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Finding the fraud in Athol

JEFF SELLE/jselle@cdapress.com | Hagadone News Network | UPDATED 10 years AGO
by JEFF SELLE/jselle@cdapress.com
| January 23, 2015 8:00 PM

For Athol Mayor Darla Kuhman, the past year has been nothing short of surreal.

Kuhman, who was elected to the Athol City Council in 2013, quickly found herself moving from the position of councilwoman to interim mayor when Mayor Lanny Spurlock took ill and eventually succumbed to his illness.

When Spurlock, 76, passed away, the city council voted Kuhman into the office. That's when she started to find evidence supporting her suspicion that something was a little fishy at City Hall - she didn't know it then, but she was looking at an embezzlement scheme.

Kuhman said as a councilwoman she asked the mayor and city clerk for information regarding the city's finances and was told that was not her responsibility.

"I suspected we were getting fabricated documents," she said. "You could tell the bank statements were cut and pasted. Sometimes the fonts didn't even match up."

When she became mayor, Kuhman said, City Clerk Sally Hansen, who had resisted Kuhman's requests for so long, began poisoning relationships between Kuhman and her colleagues.

"She would go around telling people I didn't like them and stuff like that," Kuhman said. "I had my suspicions, but the others were skeptical by then."

Hansen, who was fired by the city last year, pleaded guilty on Wednesday to 15 counts of wire fraud and admitted to embezzling $417,879 from the city.

Kuhman said when she started looking into the situation, fellow councilman Mark Dane was one of the only council members who would listen to her, so she often went to him for advice.

When she discovered that Hansen had given herself a raise, Dane urged her to dig into that.

"Mark just kept pushing me to keep it up," she said. "Once I got a hold of the bank statements, I saw a check that I know I did not sign - it was a forged check."

Dane advised her to contact the state attorney general's office, which she did and they told her to work the issue through City Attorney Bill Appleton.

"At that point I didn't know who I could trust," Kuhman said. "But when I did finally call him and told him about the forgeries, he told me I had to quit trying to hurt Sally's feelings."

Appleton's legal advice was to call the police, the mayor said. Appleton is no longer employed by the city.

"From the minute I became mayor I started digging through documents," Kuhman said. "I found stuff, but I didn't know who was in on it, so I called (Kootenai County Sheriff's) Deputy Solar Larsen."

She met Larsen on the shoulder of I-90 - because she was afraid to meet in the city - to show him the evidence, and that is when the investigation started in June 2014.

Kuhman said Larsen showed his boss the evidence and an investigation was launched, which later included the U.S. Attorney's Office and the U.S. Secret Service.

Kuhman said after she met with police she noticed a lot of checks being written, some of which were to Hansen's husband, Chuck, so she left a message for someone at the city to ask if Hansen's husband had done any work for the city.

That person apparently called Hansen about it, and Hansen called the mayor to ask what she was doing.

"I got a very frantic phone call," Kuhman said. "Sally said, 'What are you doing telling people I was writing checks to my husband?'"

Kuhman said before she could make it to city hall to collect Hansen's keys and passwords, the clerk had bolted with them.

Hansen and her husband skipped town and moved to Oregon, then to Arizona and now Hansen lives in southern Idaho.

While Hansen was charged with fraud, the authorities never issued an arrest warrant for her because she was willing to voluntarily appear in court to plead guilty, said Kootenai County Prosecutor Barry McHugh.

"We were contacted by her attorney and she started cooperating. She came back to Coeur d'Alene for a meeting and agreed to voluntarily appear in court," McHugh said. "Because she was cooperative, we felt no need for an arrest warrant."

Formal charges were filed, and that started the discussion of a plea agreement, he said.

As for Hansen's husband, Chuck, being charged, McHugh said as of Thursday investigators do not have the evidence to charge him with a crime.

"There is no information that we have at this time that indicates he was a participant in the scheme," McHugh said, adding that investigation is still active.

Kuhman said the council was deceived by Hansen, and she can understand how that can happen.

"In some respect, I can see how the council was deceived by Sally's fabricated reports," Kuhman said. "She even told the council that the city was small enough that it only had to perform audits every two years."

But, she said, the city attorney should have been on top of that issue - and Appleton was not.

"I do blame Appleton for a lot of this," she said.

Kuhman said she won't be satisfied with the outcome until she sees what Hansen gets for a sentence on May 5, but she did say that she would like to see stiffer penalties for white-collar crime.

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