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STOCK_Gary City Hall

STOCK_Gary City Hall

GARY — The city’s deputy controller is on leave after it was discovered millions of dollars were pulled from a restricted funding source to cover the cash-strapped city’s payroll and other expenses, The Times has learned.

At Tuesday night’s Gary Common Council meeting, Councilwoman LaVetta Sparks-Wade suggested one person — the employee on leave — could lose her job for allegedly following orders.

“One person is losing their job as a result of this fiasco, but I’m here to say: Surely, it wasn’t just one person. Surely we are throwing someone under the bus. Because everybody got a boss,” Sparks-Wade said. “And somebody else knew about it. So let’s follow the money trail, follow the paperwork.”

Deputy Controller Michele Roby was placed on administrative leave in April, City Council President Ron Brewer Brewer confirmed on Tuesday.

Reached Tuesday afternoon, Roby declined to comment and deferred questions to her attorney, Darnail Lyles. Lyles was not immediately available for comment at his office.

Under city ordinance, spending from the city’s Non-Reverting Ambulance Fund is restricted only to ambulance and EMS services-related expenses.

But those funds have been used, for years, to cover payroll without special approval from the Council.

“This continued to happen. This is something that could have been cleaned up a long time ago,” Brewer said at Tuesday night’s meeting.

Brewer said internal controls were in place, but not followed.

Dayna Bennett, chief of staff for Mayor Karen Freeman-Wilson, said Whittaker & Co., the city’s accounting firm, has reviewed transactions from the Ambulance Fund, finding 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. 

Based on sampling of previous years, the spending on other city expenses goes back several years, she said. The city has about 146 special revenue funds, which will be further scrutinized moving forward, Bennett added.

Bennett said there is no evidence the funds were used for non-city expenses or theft occurred.

Councilman Herb Smith at Tuesday’s meeting downplayed the use of the critical EMS emergency dollars to cover other departments' payroll in a city that’s financially strapped.

“What do you do? Do you let the whole thing crumble? Let people go to the bank and their check doesn’t cash?” Smith said. “Some of it is clearly not appropriate, but there’s a bigger picture here … I don’t look at this as some type of nefarious activity.”

As allowed under the state's public access and records law, city staff and council members met in a closed-door executive session Friday to discuss a job performance evaluation of individual employees unrelated to salary, compensation or benefits.

While declining to say if Roby was being considered for termination, Brewer said there is the possibility that an employee or employees could be terminated as a result of discussions.

The discrepancy was reportedly only brought to the City Council's attention recently by Sparks-Wade.

Sparks-Wade said Gary Fire Department personnel recently brought the accounting discrepancy to her attention, which sparked the city to conduct an internal review.

“People came to me and said there is money (missing from) the Ambulance Fund, and nobody seems to care,” Sparks-Wade said.

Matt Right, chief of staff for the Indiana State Board of Accounts, confirmed Tuesday SBOA has been notified about the allegations.

It was not immediately known if the SBOA will open its own independent investigation into the matter.

Right said the SBOA is in the initial assessment phase.

"Any time credible concerns or allegations are received that involve noncompliance or potential misappropriation of public funds, we would assess the matter to determine what responsive actions should be taken, which could include a special investigation," Right said in a statement.

Freeman-Wilson previously told The Times she wouldn't classify the spending of restricted funds on other city departments as criminal.

The mayor's office declined to comment Tuesday on Roby’s leave because it pertains to personnel matters.

Late last year, a special audit by the SBOA allegedly found Superintendent Cheryl Pruitt, of the Gary Community School Corporation, received an unauthorized $30,000 in bonus payments.

Pruitt later agreed to repay a $30,000 bonus that she said had been approved in a contract by the school board in March 2016.

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Public safety reporter

Lauren covers North Lake County government, breaking news, crime and environmental issues for The Times. She previously worked at The Herald-News in Joliet. She holds a master’s degree in Public Affairs Reporting.