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TOWNSHIPS: ANTIQUITY OR NECESSITY?

Friends and family plan: Trustees often hire relatives

From the TOWNSHIPS: Antiquity or necessity? - A CNHI News Indiana Investigative Report series

Limited nepotism not illegal for townships, which sometimes stray into misuse of funds

  • 3 min to read
Rep. Kevin Mahan

Rep. Kevin Mahan, R-Hartford City, center, talks with fellow legislator Rep. Gregory Steuerwald on Organizational Day at the Indiana Statehouse in November. "We don't know who the township trustee is, but we are so dead set about keeping the status quo with townships," Mahan says. "It makes no sense to me."

ROSSVILLE -- Matthew Marley overpaid his annual $6,400 salary as Ross Township trustee by $19,800 in 2010.

He overpaid the township's clerk, his wife, Amber, by $3,100 that year. And he paid $5,820 to his stepson to mow two township cemeteries for the year.

Hiring relatives isn't illegal for a township trustee. Some townships are so small and rural -- Ross Township in Clinton County has 2,900 residents -- that it's often difficult to find someone who isn't related to the trustee willing to do work, township supporters say.

Under state law, trustees who work out of their own homes can hire relatives, limiting payment to $5,000 a year. Trustees must have a nepotism policy stating they have not violated contract and hiring law. When the nepotism policy went into place in 2012, about 400 trustees had a relative working for them.

Trustees overpaying themselves and others is, of course, illegal.

Marley, who served one term as trustee ending in 2010, could have faced a misdemeanor charge for a conflict of interest. But the misappropriation was covered by a bond, and he was not charged.

Instead, the state filed a civil lawsuit. The Indiana State Board of Accounts, which uncovered Marley's payments in an audit, wanted reimbursement of $29,051.

The Indiana attorney general stepped in, seeking three times that amount, as is allowed by state law. In June 2017, Clinton Superior Court Judge Justin Hunter ruled that the Marleys would each have to pay the state $74,225.

On top of that, the company that bonded Matthew Marley sued him successfully for a judgment of $24,742, the amount it had to pay the state to cover Marley's initial misappropriation.

Township government critics such as Michael Hicks, director of the Center for Business and Economic Research at Ball State University, cite the potential for misuse of taxpayer funds as "problematic."

"That inefficiency benefits people who might otherwise have to have a job," Hicks said, referring to family and friends receiving township positions and pay.

Abolishing townships would eliminate salaries for an elected trustee and board members and reduce the potential for corruption or the hiring of family members, Hicks said.

'A VERY ANTIQUATED SYSTEM'

In 2012, state Rep. Kevin Mahan, R-Hartford City, pushed through the General Assembly a measure that prohibits state employees from hiring relatives. Among the exceptions, a township trustee who has a township office operating out of his or her residence can employ one relative in the trustee’s office.

While Mahan, who co-authored legislation last session that would have forced some small townships to merge, believes township government needs reform, he defends the efforts of many trustees.

Rep. Ed DeLaney

Rep. Ed DeLaney, D-Indianapolis, does an interview during Organizational Day at the Indiana Statehouse in November. Delaney has supported legislation to reform the township system.

"There are a lot of township trustees that run for office, get elected and do an absolutely outstanding job being the trustee for their townships," Mahan said. "I do think there's a lot of people doing things right in a very antiquated system."

State Rep. Ed DeLaney, D-Indianapolis, has supported legislation to reform the township system.

"Some build up unnecessary reserves," he said of townships. "Some pay too much to staff. Some have too generous benefits. There are some people getting a very modest salary but $25,000 in health insurance. … That kind of stuff is going on. It makes no sense."

Annually, each board member and trustee is required to certify in writing that he or she is following the nepotism law.

By 2017, all of Indiana's 1,005 townships had such documents on file, according to Indiana Department of Local Government Finance records.

Signing those policies, however, doesn't guarantee public funds won't be misused. Any public officer who recognizes that funds have been misappropriated is required to send a written notice to the state board of accounts and the local prosecuting attorney.

In June, the board of accounts noticed that the requirements of the statute were "not being followed consistently."

In a bulletin to township trustees, the board warned, "If a public official fails to report the misappropriation of funds or assets in a timely manner, this will result in a finding in the audit report. This may also result in additional audit costs."

In Posey County, at the far southwestern corner of Indiana, Black Township Trustee Lindsay Suits was accused of using more than $11,000 of public funds to pay her mortgage and cellphone expenses in 2013 and 2014. Suits also allegedly paid, without proper documentation, more than $18,000 in assistance to a relative, including an alleged $5,313 in mortgage payments.

After Suits died in August 2016, the board of accounts sought more than $31,000 from her estate to cover possibly misappropriated funds.

An Indiana State Police detective followed the poor relief funds in what seemed to be a money trail.

In September 2017, two of Suits' relatives were charged with welfare fraud. However, the state dismissed the charges in August. Questions arose after investigators, hampered by poor documentation by the trustee's office, couldn't prove the purpose of the payments.

Mount Vernon attorney William Gooden, who represented the relatives, said the prosecution "flat out had no case."

'I GAMBLED IT AWAY'

In Switzerland County in the mid-2000s, a state audit uncovered $180,000 in questionable payments by Jefferson Township Trustee Barbara Ray.

She reportedly wrote a check to her spouse as deputy trustee and for cemetery care. He denied cashing any checks, as did two sons whose signatures were used to endorse checks.

Ray wound up facing 20 criminal charges, including welfare fraud and forgery. In a 2008 agreement, she pleaded guilty to official misconduct and failure to deposit public funds.

She was sentenced to 10 years in prison with six years suspended and ordered to repay $153,305, according to the Vevay Reveille newspaper.

She said she had been cashing the checks and using the money to gamble at the nearby riverboat.

"I got the money in cash, and I went to the boat and gambled it away,” she told the judge.