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The City of Stockton underwent a "special investigation" by the State Auditors Office beginning last December. The report from the investigation was released Friday and cited "improper and unsupported disbursements and undeposited collections."

STOCKTON — The City of Stockton may face fraud charges based on a special investigation report released Friday by the Iowa State Auditor's Office.

The investigation covered the period from Jan. 1, 2016 through March 31, 2018.

"This came to our attention because the city clerk contacted the city attorney to notify him of issues with a maintenance employee's time sheet as well as concerns that the mayor was using city equipment for personal use," State Auditor Mary Mosiman said. "So, we were then asked to investigate and we performed the procedures we identified in this report."

In the report, $3,303.77 was identified as "improper and unsupported disbursements and undeposited collections." The payments included $1,435 to a former city maintenance employee Robert Russell, for hours he allegedly did not work, but recorded on his time sheet. The report read, "According to the former maintenance employee, the mayor told him to "pad" his hours and pay him (the mayor) for the work he helped with. The mayor denied this occurred."

Attempts were made to contact Stockton Mayor Patrick Baker prior to deadline, but were not successful.

Improper payments totaling $1,299.47 were made to U.S. Cellular for Baker's cellphone plan and devices, another $54.54 went to improper mileage reimbursements to the mayor, and an unsupported payment of $85.03 went to the mayor, according to the report. The investigation also found that donations and disbursements for City sponsored events held at City Hall for the youth of the community did not include adequate internal controls over donations and disbursements for the events.

Moisman also reported it was not possible to determine if additional amounts were improperly disbursed or if additional collections were not properly deposited because adequate documentation was not available.

Per statutory requirement of the Auditor's Office, Mosiman said the report was filed with Muscatine County Attorney and Sheriff's offices, and the Iowa Division of Criminal Investigation and the Attorney General's Office.

County Sheriff C.J. Ryan said his office and the office of the county attorney will meet to review the report. He said sometimes improprieties arise in governments and during an investigation criminal activity may be found, but not always. "We'll decide what we're dealing with," Ryan said, "then decide how we're going to proceed."

Muscatine attorney R. Craig Oppel, listed in the report as city attorney for Stockton, could not comment on the findings because he resigned three or four months ago, he said. Oppel confirmed he was Stockton city attorney in December 2017, when the investigation began according to Mosiman, but he said he has "no independent recollection" of the information that started the investigation.

Mosiman said a "periodic examination" of Stockton was done in 2016. The examination is a set of agreed upon procedures using the auditor's office as a resource to verifying financial transactions in a cities with populations less than 2,000 people -- Stockton has 197 as of 2010 census -- and with budgeted expenditures less than $1 million for two consecutive years. This type of oversight was established in 2013 and cities are given several days notice before the auditor's office visits. Mosiman said "because of findings in the initial report, we decided we needed to come back and do a follow-up report," which was also issued Friday.

Concerns about Baker's use of city property for unapproved projects was also brought to the attention of the city attorney to initiate the special investigation from the auditor's office.

Mosiman said the City of Stockton "so far has not gotten all of the recommendations implemented" that were included in the reports.

Having checks and balances such as audits and periodic examinations from an independent source are meant to provide oversight in government.

"This is meant to protect the employee -- the financial employee -- as well as the government entity themselves -- the city council -- and ultimately the taxpayer," Mosiman said, "so, it's a win-win situation if oversight and accountability is put in place when it comes to the use of public funds in a government entity."

The full report may be viewed online on the Iowa State Auditor's website.

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