Dunn County pays $168,000 claim resulting from fraud

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By LeAnn R. Ralph

MENOMONIE  — “Someone” changed a pay request from Haas Sons Inc. for road work, and now Dunn County is on the hook for $168,000.

Haas Sons was under contract with Dunn County in 2019 to build the road that runs parallel with U.S. 12/29 connecting Lookout Road, which is the entry to the Neighbors of Dunn County and the Dunn County Government Center, and Red Cedar Street, and which also provides access to the Prevea clinic, said Nick Lange, Dunn County Corporation Counsel, at the Dunn County Board’s November 9 meeting.

Early in 2019, someone manipulated electronic documents and changed how Haas would be paid for the road construction, he said.

It was unknown at the time that a criminal was doing this as a for-profit illegal enterprise. Since the payment method was changed, when the pay request came through from Haas Sons, the payment went to a bank account that was not connected with Haas, Lange explained.

A number of security measures have been implemented since then, and “it’s not going to happen again,” he said.

The police were contacted when the fraud was discovered, and they have conducted investigations, Lange said.

“It looks like the likelihood of the county recovering the misappropriated funds is pretty low,” he said, adding that if someone is ultimately charged with the crime and is held responsible and there are criminal proceedings, the county might be able to recover the money.

In the meantime, because Haas Sons did not receive payment for the road work they had completed that was included in the pay request, Haas filed a claim against the county for $189,000, Lange said.

The $189,000 claim reflected the funds that had been diverted and additional funds that were due. The Executive Committee and the Committee on Administration have investigated the facts and hired an attorney, Lange said.

As for Dunn County, the fraud turned out to be an uninsured loss, he said.

Dunn County and Haas Sons have negotiated a favorable settlement, and after a review of the situation, reaching a settlement was the appropriate way to handle the fact that Haas had not been paid, Lange said.

The settlement of $168,000 with Haas Sons is less than the claim the company submitted, and the county also is saving money because the county does not have to litigate the case and pay additional interest that would be due if a judgement was entered again Dunn County, he said.

The claim is an unanticipated expense, but the money must be paid, and “it’s as good as we can do under the circumstances,” Lange said.

Mike Rogers, county board supervisor from Menomonie, asked if the county has some form of insurance to cover fraud or theft.

This is not an insured loss. The county administration has been exploring additional coverage to provide insurance for some kinds of loss, but coverage for this kind of fraud was not in place at the time the fraud occurred, Lange said.

Dunn County had no insurance at the time to cover the loss or to pay the attorney representing the county, he said.

The Dunn County Board unanimously approved a settlement with Haas Sons Inc. in the amount of $168,000. The resolution approves the amount of the settlement as well as the payment to Haas Sons.