Hanover Township targets Kelly to recoup stolen funds
Prosecutors may have secured a prison sentence and closed the book on a criminal investigation into the theft of government funds at Hanover Township, but a new chapter has opened in the ongoing story.
Hanover Township trustees last week voted to proceed with claims against former Supervisor Michael Kelly in an attempt to recoup more than $700,000 they say was stolen under his watch.
“I have nothing personal against Mike Kelly, but there was no real supervision on his part,” Trustee Howard Krick said. “He should have caught something.”
Kelly, also the former mayor of Bartlett, did not return several calls to his home and office seeking comment about the township's action.
In August, former township Welfare Director Aurea Picasso was sentenced to six years in prison after pleading guilty to stealing more than $100,000 from the township's welfare funds.
Picasso reported directly to Kelly, who signed off on hundreds of fraudulent checks she wrote over a five-year period. She used township accounts for such personal expenses as dental work, car insurance and her daughter's birthday party, prosecutors said.
In previous interviews with the Daily Herald, Kelly said he was shocked by the allegations against Picasso, who he said he completely trusted.
Township trustees several weeks ago voted to retain attorney Richard Cowen, who doesn't regularly represent Hanover Township, to review records and make a recommendation on whether Kelly, individually and through insurance, could be held financially responsible for the loss of funds.
According to a memo written to trustees by township Administrator James Barr, Cowen determined that “Kelly failed to properly oversee and administer General Assistance, including Emergency Assistance, in accordance with applicable law, and that he breached his fiduciary duties owed to the Township and to the taxpayers of Hanover Township.”
Before Cowen pursues a civil suit, he's first submitting claims under both the Public Officials Liability Insurance policy and Kelly's Supervisor's Bond. If the claims can't be resolved with the insurance carrier, Cowen is authorized to sue Kelly, Barr said.
State statute requires that all township supervisors, in their role as treasurer, be bonded for an amount of money “that may come into the supervisor's hands,” said Crystal Lake-based attorney James Kelly, who is not related to Michael Kelly.
In other words, a supervisor's bond is greater than a township's annual revenue, or about $6.5 million in Hanover Township's case.
“Each township supervisor must post a bond as part of holding office, guaranteeing he'll properly discharge duties of office,” Cowen said.
He believes the statute of limitations on the case is five years. The bond is typically issued by the Township Officials of Illinois Risk Management Association, or TOIRMA.
Cowen said that after reviewing township documents, he concluded Kelly failed to supervise Picasso, failed to review records and failed to confirm eligibility of the welfare recipients.
Picasso enrolled family, friends and others for welfare benefits, forged their signatures and then deposited money into a personal bank account, prosecutors said.
“It's a no brainer we'd go for this money,” Trustee Sandra Westlund-Deenihan said. “The attorney recommended it and we have a fiduciary responsibility to the taxpayer to make sure we account for the tax dollars.”
Not everyone supports the township's action, however.
Trustee Mary Alice Benoit said she would rather the township move forward, pointing to numerous reforms that have been implemented to try to prevent future theft.
Changes included making welfare checks a different color, giving the administrator and trustees authority to view welfare checks, and having the welfare director report to the administrator.
Benoit said that because she took office in May 2009, at the same time current Supervisor Brian McGuire fired Picasso for reasons unrelated to the theft, she doesn't know how the theft could have occurred.
“I don't know how bringing up the past all the time can be a positive,” Benoit said. “I think very highly of Mike Kelly, and it's very hard for me to say what he could or could not have done differently” to prevent the thefts.
Benoit, who missed the meeting, said however, that the other trustees' opinions are well-founded and she'll go along with the board majority.
Trustees have directed Barr to report back monthly on Cowen's legal bills, saying they want to make sure expenses are kept in check.
“We're all cognizant of the cost, but a lot of money was misappropriated,” Trustee William Burke said. “Hopefully, this will be a minimum investment with a maximum return.”