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

Monroe schools awarded $675Kin civil lawsuit

By Lauren Pack

Staff Writer

BUTLER COUNTY — 

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

    In June 2012, the district filed the suitagainst former treasurer Kelley Thorpe, bond holder Ohio Causality Insuranceand Clark, Schaefer, Hackett & Co., the accounting firm responsible forauditing the district’s books.

    The lawsuit alleged Thorpe impermissablyused bond money to pay the district’s regular bills, between 2008 and 2011, andthat Clark, Schaefer, Hackett & Co., was negligent in its duties whenconducting audits.

    After a long series of legal motions, trialdates that were set and reset, and two mediation sessions, “a settlementagreement and mutual release of all claims” was formalized, and the suitdismissed on March 6.

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

    “Theboard states that the auditor of the state has placed the board on fiscalemergency status. Is that because Ms. Thorpe, under the watchful eye of theboard’s auditors, continued the district’s practice of paying its legitimateexpenses? Of course not!,” Pergram wrote. “The complaint in this action isnothing other than a poorly-disguised attempt to find a scapegoat for the boardbeing placed on fiscal emergency status.”

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

    Pergram also stated in the dismissal motionan employer such as a school board is not allowed to sue their employees. Hesaid 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 anymoney.

    Ohio Casualty provided Thorpe’s requiredsurety bond for faithful performance of her duty as the board’s treasurer. Thelawsuit demanded the bond be paid to the school district to satisfy damages ithas suffered.

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

    In September of last year, both Thorpe andOhio Casualty were dismissed from the suit, which left only the claims againstClark, Schaefer, Hackett & Co.

Aspart of the settlement Clark, Schaefer and Hackett agreed to pay the schooldistrict $675,000 and the suit was dismissed.

    But the firm did not admit any wrongdoing.

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

    The settlement calls for all parties not todisparage one another and instructs attorneys for all parties to “limit theirstatements to the public and media” to the statement of “the parties havesettled this matter and are pleased this matter is resolved.”

    All parties agreed to pay their own legalexpenses.

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

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

    “The Ohio Department of Education receivedinformation indicating that you may have engaged in conduct unbecoming alicensed educator. After investigating these allegations, the departmentdetermined that you followed the practice of both your predecessors, and youmade payments on the district’s loan obligations out of the district’s bondretirement fund, notwithstanding the fact that those loan obligations were notrelated to the bond retirement fund; however the payments were not disallowedduring the audit done by the independent auditing firm,” Dr. Richard A. Rosswrote in the letter.

    “The state superintendent is issuing thisletter of admonishment concerning your conduct unbecoming to the teachingprofession … Educators act as role models for students and the state board anddepartment of education expect all educators to conduct themselves in aprofessional and ethical manner,” Ross said.

    Thorpe was informed that further conductunbecoming the teaching profession may result in disciplinary proceedings torevoke, limit or suspend her credentials.

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

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