The City of South Haven reports this afternoon that they have completed a forensic audit of their former finance director and they are working with state authorities to pursue criminal charges against her.
City Manager Brian Dissette has shared results of the forensic audit, which verified improper financial transactions connected to former Finance Director Wendy Hochstedler, with the Michigan State Police as part of its ongoing investigation. South Haven fired Hochstedler in late November after an internal audit uncovered financial irregularities and expects the Michigan State Police will pursue felony criminal charges against her.
Dissette updated the South Haven City Council at its meeting last night on the City’s plan to pursue civil charges against Hochstedler, who spent seven years working as the City’s finance director. As part of a civil lawsuit, South Haven would work aggressively to seek full reimbursement from Hochstedler.
Dissette says, “We are incredibly disappointed in this breach of trust by an employee who was in charge of safeguarding public funds and the public interest,” and adds, “Our just-completed forensic audit will provide a clear and detailed accounting of the fraudulent charges that occurred so we can seek reimbursement and a civil remedy through the courts.”
As a result of the audit, Dissette says, “We have shared the forensic audit with the Michigan State Police to ensure they have the detail needed to pursue criminal felony charges. We are working to put additional safeguards in place to protect the public’s money and look forward to sharing additional details with our residents as they become available.”
The forensic audit revealed at least three years of fraudulent charges made on credit cards belonging to former employees. After learning of the irregularities, Dissette and his team took immediate steps, including:
- Terminating Hochstedler and hiring an interim finance director with more than 20 years of experience in public accounting
- Reducing the number of City-issued credit cards and strengthening checks-and-balances on their use
- Implementing additional recommendations from the audit to further safeguard public funds from misuse
As South Haven pursues civil remedies against Hochstedler, the City is also working with its insurance provider to minimize out-of-pocket loss of City funds.
