By Patric Hedlund and Pam Sturdevant
A Kern County Sheriff’s detective was assigned last week to investigate the alleged embezzlement at the Lebec County Water District, but even before he arrived, customers and members of the board were coming forward to offer evidence that will help the company reconstruct its books.
In an executive session August 10 the board fired Michelle Miller Gustafson (daughter-in-law of Diane Gustafson who is secretary for Lake of the Woods and Krista Mutual Water Companies). Miller Gustafson was hired as the Lebec district’s secretary in April. Board members began their investigation after noting discrepancies in July.
Customers came to the August 16 meeting with documentation of cash payments demanded by Miller Gustafson and tales of rude and aggressive responses when they asked for receipts.
One customer, proprietor of the Mamma Mia restaurant, said in the meeting that she received no water bill for three months and then found a notice taped to her front door saying that the water would be shut off if she did not pay within 24 hours. Silvina Friera said when she went to the office she was told she could not pay with a check but must pay in cash. She went to an ATM for cash, but was then told by the secretary that she would not be given an official receipt, Friera asked to speak with her manager. Miller Gustafson said, “I don’t have a manager.” Still, Friera refused to leave without an official receipt. Miller Gustafson drew one up and, after argument, finally stamped it with the district’s name. Friera produced the receipt for the board. It said she paid $830.11 on June 8.
Bank records show that such cash payments were not deposited in the water company’s account. Examination of computer billing programs show “chaotic entries” the board said, plus false entries, including the name of Miller Gustafson’s husband, Greg Gustafson, as a vendor. Checks were made out to him.
Board members told those at the meeting that Greg Gustafson has never been authorized to provide services to the district.
Customer Doris Griffin said at the meeting she had gone to the office to learn why she didn’t get her bill in the mail. When Griffin asked if the secretary had mailed them, Miller Gustafson said she had “mailed them from Bakersfield.” The next day a duplicate bill was in Griffin’s mailbox.
Griffin asked: “Why would you take 300 invoices to Bakersfield to mail, instead of mailing them down the street? I have a question: as bold as this is, do you think she would be bold enough to open another account somewhere under the Lebec County Water District’s name?”
At the August 16 meeting forensic accountant Rachel Unell was introduced. She was hired to reconstruct the books and attempt to assess what the monetary loss to the district has been. She said, “You guys did a great job, some people let this go on for years. You did really well to catch it so quickly.”
Board President Darren Hager said in the public meeting that the district has already started the insurance claim process.
In an interview on August 17 he said, “Whatever she took, we will never see it. But we will recoup that money. We are covered for theft.”
He said Unell would begin reconstructing the books and tracing Miller Gustafson’s transactions August 18. Unell will work with former secretary Cindy Blomgren.
“Once we get the bookkeeping back on track again we will be up and running. We temporarily suspended maintenance projects because we didn’t want to write checks this week until Rachel has the system back in order,” Hager said, adding, “We have money in the bank.”
This is part of the August 20, 2010 online edition of The Mountain Enterprise.
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