Posted: 2:38 p.m. Friday, March 20, 2015

Monroe schools awarded $675K in civil lawsuit

By  http://www.journal-news.com/staff/lauren-pack/" rel="nofollow - Staff Writer

BUTLER COUNTY — 

    Nearly three years after filing a civil suit against its former treasurer, the bond holder and the accounting firm responsible for auditing the books, Monroe Local School District has received a payout of more that a half million dollars.

    In June 2012, the district filed the suit against former treasurer Kelley Thorpe, bond holder Ohio Causality Insurance and Clark, Schaefer, Hackett & Co., the accounting firm responsible for auditing the district’s books.

    The lawsuit alleged Thorpe impermissably used bond money to pay the district’s regular bills, between 2008 and 2011, and that Clark, Schaefer, Hackett & Co., was negligent in its duties when conducting audits.

    After a long series of legal motions, trial dates that were set and reset, and two mediation sessions, “a settlement agreement and mutual release of all claims” was formalized, and the suit dismissed on March 6.

    Early on in the proceedings, Thorpe’s attorney Dennis Pergram moved for charges to be dismissed against Thorpe and the insurance company.

    “The board states that the auditor of the state has placed the board on fiscal emergency status. Is that because Ms. Thorpe, under the watchful eye of the board’s auditors, continued the district’s practice of paying its legitimate expenses? Of course not!,” Pergram wrote. “The complaint in this action is nothing other than a poorly-disguised attempt to find a scapegoat for the board being placed on fiscal emergency status.”

    The district’s lawsuit claimed the $3.1 million was taken out of the bond fund between 2005 and 2011 to pay bills.

    Pergram also stated in the dismissal motion an employer such as a school board is not allowed to sue their employees. He said professional malpractice claims, which the lawsuit alleges occurred, involve independent contractors, not employees whom the employer controls, unless the person was acting in bad faith. No one claimed Thorpe took any money.

    Ohio Casualty provided Thorpe’s required surety bond for faithful performance of her duty as the board’s treasurer. The lawsuit demanded the bond be paid to the school district to satisfy damages it has suffered.

    “The board is attempting to treat Ohio Casualty as a malpractice carrier for Ms. Thorpe as its claim against Ms. Thorpe is for malpractice,” Pergram wrote.   “Ohio Casualty issued a bond, not malpractice insurance.”

    In September of last year, both Thorpe and Ohio Casualty were dismissed from the suit, which left only the claims against Clark, Schaefer, Hackett & Co.

As part of the settlement Clark, Schaefer and Hackett agreed to pay the school district $675,000 and the suit was dismissed.

    But the firm did not admit any wrongdoing.

    “CSH denies and continues to deny the allegations made against it by the board in the action, and has asserted and continues to assert, among other things, that all professional due care was utilized by CSH in performing the audits and other services for the board,” the settlement states. “The parties have determined that it is in their respective best interests to amicably resolve, settle and compromise all claims ….”

    The settlement calls for all parties not to disparage one another and instructs attorneys for all parties to “limit their statements to the public and media” to the statement of “the parties have settled this matter and are pleased this matter is resolved.”

    All parties agreed to pay their own legal expenses.

    Thorpe served as the Middletown City School’s treasurer from Aug. 1, 2011 until July, 2014 when she resigned.

    In January the Ohio Department of Education issued a letter of admonishment to Thorpe. She holds at five-year school treasurer license issued in 2011 and a five-year school business manager license issued in 2013.

    “The Ohio Department of Education received information indicating that you may have engaged in conduct unbecoming a licensed educator. After investigating these allegations, the department determined that you followed the practice of both your predecessors, and you made payments on the district’s loan obligations out of the district’s bond retirement fund, notwithstanding the fact that those loan obligations were not related to the bond retirement fund; however the payments were not disallowed during the audit done by the independent auditing firm,” Dr. Richard A. Ross wrote in the letter.

    “The state superintendent is issuing this letter of admonishment concerning your conduct unbecoming to the teaching profession … Educators act as role models for students and the state board and department of education expect all educators to conduct themselves in a professional and ethical manner,” Ross said.

    Thorpe was informed that further conduct unbecoming the teaching profession may result in disciplinary proceedings to revoke, limit or suspend her credentials.

    Attorneys for Thorpe, the bonding company and accounting firm did not respond when contacted for comment. The board’s attorney Jeffrey McSherry gave only the response agreed to in the settlement.

    Monroe Schools Superintendent Dr. Phil Cagwin said, ” I think both parties are pleased this issue has been resolved. I am happy to continue to focus on providing our students with a positive learning environment at Monroe Local Schools.”