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Township clerk's arrest forces clean-up for new trustee

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

The Olive Township trustee's office in St. Joseph County where Sherri Houser worked as clerk. She was convicted of felony forgery for overpaying herself and using township money to pay her utility bills.

SOUTH BEND -- Sherri Lynn Houser tried to pay family bills by writing checks to herself through the local Olive Township trustee's office where she was a clerk.

Houser overpaid herself $11,532 during a three-year period, according to an audit by the Indiana State Board of Accounts. She also paid 10 utility bills for her home totaling $4,245.

Sherri Houser

Sherri Houser

On Sept. 11, the 50-year-old Houser received an 18-month jail sentence, with 12 months suspended and six months on home detention, for a felony charge of forgery. Under Indiana's day-for-day credit on sentencing, she had three months of home detention, followed by six months of probation.

She had resigned as a trustee office clerk in 2017.

During her sentencing in St. Joseph Superior Court 3, she told Judge Jeffrey Sanford that, because of an impending divorce, she had been unable to live with her sons.

"I'm sorry that it all happened, obviously ..." she told the judge. "Whatever you sentence me to, I just want to be able to see my kids."

The judge tallied the full restitution, most of which she had already repaid to the township and state, at $25,103, including court fees and the cost of the State Board of Accounts audit.

In addition, the Indiana Attorney General's office filed a civil case saying Houser had breached her duties to Olive Township. As allowed by law, the state sought three times the actual loss and said that, minus previous payments, it was entitled to recover $43,837.

Watching from the courtroom gallery was current Olive Township Trustee Dominic "Nick" Zarate, who had been hoping for court-ordered compensation to his office.

"The ripple effect of Ms. Houser’s actions have been a long process in correcting," Zarate told CNHI News Indiana. "It goes beyond the amount of money that was misused."

He said the township was forced to work with an accountant, an attorney, the State Board of Accounts, the Department of Local Government Finance and the Internal Revenue Service to resolve the issues.

"In the midst of all of this cleanup, we’ve had to get a new clerk trained as she’s piecing all of this together," Zarate wrote in a statement.

Houser’s annual salary was $11,000. But, as the staffer responsible for payroll, she overpaid herself, first by $309 in 2014 and by $7,288 two years later, according to the state audit.

Houser has been asked to reimburse the township, which is about 25 miles west of South Bend.


Olive Township

The Olive Township, St. Joseph County, trustee's office is open just 10 hours a week, as shown on this note taped to the office door.

The office had already been hit by the abuses of a previous trustee.

In 2013, John Michalski resigned after a state audit found, among other accusations, that he used an office ATM card to withdraw more than $1,600 in taxpayer funds at casinos in Indiana and Michigan.

He pleaded guilty to two counts of theft and one count of official misconduct. Then 72, Michalski was given a one-year suspended sentence and placed on probation. He reimbursed the state $7,671.

In August 2013, Zarate, a South Bend police officer, was selected at a precinct caucus to fill the post. He has instituted internal controls, a critical factor considered in every board of accounts audit.

For example, Zarate's office converted from a fully handwritten process to a computerized process for checks and record-keeping.

He and his new clerk have unique usernames and passwords to use office software. When the clerk is logged in and prints a check, the action is recorded electronically and also places the clerk's initials onto the check to denote who printed it.

Kathleen Keller said she never should have run for Tippecanoe Township trustee in Pulaski County eight years ago. The job ruined her marriage, embarrassed her husband and children, and landed her in jail, she said.

"I, as trustee, am the only one authorized to sign the checks. In our office, the clerk prints all the checks, makes a copy for record in a binder in numerical order, aside from the electronic record that automatically saves in the software," Zarate said.

During 2015 and 2016, Houser wrote 10 checks from the township’s bank account to a local electric utility. The payments totaling $4,245 went for electric service at a New Carlisle residence shared by Houser, her husband and their two teenage sons.

Although residents in need can apply for utility, food or housing assistance through township trustees, Houser had not applied.

The state audit, with details about Houser’s involvement, was released in October 2017.

That month, she was quoted in the South Bend Tribune saying, "I thought we had increased my yearly salary. We didn't, and now I have to pay that back. I didn't realize I overpaid myself as much as I had."

Houser called her use of public money to pay her electric bills an "error in judgment.”