Ex-Iowa school official charged with theft

IOWA CITY - Authorities arrested the former business manager of a small Iowa school district Thursday after a state audit alleged she wasted $229,000 paying off personal expenses such as credit cards and college loans while improperly inflating her own salary and benefits.

Vicki Vanter, 61, of Strawberry Point, surrendered to face a first-degree theft charge. The former 24-year employee of the Starmont Community School District made an initial court appearance and was expected to be released from jail on $10,000 bond, Assistant Attorney General Scott Brown said.

The charge came as state Auditor David Vaudt's office released a report describing years of apparent fraud and theft, mismanagement and poor oversight that devastated the finances of the district, which is based in Arlington in northeastern Iowa.

The report said Vanter and former superintendent Gary Stumberg spent $362,000 in district money that was either improper or not supported by documentation, in part by awarding themselves pay and benefit increases beyond what the school board had authorized. They also used funds meant to reward high-performing teachers to give themselves and other administrators extra pay, auditors said.

Fayette County Sheriff Martin Fisher said the investigation continues and could lead to more arrests.

Vanter's attorney, E.J. Gallagher, declined comment on the specific allegations but said, “We will use all procedures under the law for her defense.”

Stumberg retired from the district but now works as administrator of the Keystone Area Education Agency in Elkader. His lawyer, Brandon Brown, urged the public to reserve judgment, saying confusion among auditors “led to many of the unfortunate inferences drawn against Mr. Stumberg.” He said Stumberg was proud of his 37-year education career and would “work diligently to restore his reputation.”

Superintendent Matt O'Loughlin said the district was still calculating its losses and hoped to be fully reimbursed by its insurer. He said he worried how the public would react to the findings and pledged to take steps to restore trust.

The audit describes a theft and fraud scheme by Vanter, who was hired in 1986 and wielded great authority over district finances, computer systems and payroll. Vanter issued checks worth $114,000 to pay credit card debts of her and her daughter, spent tens of thousands more on expenses such as paying off car and college loans and tuition for a daughter to attend a Texas airline operations school.

She falsified documents to make her personal spending appear as district business, the audit found. She used the correction feature on a typewriter to change names of vendors when redeemed checks were returned by the bank, partially tore checks to hide the credit card numbers she had written on them and used bogus invoices and purchase orders to justify the payments, the audit found.

In one of many such instances, a check for $2,201 in 1997 to Discover for a personal credit card payment was altered to list the payee as “Iowa Prison Industries,” a legitimate district vendor. In another, a 2009 check to Discover for $6,750 for a credit card payment included a phony purchase order stating it was to pay for 15 teachers to attend a workshop through “Discover Education,” another legitimate vendor.

All the while, “Ms. Vanter often commented on her displeasure with not receiving a raise,” O'Loughlin told auditors.

Meanwhile, Stumberg took actions that resulted in the district overpaying him by tens of thousands of dollars by essentially covering the cost of his medical insurance twice, the audit found.

Stumberg declined to take the district's insurance that was part of his compensation and instead received extra pay for the value of premiums so that he could contribute to a retirement account or purchase other insurance products, the report said. Stumberg told auditors the board approved that arrangement, but it was never documented in writing.

Unaware to board members, the district was also reimbursing Stumberg for the cost of his family's insurance purchased through his wife's employer, the report found. Vanter also received extra pay for declining family insurance coverage, the audit said.

Few expenses were too small for Stumberg to claim reimbursement, the audit found, including $134 for mowing the district's grass and $260 for managing a grant. He claimed excessive mileage reimbursement for checking road conditions during bad weather, once claiming more than 700 miles over 12 days, the audit found.

The district gave summer jobs to both Stumberg's and Vanter's children, and most of their timesheets were not approved properly, the audit found.

The discrepancies came to light after Stumberg retired in 2008 and was replaced by O'Loughlin, who discovered the district's surplus had dropped dramatically. While developing an early retirement program for administrators, he discovered salary increases received by Vanter and others were often more than what the board had approved during the previous 12 years, the audit said. Vanter resigned in October 2010 and O'Loughlin requested the audit.

School board members had asked for years about “declining fund balances” but never pursued the matter even though Vanter could not give a satisfactory answer, the audit said. District finances are starting to recover, but remain burdened “by the cumulative effect” of the mismanagement.