Linn County Attorney Jerry Vander Sanden likely will review a report by the State Auditor detailing more than $700,000 in misspent funds by the 6th Judicial District Department of Correctional Services to see if criminal charges apply.
The report doesn’t show “absolute fraud,” according to Deputy State Auditor Tami Kusian.
But “there are a lot of questions to be answered,” she said. “One of them, is there any criminal activity?”
The report released Jan. 10 showed $776,000 in improper disbursements from the district, with $563,000 going to a not-for-profit started by the district’s former director, Gary Hinzman. The district paid $440,000 of the not-for-profit’s payroll, as well as gave the group free office space, cellphones and use of state vehicles, auditors found.
The district also made $170,000 in improper vacation payouts to former employees and $40,000 in vacation paid before it was earned, the report states.
When Hinzman retired in May, his assistant director, Bruce Vander Sanden, was named to lead the agency that provides community-based corrections in six Eastern Iowa counties, including Linn and Johnson. Bruce Vander Sanden is Jerry Vander Sanden’s brother.
Jerry Vander Sanden told The Gazette earlier this week he would not be reviewing the 64-page report for possible charges because the State Auditor’s Office had not sent him the document.
“I take that to mean they don’t think criminal charges are appropriate,” he said.
Kusian, who led the 18-month review of the district’s finances, said because it wasn’t an official audit — but rather a review requested by Corrections Director John Baldwin — her agency did not send it to the county attorney.
The Auditor’s Office did send the report to the Iowa Attorney General’s Office, which provides legal counsel for the Department of Corrections, Kusian said.
Scott Brown, an assistant attorney general, said his office would not be reviewing the report for possible criminal charges because Iowa’s judicial system is set up so county attorneys make those decisions. County attorneys can refer cases to the AG’s office, which is done about 20 percent of the time, Brown said.
Jerry Vander Sanden said Friday he would read the report over the weekend and talk with the Auditor’s Office about whether they believe the review showed criminal activity.
“This is not a case of a government employee that converted taxpayer funds to their own personal use,” he said.
However, “because of the significant amount of money, I’ll probably review it anyway,” Vander Sanden said.
He left the door open for referring the case to the Attorney General because of the potential conflict of interest of reviewing a report of an agency led by his brother.
District officials already have taken steps to separate the district’s money from the Community Corrections Improvement Association.
Bruce Vander Sanden sold 19 vehicles and removed CCIA employees from the district’s plan for health and dental benefits. The CCIA had paid the district for these benefits, but they were not entitled to get them as part of the state plan, the state report showed.
The district’s new division manager in charge of finances also has changed financial reports so they are easier for the board and state officials to understand, Bruce Vander Sanden said.