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Cash flow questions in street department since coin controversy

July 08, 2014 | 02:41 PM
Problems at the Lake Geneva Street Department may well have sprung from the fountain at the Riviera.

In a telephone interview on Thursday, former mayor William Chesen said the secret street department slush fund that has since resulted in some charges against the former street department leadership apparently started with the loose handling of coins street department employees were collecting from the fountain in front of the Riviera.

Chesen said people would come to city hall and tell him about a city employee who claimed he bought a collector car using money from the fountain. At bars, the employee reportedly told people it was his “fountain car,” Chesen said.

Chesen is quoted by Neil Waswo, a street department employee and now foreman, in the criminal complaint against Don Hoeft, former street department foreman.

Chesen is not accused of wrong doing.

“Waswo stated that the former mayor (William Chesen) had told the streets department they had to remove the ‘slush fund,’” the complaint states.

On June 23, multiple felony and misdemeanor charges were filed by the state Attorney General’s office against Don Hoeft, former Lake Geneva Street Department foreman, and Ron Carstensen, the former street department superintendent. Carstensen resigned in December. Hoeft retired in June.

The charges come directly from an investigation into the street department by the Lake Geneva Police Department and the Walworth County Sheriff’s Office that started in October.

The Riviera Fountain was erected in 2004, but the city council did not set a policy to determine the handling and accounting of coins collected from the fountain until about six years later.

Cash to slush fund

Before the council set the policy, coins tossed into the fountain in front of the Riviera were being collected by the street department.

The cash was apparently going to a street department slush fund.

Whether any of that money helped the employee pay for his classic car is unknown. The employee was neither Hoeft nor Carstensen.

The detective who interviewed Waswo, then interviewed Chesen who, according to the report, said that in 2008 he told Carstensen and City Administrator Dennis Jordan that the street department needed to have an accounting system for its petty cash fund.

Chesen said he recalled the incident, but believes it happened later, about sometime in 2009.

“It was during the very contentious portion of my administration,” Chesen said.

Chesen said he heard rumors about city employees taking coins collected from the fountain for their own personal use.

He said he took his concerns about the fountain coins and the unaccounted-for slush fund to Jordan.

Chesen said he had a hard time convincing Jordan that the problem was a big one.

“I was just floored when I was told (by Jordan) there was no money,” Chesen said.

Chesen said he had heard other rumors of what was happening to the coins taken from the fountain.

“I was told buckets of money were in Don Hoeft’s garage.” Chesen said.

Neighbor and friend

Hoeft is a neighbor and friend, Chesen said.

To check the rumors, he said, he visited Hoeft and noticed that inside Hoeft’s garage were buckets of coins.

Chesen said he asked Hoeft about the money. Hoeft said that he was to clean up the money because the coins became slimy after being left in the fountain. The banks would not take the coins unless they were dried and cleaned.

Hoeft then said he was to turn the money back to the city.

Chesen said he later told Jordan that in fact the money was significant, and that many of the coins were quarters and half dollars.

Chesen said Jordan agreed to take care of the issue of the coins and the slush fund.

“Dennis Jordan was going to see that it was all taken care of,” Chesen said.

Chesen said he also took the issue to the city council, but nothing happened, at least not right away.

“I brought it to the council’s attention and they had no stomach to proceed,” he said.

Asked about Chesen’s account of the fountain coins, Jordan admitted that he didn’t see it as a big issue at the time.

He said he recalled a street department employee coming in with a half full coffee can of change from the fountain.

The employee asked him what he should do with the coins.

Jordan said he told the employee to come back when the coffee can was full.

He never did, Jordan said.

Jordan said he also called a number of area cities with public fountains and asked officials there what they did with the coins collected from the fountains.

Not worth much

None of the other communities regarded the fountain change worth much attention, he said.

“Chicago said the problem takes care of itself,” Jordan said.

He said he also called Milwaukee and Whitewater, and was told by staff in those cities that they empty their fountains once a year, not so much to collect the coins, but to clean the fountains.

“Everyone was pretty lackadaisical about it,” Jordan said of the cities he called.

According to Regional News back issues, Chesen filed a complaint with the Lake Geneva police in August 2009 claiming possible “diversion of monies from the Riviera by city employees.”

The letter Chesen wrote to Lake Geneva Police Chief Michael Rasmussen said that although money from the fountain collected in summer of 2009 was deposited into the city’s account, there were no other records of deposits in prior years since the fountain was installed in 2004.

On Sept. 9, 2009, City Comptroller Peg Pollitt wrote a memo to Rasmussen regarding seven envelopes from June through late August found in Carstensen’s desk that included bank coin counter receipts and cash for the collected fountain change. That total was more than $925 and Pollitt deposited the money into the city accounts.

That same day, Rasmussen sent a memo to Capt. Dana Nigbor of the Walworth County Sheriff’s Department requesting a sheriff’s department investigation into the possible missing fountain change because of a conflict of interest concern.

According to the 30-page report from the Walworth County Sheriff’s Department, a street department employee (not Hoeft or Carstensen) told investigators that he had been placing change collected from the fountain since 2005 into five-gallon pails. Coffee cans also were filled and given to Hoeft to clean. The employee claimed he could find no one in city hall willing to take the money.

No charges were issued in the taking of the coins. Then-Walworth County District Attorney Phil Koss said that, lacking a clear city policy, the money was considered abandoned property.

Jordan said current city policy, approved by the city council in May 2010, requires the fountain be emptied of coins once every two weeks. He said Teresa Klein, acting deputy clerk/treasurer, and the harbor master collect the coins, dry them, and deposit them with the city.

Hoeft, Carstensen charges

In the June 23 complaints against Hoeft and Carstensen, Hoeft, 64, Lake Geneva, is facing two felony counts of misconduct in office and one felony count of theft from a business setting between $2,500 and $5,000.

He is also charged with three misdemeanors, two of theft from a business setting of $2,500 or less and one misdemeanor count of encouraging a parole or probation violation.

Carstensen, 55, of Lake Geneva, was charged in Walworth County Circuit Court with three counts of theft from a business setting between $2,500 and $5,000; one count of theft from a business setting $5,000 to $10,000 and one count of theft from a business setting of $10,000 or more, and two counts of misconduct in office.

According to the Attorney General’s office, Carstensen is accused of giving away more than $25,000 worth of salt and sand to private companies between 2009 and 2013 while working as street superintendent.

Carstensen also is charged with cashing and keeping a $20.06 sales tax refund check meant for the city following the purchase of a scanner.

Chesen said he was taken completely by surprise by the charges, which also involve the illegal transfer of road sand and salt the city purchased through state contract from Walworth County. The salt and sand was traded to two local landscaping companies in exchange for future materials and services.

“I’m ashamed of all of them,” Chesen said. “I was shocked to hear that had occurred.” he said.

Chesen said he talked to Hoeft about the time that Carstensen resigned.

He said Hoeft’s response was “I just did what I was told to do.”

Chesen said there was obviously a failure of communication between the street department and city hall, because he had no idea that salt and sand was being diverted to two area landscaping companies.

“You do what you can do,” Chesen said. “I’m very sorry this occurred. I’m embarrassed.

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