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Heins, Rausch handled MFD accounts outside city oversight
MONROE - A recently concluded investigation into the conduct of former Monroe Deputy Fire Chief Lane Heins found he and former Chief Daryl Rausch operated accounts containing department funds outside of the oversight of the city and purposefully concealed their behavior from city officials.

Attorney Steven Zach of Boardman Clark LLP was hired by the city in September to conduct an investigation of Heins' conduct. The Monroe Common Council approved an invoice last month for more than $27,000 from the company labeled for "Heins Investigation."

Monroe Fire Chief Dan Smits said he requested the city council begin an investigation after noticing record-keeping discrepancies.

Heins signed a severance agreement with the city in February following the personnel investigation. City Administrator Phil Rath said it was conducted through a special investigator because the city needed a third-party to examine the issue and that a criminal investigation could have taken longer than the private investigation if one was started at all. Zach was recommended by the city's labor attorney, Rath said.

"If you can afford to do it, it is best practices," Rath said, referring to hiring a special investigator. "You can report this; it doesn't mean it will necessarily be taken up (by law enforcement)."

Zach shared his findings in a December memo to Rath and Smits. The investigation results were based on interviews with 17 people, including city personnel, members of the fire department and others, in addition to the examination of financial records.

Beginning in 2008, Zach found that Rausch and Heins opened two accounts at Woodford State Bank. One was a checking account in the name of Monroe Volunteer Firefighters Inc - Fire Fighters Prevention Account opened with Rausch's home address in Monroe.

The following year, Heins became deputy chief. The Volunteer Firefighters account remained open until January 2011, when Heins and Rausch opened an interest-bearing account with the closure of a Woodford account. The amount of nearly $8,000 was transferred from one of the Woodford accounts via cashier's check. A non interest-bearing account was also set up. The two accounts were established through separate banks; one at Sugar River Bank and the other with Bank of New Glarus.

According to Zach's investigation, city personnel did not know Rausch and Heins were operating outside of city observation. While Heins said he did take care of the maintenance of each account, he told Zach that Rausch was the person who initiated the plans and gave direction on transactions.

A key finding by Zach was "Heins and Rausch took steps to conceal the existence of the WSB and NGB accounts and/or their role in controlling them." Zach wrote, "It is my conclusion that these accounts were established to avoid the City's budgetary oversight and control over the donations and funds."

For instance, during an interview for the investigation, former public works director Colin Simpson noted roughly $50,000 worth of his department's equipment had been sold by the fire department. Simpson suggested City Comptroller Bridget Schuchart be contacted to correct financial records but was "met with resistance by Heins, who told Simpson that it was not necessary" to contact her and that the department could sell equipment to be put directly in the utility fund to balance out the amounts.

According to the investigation, Zach was told by Heins that the outside accounts were established because the city mismanaged donations to the MERIT Center.

"The 2013 ledger for the MERIT Center shows an audit adjustment of approximately $90,000 to properly categorize funds from 2009 that were not properly credited to the MERIT Center account," Zach wrote. "That, however, does not explain why the WSB accounts were opened prior to this."

Zach found that Heins made deposits into city accounts from the Bank of New Glarus account by cashier's checks. Heins told Zach that Rausch felt it would be simpler to do so.

Heins' attorney Katy Lounsbury of Ehlke, Bero-Lehmann & Lounsbury S.C. in Monroe and Madison wrote in an email on his behalf that "Heins maintained the accounts pursuant to the orders of Chief Rausch" and he "had no reason to believe the accounts were not authorized, and in fact was led to believe that the City and its auditors were aware of the use of these accounts. Had Heins refused to maintain the accounts, Heins would have been considered insubordinate."

No city funds were used for personal gain by Heins or others, Lounsbury wrote. Zach acknowledged it appeared no one had personally benefited.

However, he did find discrepancies in his examination of accounts.

In documents kept on Heins' computer to track expenses from the annual fish fry fundraiser, Zach wrote that the expenses match checks written on accounts with New Glarus Bank. He "was not able to directly tie deposits made around these dates to the precise profit numbers," but deposits do correspond with the date of the fundraisers.

Zach also noted in a spreadsheet identifying receipts of bills Heins said he used to track expenses paid through the Woodford and New Glarus Bank accounts that "not all of the check payments have a corresponding invoice." Rath said the checks appeared to be used for vending machine expenses and did not exceed more than "a couple hundred dollars."

Another portion of the memo stated that while cash withdrawals Heins said were used for cash boxes at annual fundraisers correspond with the date of the fundraisers, Zach was unable "to determine if that cash was ever re-deposited into the accounts."

Heins closed the second Woodford account by a cashier's check totaling $136.36 to the city in October 2013. In January 2017, one day before the Monroe Board of Police and Fire Commissioners hired Smits, Heins closed the Bank of New Glarus account with a $160 cash payment to the city.