GARY — An attorney representing a city worker is speaking out amid allegations his client signed off on unapproved fund transfers from a restricted account to cover the city's payroll and other expenses.
Gary attorney Darnail Lyles said his client, Deputy Controller Michele Roby, could not have acted alone. She has been on paid administrative leave since April.
"What I can tell you is underlings can't order the payment of money. My client is not the boss. She's a worker," Lyles said. "The controller gets reports of all payments every day. The controller gets reports of what’s in each fund every day."
Matt Right, chief of staff for the Indiana State Board of Accounts, confirmed SBOA has been notified about the allegations and is assessing to determine if a state audit is warranted.
It was not immediately known if SBOA will open its own independent investigation into the matter.
Angie Hayes, city controller and head of the Finance Department, could not be reached for comment Wednesday.
Kenneth Farmer Newman, a finance/administrative assistant in the city's Finance Department, referred The Times to the Law Department when a reporter asked to speak with Hayes. City Attorney Gregory Thomas declined comment.
"Your question relates to a personnel matter that is currently under investigation. The City cannot comment on pending personnel matters," Thomas wrote in an emailed statement.
Under city ordinance, the city’s Non-Reverting Ambulance Fund, or Fund 224, is a restricted-use fund, meaning it can only go toward ambulance and EMS services-related expenses — unless the City Council signs off.
Fund 224 is primarily used for operating costs related to maintaining and repairing ambulances and fire suppression vehicles, as well as other nonpersonnel operating costs, according to city documents.
But millions of dollars from that fund have been used, for years, to cover other city departments' payroll without council approval, council members have said.
Hayes has been leading the city's Finance Department for a few short months and it's believed the funds were transferred without authorization for several years.
Hayes took over after City Controller M. Celita Green retired earlier this year.
The issue was brought to light only recently when Councilwoman LaVetta Sparks-Wade, a member of the Ambulance Committee, brought it to the council's attention.
"This is shoddy accounting, and my responsibility on the council is to be a checks and balances on the administration," Sparks-Wade said. "This is why we have three branches of government."
Lyles said he notified the city of Gary on Monday he would be representing Roby after the city placed her on administrative leave last month.
Roby has been with the city for 19 years, he said.
"Nineteen years, no problems, and now all of the sudden, there's a problem," Lyles said.
Dayna Bennett, chief of staff for Mayor Karen Freeman-Wilson, said at Tuesday night's City Council meeting that Whittaker & Co., the city’s accounting firm, has been reviewing transactions from the Ambulance Fund by comparing bank statements to the city's general ledger balance.
So far, Whittaker has found that about $4.5 million of the fund went to cover payroll, while about $1.2 million went to the city’s Blight Elimination Fund from January 2015 through March 2018, she said Tuesday night.
Based on sampling of previous years, the spending on other city expenses goes back several years, Bennett said. The city has about 146 special revenue funds, which will be further scrutinized moving forward, Bennett added.
There is no evidence the funds were used for non-city expenses or that theft occurred, Bennett said.
"This is the beginning of the report. It is not final because there's additional work to be done," she said at the council meeting.
Lyles declined to say how he and his client will respond if Roby is terminated.