al Kupsik, who chairs the personnel committee, said he was concerned about how the management situation at the street department got out of hand.

“I think the problem was that upper management put too much trust in middle management,” Kupsik said.

“Who’s watching the hen house?” he asked.

Kupsik added that it would be inappropriate for himself, other council members or the mayor to try to manage the daily affairs at city departments.

Kupsik said he believes that the former street department managers alienated the department from city hall.

Hiring Earle from outside the city as assistant public works director was the first step in starting the cleanup of the situation at the streets department, Kupsik said.

“He’s a hands-on kind of guy and his qualifications got him where he’s at,” Kupsik said of Earle. “It’s a new start.”

Now, said Kupsik, the city needs to improve checks and balances between city hall and the street department.

Alderman Bob Kordus, who chairs the public works committee, said he wants to talk to Winkler about oversight of the street department.

“We want to make sure these slush funds don’t get started again,” Kordus said.

Kordus said that what concerned him is that, it is revealed in the criminal complaint narrative, the slush fund was discovered in 2008. According to the testimony in the complaint, former Mayor Bill Chesen personally told Carstensen and Jordan that the slush fund money had to be returned to the city and that the street department needed a system to account for petty cash.

“There were people who were aware of it and everyone assumed it went away and they didn’t check on it,” Kordus said.

Alderman Dennis Lyon, who chairs the council’s finance and regulation committee, said he was concerned that city audits did not pick up on the irregularities in the street department.

Certainly, said Lyon, city hall has to regain control of the street department.

“Hell no, we don’t want this to go on,” Lyon said. “I don’t care who you went to school with or whose hand you’re washing.”

On the other hand, controls come with a cost.

It wouldn’t make sense to spend $10,000 a year to prevent $5,000 a year in losses, he said.

Apology offered

“I have no comment toward the two gentlemen in question,” Hill said in a prepared statement to the Regional News. “This happened under our watch. I would consider Monday (when the criminal complaint was released) a failing grade.

“I would like to apologize to the taxpayers and residents of Lake Geneva for the obvious lack of oversight. I look forward to working with the mayor and common council to address any concerns that have arisen.

“We’re coming off of other well-known personnel challenges in the city, and it is disappointing,” Hill said.

“I certainly hope we rehash everything and take some preventative measures so it doesn’t happen again,” said Alderman Jeff Wall.

While it’s unclear at this point how much money the city lost on the deals and through the slush fund, Wall said he hopes the city gets compensated for what was lost.

Alderwoman Elizabeth Chappell, one of the newest city council members who took her seat in May, said she didn’t want to comment.

“I have no comment,” she said. “I have not developed an opinion at this point.”

Alderman Sturg Taggart said the city needs to clean up the situation at the street department, but he was also a bit more pessimistic about finding a long-term solution.’

“I’ve given it a lot of thought,” said Taggart. “I don’t have an answer. “Will it happen again? Maybe,” he said.

He said it may also have happened in the past.

Alderwoman Ellyn Kehoe said she has confidence that Connors will do the right thing.

“We have to work very strongly to make things right again,” she said. “I will do what I can to help with what needs to be done.”

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