The Indiana State Board of Accounts has released its report on the findings of an internal investigation based on alleged billing improprieties by former Warsaw Street Superintendent Lacy Francis Jr. Francis is currently charged with 8 felonies related to theft. (See related)

Released today, the report found that from Jan. 1, 2011, to Dec. 31, 2013, the city overpaid Pro Form Pipe Lining of Mishawaka $318,569 to have various storm sewers lined, cleaned and repaired.

Ten of the 11 of the accounts payable vouchers for the payments were signed by Francis, certifying that the attached invoices were true and correct and that the itemized materials or services were ordered and received. The other voucher was prepared by Francis and signed by another street department employee.

In March, Francis, owner/president of Pro Form Pipe Lining Marc Campbell, and Kevin R. Brown, 45, a field supervisor for Pro Form, were arrested on charges including various counts of corrupt business influence; theft; aiding, inducing or causing theft; providing false information to governmental entity to obtain contract; official misconduct; and conflict of interest. (See related)

The case was opened in December 2013 when a former employee of Pro Form contacted the city of Warsaw Clerk-Treasurer and alleged that Pro Form had been intentionally overbilling the city. After being informed of the allegations of overbilling, city engineer James Emans collected all of the quotes, agreements and accounts payable vouchers with attached invoices pertaining to the payments to Pro Form.

The SBOA report found that from the documents, and by using available GIS technology, Emans was able to calculate the actual length of sewer that was lined for each project to within plus-or-minus 5 feet. Based on the calculations, for 10 of the 11 projects, the amount of footage that was billed to the city exceeded the actual footage by amounts ranging from 59 feet to 229 feet per project for a total of 1,638 feet. On the 11th project, the city was billed and paid for lining 175 feet of sewer that only measures 75 feet and was never actually lined. The total sewer lining, billed to and paid for by the city, in excess of the amount actually installed, was 1,813 lineal feet for a total of $267,569.

SBOA ruled that funds “misappropriated, diverted or unaccounted for through malfeasance, misfeasance, or nonfeasance in office of any officer or employee may be the personal obligation of the responsible officer or employee.” Further, “We consider Lacy Francis, Jr., former Street Superintendent; Pro Form Pipe Lining Company; and Marc Campbell, Owner/President of Pro Form Pipe Lining Company, to be jointly and severally liable to the city of Warsaw for overpayments in the amount of $318,569.”

The state of Indiana incurred additional costs of $15,164.88 related to the investigation of overpayments which Francis and Campbell could also be required to pay back.

Additionally, Francis’ wife, Mildred Francis, was arrested in May on charges she laundered money. According to court documents, she and her husband separately invested large sums of money into a company commonly known to operate as a Ponzi scheme. In short, investors put in a money with the false promise that they are paying into valid investments. Officials have reason to believe the funds they were using were those paid out by the city. (See related)

Both Lacy Francis Jr. and Mildred Francis are not set to appear in court again until Sept. 29 for pre-trial conferences.