Volume 121, Number 52
$78,000 missing from housing board funds
An audit by Eide Bailly Certified Public Accountants of Fargo reveals the Benson County Housing Authority is missing $78,344.19 in US Department of Agriculture and Housing and Urban Development Funds. Executive director Faye Nystrom of Leeds, who was forced to resign in November, previously admitted to misappropriation of $18,000 in a written confession. The money was taken during the period 2002 to 2004 when Nystrom was executive director. An audit prior to her assuming the position found everything in order.
Benson County State’s Attorney James Wang said charges are likely to be filed by federal attorneys because the missing money came from federal funds. In the unlikely event they do not pursue the issue, Wang will be required to press charges.
The housing authority board has a $375,000 bond on its executive director, so the county and federal government will not be out any money. In addition, the county has a $15,000 employee dishonesty policy with Farmers Union Insurance of Maddock. Farmers Union Insurance has indicated it will pay the county the full amount.
According to the audit, she made unauthorized payroll checks to herself.
Her salary was supposed to be $15,500 for 2002, $17,500 for 2003 and $15,200 for 2004. However, her W-2’s reflect salary of $29,030.40 in 2003 and $29,324.80 in 2004. The report states, "Nystrom used her check signing ability to give herself excessive and unauthorized pay for minimal maintenance duties, payments for travel and other numerous questionable expenses. Nystrom also wrote checks for questionable unauthorized services performed by her husband, Ed Nystrom."
The report concluded she had overpaid her salary by $36,539.40, made various questionable payments of $35,137.01 to herself and three maintenance employees (including her sister, Susan Hawn) and $5,973.84 to her husband. Her activities resulted in $461 in overdraft fees at Ramsey Bank in Maddock and Bremer Bank in Minnewaukan and $232.94 in CD withdrawal penalties.
Members of the Benson County Housing Authority became suspicious when the program’s books didn’t seem to be in order. Upon questioning, she admitted having taken $10,000 from the authority’s funds. Later she admitted to theft of $18,000.
The Benson County Housing Authority owns apartment complexes in Minnewaukan and Maddock and five houses in Minne-waukan which are rented to low-income people. It also runs a rent voucher program that subsidizes housing costs for low income people.
Members of the housing authority board are chairman Donna Rice of Maddock, Ray Scherr of Minne-waukan, Carol Finley of Oberon and county commissioner Jason Lee of Maddock. County commissioner Ed Ripplinger of Leeds, Faye Ny-strom’s father, resigned from the board after her confession. There is no suspicion that Ripplinger had anything to do with the embezzlement.
Melissa Buckmier, the executive director prior to Nystrom, came forward to help the authority with paperwork connected to the problem. She was appointed to the board to replace Ripplinger. Shelly Kallenbach of Maddock was hired in mid-January as the new executive director.
Lee said Donna Rice, Shelly Kallenbach and Melissa Buckmier will be working for some time to get the books straightened out. Safeguards have been put in place to prevent future problems.
Lee added that the $78,000 figure arrived at by Eide Bailly was a "conservative" figure because it is difficult, if not impossible, to get a handle on cash which comes into an organization. He added that the extra work being done to straighten out the books and the initial Eide Bailly bill of $6,700 will be added to the figure presented to the bonding company.
City-owned building breaks into the black
Members of the Minnewaukan City Council were informed at their Jan. 18 meeting that the FSA-Bank Building Fund is now in the black to the tune of
$2,580.02 after being in the red ever since the city took possession of the building in March of 2000.
The news of the breakthrough into the black completes a tortured journey of Minnewaukan Enterprises through debt, resignation of city council members and a court trial.
The original Minnewaukan Enterprises was formed in 1958 to handle Minnewaukan’s 75th Jubilee. In 1966 the corporation took possession of the Memorial Hall in Minnewaukan. The city deeded the hall to Minnewaukan Enterprises, which remodeled the building to house the Benson County Social Services Agency. Board members of Minnewaukan Enterprises were the members of the city council. Once the loans for remodeling had been paid back, Minnewaukan Enterprises deeded the building back to the city in the 1980’s.
The city also received the approximately $17,000 Minnewaukan Enterprises had in its checking account. At that point the original Minnewaukan Enterprises ceased to exist.
Since this organization had been so successful in operation of the Memorial Building, it was thought a similar organization would be good for operation of the Bank-FSA Building in Minnewaukan. Using the same name, a new Minnewaukan Enterprises was formed, again with members of the city council serving as the board of directors.
Minnewaukan Enterprises purchased the building from the Bremer Bank for $150,000, plus free rent for the bank for 10 years. The bank spent about $20,000 to remodel the east portion of the building for its offices. The bank also sold approximately $30,000 worth of furnishings to the city for $2,500. The bank also agreed to pay $1,300 per year for water, sewer and garbage during the first 10 years of rent-free occupancy.
USDA also required approximately $100,000 of additional remodeling. An elevator and a paved parking lot are required by the terms of the lease, but money ran out before these items could be provided. Of the $250,000 invested in the building, the bank had a loan of $191,000, the city put in $59,000 and the Benson County Job Development Authority provided $20,000.
At the time the money was loaned to Minnewaukan Enterprises, it was known by the bank and the city council that the Minnewaukan Enterprises building would not cash flow by itself. This shortfall was to be covered with about $14,000 annually from profits in the city-owned building housing the Benson County Social Services Agency. Once the bank building was paid for there would be money coming to the city from both buildings. With the advice and consent of the city council, Mayor Vern Thompson signed a document with the loan papers stating the city would cover any shortfall Minnewaukan Enterprises had.
However, in a routine audit the state auditor’s office notified the city that it was illegal for the city to spend tax dollars on a building not owned by the city. The city had already invested $59,000 in remodeling expenses in the building. When this alleged infraction of the law was discovered, there were no further transfers of city money to Minnewaukan Enterprises and the financial difficulty began. A full audit conducted by the state auditor’s office determined there was no money missing and nobody profited by the situation.
Without the infusion of money from the city, the building did not cash flow. Payments on the principal and interest could not be made to the bank.
The bank agreed to a moratorium on payments until the building’s financial situation changed.
The problem became exacerbated when the Farm Service Agency (FSA) began withholding rent payments. Payments were withheld because of no elevator and no paved parking lot.
The state’s attorney charged Mayor Thompson and the city council with misappropriation of funds. In a trial Judge Lee Christofferson dismissed all charges against the defendants and stated in court that he was not at all certain that anything illegal had been done.
During this time all members of the city council resigned, with the exception of the mayor. The ND Attorney General stepped in and ruled that city council members could not resign all at once and had to resign one at a time with someone appointed to take their places after each resigned.
To settle the issue of the bank building, new members of the city council persuaded the bank to write off all debts owed on the building and allow Minnewaukan Enterprises to deed the building over to the city, free of charge. The building was valued at $271,000. Members of the council convinced the FSA to release all withheld rent payments and all that money went to pay back taxes, penalty and interest of $42,000. The FSA agreed to hold back 5 percent of the rent until an elevator is installed and an additional 7 percent until the parking lot is paved. Members of the council also convinced the FSA to raise the rent 16 percent.
Since taking ownership of the building in March of 2000 the city has spent about $5,000 for back taxes, penalty and interest and about $16,800 on paving the parking lot. Funds for the latter two expenses came from rent receipts from FSA. The city’s books showed a $59,000 deficit in the FSA-Bank Building Fund until the last of the deficit was erased last month.
FSA pays the city $41,745 per year for renting the majority of the building. It is expected a five-year lease will be renewed in 2006. The Bremer Bank occupies a portion of the building rent-free until 2010. For a portion of last year the basement meeting room was rented out to the engineers working on the state’s emergency outlet for a total of $3,455.
Benson County Social Services moved out of the Memorial Building and that has been vacant for a couple years.
The city offices and library moved into the former USDA office. Grants and donations paid most of the costs of purchasing that building for $25,000.
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The FSA-Bank Building in Minnewaukan has a controversial history which includes resignations from the city council and a court case before Bremer Bank donated the building to the city. As of December the city regained all its investment in the building. Bremer Bank and the Benson County Farm Service Agency are located in this building.
County native decorated in Iraq
Spec. Amy Egbert, a soldier in the logistics (S-4) section of the 141st Engineer Combat Battalion, was recently presented an Army Achievement Medal at FOB Speicher in Iraq. The award recognizes Egbert for meritorious service during ground combat operations against enemy forces in support of Operation Iraqi Freedom II. The citation reads: Spec. Egbert did an outstanding job performing her duties in the S-4 section. Spec. Egbert was instrumental in developing an Excel spreadsheet for requiring documentation and tracking of the 141 ECB field ordering officer purchases. Spec. Egbert instructed classes in forklift operation and provided drivers’ training to others, which helped the S-4 section to be more efficient. Egbert, 23, lives in Grand Forks, where she is pursuing a degree in forensic science and criminology from UND. She is the daughter of Paul Georgeson of Altura, Minn. and Diane and Jim Yri of Minnewaukan. Her siblings include Amber Georgeson of Devils Lake and Autumn Georgeson and Erin and David Yri of Minnewaukan.
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Spec. Amy Egbert is shown accepting the Army Achievement Medal from Battalion Commander Lt. Col. Robert Fode (center) and Headquarters Company Commander Capt. Patrick Gleich (right) in Iraq. Story and photo by Sgt. Amy Dobler, Headquarters Company, 141st Engineer Combat Battalion.
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Students have been chosen to represent Minnewaukan at the Benson County Mathcounts competition Feb. 9 at the Benson County Courthouse. Left to right, back row, are Jacob Cline, Ashley Greywater (alternate) and Bobbi Grann. Front row: Dallas Welch, Beth Beecroft and Chandra Anderson (alternate). Mathcounts is co-sponsored by the ND Society of Professional Engineers and the ND Association of County Superintendents. Co-coaches for the team are Amy Grotte and Darlene Thompson.