Forensic audit reveals GC school district lost more than $300,000 to fraudulent activities
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By LeAnn R. Ralph
GLENWOOD CITY — When several Glenwood City school district residents brought their concerns to the Board of Education regarding reimbursements to the superintendent of $40,650, they had no way of knowing the full extent of the fraud.
Instead of $40,650 of fraud regarding classes that former district administrator, Tim Johnson, said he had taken at Viterbo University, the total amount turned out to be $290,792, along with $17,500 in performance stipends paid to Ron Johnson, district accountant, that were not included in his contract and were not approved by the Glenwood City school board.
All together, the forensic audit attributed fraud to Tim Johnson that included reimbursements for classes he never took at Viterbo in the amount of $75,515; stipends to offset the cost of graduate courses he had never taken in the amount of $125,000; performance pay as the school district’s special education director in the amount of $38,462 when he did not possess the credentials of a special education director; and “alternative benefits” of $51,815.
Tim Johnson and Ron Johnson also were found by the forensic audit to be negligent in investing school district funds in the amount of $349,650 in stocks and mutual funds that do not meet the specifications of Wisconsin state law for school district investments.
According to the cover letter included with the audit report, which was signed by Eric Stephens of Intellex Forensics, “These actions demonstrate fraudulent misconduct and negligence by Tim Johnson and Ron Johnson.”
Tim Johnson began his duties as district administrator in Glenwood City on July 1, 2014.
Two years
Although it took two years — and the hiring of a new district administrator, Patrick Olson — the Glenwood City Board of Education eventually agreed to a forensic audit regarding the financial activities of the former district administrators in March of this year.
Tim Johnson resigned from Glenwood City in May of 2023 and was hired as the director of human resources in the Chippewa Falls school district.
Johnson was placed on administrative leave in Chippewa Falls and subsequently resigned following a news story by Fox 9 KSMP in January of this year about the alleged fraud conducted in the Glenwood City school district.
The audit conducted by Intellex Forensics was completed June 4, 2024, and was released to the public August 23, after Johnson had attempted to file for a restraining order in St. Croix County Circuit Court to keep the school district from releasing the results.
A St. Croix County judge dismissed the case after attorneys representing the school district and Johnson filed a formal agreement with the court stipulating that Johnson must receive the forensic audit report seven days before the report could be released to the public.
Method
To conduct the forensic audit, Intellex reviewed a variety of documents, including employment contracts, Viterbo transcripts, W2 forms, expense vouchers, reimbursement invoices, performance stipends, direct deposits and 403(b) contributions from the school district to Tim Johnson.
A 403(b) is a tax-sheltered annuity retirement plan offered by school districts and is similar to a 401(k) plan offered by other employers.
During the review of the 403(b) contributions, Intellex “observed extensive manual adjustments to monthly contribution ledgers. Any review of these manual entries was not in the scope of this engagement; however, we recommend a comprehensive analysis be performed of the 403(b) plan and related contributions. Our review, however, did not reveal that payment for these components exceeded contractual amounts.”
Tim Johnson received $30,000 per year for his tax-sheltered annuity.
During his time as district administrator, Johnson started out with an annual salary of $105,335 in 2013-2014 and ended with a salary of $153,812 in 2022-2023.
Total salary for the 10-year period was $1,367,740.
Viterbo
At the heart of the fraud allegations were the classes Tim Johnson said he had taken at Viterbo University in La Crosse.
Beginning in 2017-2018, Tim Johnson received an annual stipend of $25,000 as part of educational reimbursement clauses in his contracts with the school district, for a total of $125,000.
Along with the annual stipends, Tim Johnson received reimbursement of $75,515 for classes he said he taken at Viterbo.
From July 1, 2013, until June 30, 2023, Tim Johnson had submitted 15 reimbursement vouchers, received 17 reimbursements, and had signed and approved all 15 of his reimbursement vouchers.
Intellex reviewed Tim Johnson’s Viterbo University transcripts to determine which courses he had completed compared to those for which he had asked for reimbursement.
Out of more than 51 classes Tim Johnson said he had taken at Viterbo, he actually completed 11 classes.
For six of those classes that he completed, he was reimbursed $8,295.
While all 11 classes were on Tim Johnson’s Viterbo transcripts, Intellex apparently could only find evidence of reimbursement for six classes — five at $1,350 each and one for $1,545.
For the other more than 40 classes Tim Johnson said he had taken but for which there were no transcripts, he received reimbursement of $75,515.
Out of the $75,515, a total of $7,425 is listed in the report as “unknown” related to two payments made January 4, 2016, and September 9, 2016, for which Intellex presumably could not locate any receipts for the reimbursements.
All together, Tim Johnson received $200,515 for classes he said he had taken at Viterbo but for which Intellex could find no evidence that he had taken.
Resident concerns
Amy and Dan Dopkins, residents of the Glenwood City school district, voiced their concerns about the reimbursements of $40,650 to the Board of Education during the public comments portion of the April 24, 2023, meeting.
Amy Dopkins had made open records requests concerning Viterbo classes taken between August of 2017 and December of 2020 with a total of nine reimbursements for $40,650.
After approaching the school board president about having her concerns discussed in closed session, Dopkins said she was told “no.”
A packet of information pertaining to her concerns was given to the Board of Education the previous year to review in closed session, and Dopkins presented the same packet of information to the Board of Education at the April 24, 2023 meeting, in open session during public comments.
Dopkins had asked Tim Johnson for transcripts of the classes at Viterbo, but he refused.
Dopkins also was unable to get transcripts from Viterbo because Tim Johnson refused to release them.
The executive summary of the Intellex report states that Patrick Olson, as district administrator, had attempted in December of 2023 to get information from Viterbo but was unsuccessful.
Olson then requested authorization from Tim Johnson to release his Viterbo records, but Tim Johnson did not authorize the request.
“Ultimately, GCSD received Tim Johnson’s Viterbo records from the Glenwood City Police Department,” the executive summary states.
Everything matches
A series of e-mail messages between Amy Dopkins and Lisa Kaiser, president of the Glenwood City Board of Education in May of 2022, shows some of the difficulties that Dopkins experienced in obtaining information.
On May 4, 2022, Kaiser wrote to Amy Dopkins: “I just finished a meeting with Mr. Johnson. Tim shared his own personal folder from Viterbo. I was able to see his ID number, the college logo was present, the course description and ID number for the course and his grade. I then cross-referenced the courses and ID numbers to the District’s invoices. Everything matches and is there. I believe this addresses your concern in this matter and if you have any questions, please contact me.”
Amy Dopkins replied: “Did you get his transcripts directly from Viterbo, or just his own paperwork?”
Kaiser replied: “His login account.”
Amy Dopkins wrote on May 5: “Great. I would like a copy of his grades for those courses from Viterbo along with the course number and date taken. The ‘invoices’ that I received from Tim that corresponded to said coursework did not have course numbers associated with them. If this documentation does in fact exist in the GCSD records, it should have been provided with the original [open records] request and it was not. Again, the ‘invoices’ provided to me by Tim did not originate from Viterbo per the Viterbo Business Office … Again, I need to see it directly from Viterbo, as they have said he HASN’T taken any coursework since 2016 …”
Due diligence
A short time later on May 5 after Amy Dopkins said she wanted a copy of Tim Johnson’s grades for the classes he said he had taken at Viterbo, Kaiser replied: “ … I have done due diligence in researching this matter. I would hope and think that the integrity I have would be respected on the information provided and staying in the guidelines of the public aspect and the personal aspect. There are privacy laws in reference to what schools can give out whether they are high schools or secondary schools …
Amy Dopkins replied: “The ‘invoices’ provided did not originate from Viterbo per Viterbo’s own business office. They looked like a fabricated word document … I have been in contact with other districts. They REQUIRE a transcript to be on file for reimbursement of any coursework …”
Later on May 5, Kaiser wrote: “What you are referring to with the accounts payable open records and you feel is a false document is a printed receipt once payment has been made. This is printed out of Tim’s Viterbo account. It is not an ‘invoice’ from the college but a verification of payment received. I called Tim to verify where that piece comes from.”
Closed session
On May 13, 2022, Amy Dopkins wrote to Kaiser to find out what had happened to the information she had given the Board of Education to review in closed session: “I would appreciate knowing what the board came up with in reference to my concern.”
Kaiser replied: “ … the board did not raise any red flags as I was able to see a transcript. It was also stated that since the local law enforcement and the DA have been contacted with no evidence to support action from them, the Board feels that this matter is concluded and does not require further action …”
In an e-mail message provided to the newspaper from Tim Johnson to the Board of Education dated May 6, 2022, Johnson had written: “Luckily, our law enforcement agencies have told individuals that they don’t have a complaint.”
Dopkins had written on a printed copy of the e-mail message: “Not true! Only school board can request an investigation per Chief Darwin and SCC DA [St. Croix County district attorney].”
During an interview with the Tribune Press Reporter, Nicole Miller — who had just been elected to the school board in May of 2022 and presented the information Amy Dopkins had obtained at Miller’s very fist closed session — said the other board members had taken turns ridiculing her for bringing up the information Dopkins had provided.
Some of the board members laughed at her. Some of them threw away their packets of information. None of them “gave it a second look,” Miller was quoted as saying an in article published in the Tribune Press Reporter in February of this year.
The people attending the closed session meeting took turns telling Miller exactly what they thought of her for even bringing up the issue of the reimbursement for the classes at Viterbo, Miller said.
“They all took shots at me and told me what a horrible person I am,” she said.
Seeing is believing
Kaiser says she saw Tim Johnson’s “personal folder” from Viterbo that contained course descriptions, identification number and grades. She said the transcript information was then cross-referenced with the district’s invoices paid to Johnson.
When Dopkins asked if the information was from Viterbo transcripts or Johnson’s own paperwork, Kaiser replied “his login account” which the Tribune Press Reporter interprets to mean Tim Johnson logged into his student records on his student account at Viterbo on Viterbo’s computer system, and Kaiser was able to see the course numbers and grades on a computer screen at the Glenwood City school district.
Viterbo had already confirmed to Dopkins that Tim Johnson had not taken any classes there since May 31, 2016 — and Dopkins was concerned with the time period from 2017 to 2020.
The Intellex report does not include any dates for the classes at Viterbo for which there is a transcript and for which, out of those 11 courses, Tim Johnson was reimbursed for six classes in the amount of $8,295.
Amy Dopkins was concerned about reimbursements for classes from 2017 to 2020 for $40,650.
It is not clear what Kaiser had actually looked at when she wrote, “I was able to see his ID number, the college logo was present, the course description and ID number for the course and his grade. I then cross-referenced the courses and ID numbers to the District’s invoices. Everything matches and is there.”
It is not clear what Kaiser would have been matching for invoices when the Intellex report notes 11 classes were completed, six of which were reimbursed, five at $1,350 and one at $1,545, for a total of $8,295.
If the other five classes had cost $1,545, the total would have come to $14,020 and not the $40,650 for which Amy Dopkins had expressed concern.
The Intellex report notes that Tim Johnson submitted claims for more than 50 graduate courses he said he took at Viterbo from 2013 to 2023.
Tim Johnson “submitted claims for and received $75,515 in reimbursements for graduate courses he claimed he completed during the school years of 2013-2014 through 2022-2023. Our examination of the Viterbo transcripts, however, revealed that Tim Johnson never completed these courses.”
Stipend
According to the executive summary of the Intellex report: “Tim Johnson also received $125,000 in stipends intended to offset the cost of graduate courses never taken.”
Starting with the 2017-2018 school year, Tim Johnson’s employment contract included payments that amounted to $25,000 per year to help offset the cost of graduate courses.
From 2017-2018, contract provisions allowed total compensation in the amount of $125,000 for the cost of graduate courses and $25,000 for performance of duties, according to the Intellex report.
Spec. Ed. and HRA
In June of 2015, Tim Johnson issued a memorandum to employees participating in the school district’s Health Reimbursement Account Plan (HRA) notifying employees that the plan was being terminated effective July 1, 2015.
Tim Johnson issued a memorandum to himself on June 15, 2015, stating he was eligible for a one-time Performance Stipend as result of his assignment as the Special Education Director/Pupil Services Director, and on July 6, he submitted an expense voucher in the amount of $44,020 for a performance stipend.
On August 4, 2015, Tim Johnson included a handwritten note explaining that the “performance pay” was to “clear out” the funds in his HRA account that had accumulated over the last five to seven years.
Tim Johnson accepted a transmittal form presented to Hiawatha State Bank, and authorized by Ron Johnson, to issue a payment of $25,314.17 to Tim Johnson, an amount that reflects the amount of $38,462.22 less payroll taxes withheld.
Intellex conducted a search of the Wisconsin Department of Public Instruction’s Educator Licensing online platform for Tim Johnson’s education licenses.
According to the DPI, Tim Johnson was never issued, and never held, a Special Education administrator’s license, the Intellex report states.
Alternative benefits
While employed as the district administrator in Glenwood City, Tim Johnson also received 226 payments for “alternative benefits” totaling $51,035.
Intellex reviewed Johnson’s employment contracts from July 1, 2013, through July 10, 2023, but did not find any references to compensating him for the alternative benefits for which he was compensated.
District leadership and accounting personnel informed Intellex that the “alternative benefits were ostensibly paid to Tim Johnson in lieu of insurance benefits he supposedly no longer received.”
Ron Johnson
Intellex reviewed Ron Johnson’s employment contracts, and in the 2018-2019 contract, Ron Johnson would receive $15,000 for “professional duties.”
Ron Johnson received a performance stipend of $15,000 for the 2017-2018 school year on July 10, 2018.
On May 4, 2019, Ron Johnson received another $15,000 payment as a performance stipend.
Both payments fell within the same school year, but the July 10, 2018, payment applied to the previous school year, except that there was no provision in Ron Johnson’s contract the previous school year that allowed the payment, according to the audit report.
From 2019-2020 to 2022-2023, Ron Johnson received the $15,000 performance stipends annually, which was allowed by his employment contracts.
All together, Ron Johnson apparently received $60,000 in stipends allowed by his contracts.
In June of 2022, Ron Johnson received a $500 performance stipend as directed by Tim Johnson.
In 2022-2023, Ron Johnson received a $500 performance stipend on February 10, 2023, and a $2,0000 stipend on June 6, 2023.
Intellex determined there was no provision in Ron Johnson’s employment contract for 2022-2023 allowing for the two payments amounting to $2,500.
All together, Ron Johnson received $17,500 for which there were no provisions in his employment contract.
Packerland
In 2020, GCSD opened accounts containing three portfolios with Packerland Brokerage Services, Tim Obermueller, financial advisor, according to the Intellex report.
The school district’s accounts with Packerland included an account for “Fund 46,” the capital improvement account in which school districts can put any money left over from the budget at the end of the school year to be used for a pre-approved list of capital improvements.
The Board of Education must approve the list of capital improvements.
Another Packerland Account was for “Fund 80,” the community service account which is used to pay for non-required school services such as open swim nights if the school district has a swimming pool or non-special education daycare — services that are community related.
The third Packerland account was for the GC Co-op Trust, which is the school district’s scholarship account.
The Intellex review of the account statements showed that Tim Johnson and Ron Johnson were the account holders.
Being the account holder means that the person who is holding the account is the owner of the money contained in the account.
In April of 2020, there were deposits made from the GCSD Hiawatha account for the capital projects fund in the amount of $120,000 that was deposited in the Packerland Fund 46 account.
There were two deposits made from the GCSD Hiawatha general account in the amount of $220,000 deposited into the Packerland Fund 80 account.
Two additional deposits from the GSCD Hiawatha account for the Glenwood Co-op Scholarship totaling $9,650 was deposited into the Packerland account for the GC Co-op Trust.
The total amount transferred was $349,650.
The Intellex report points out that under Wisconsin statute 66.0603, stocks are not generally acceptable for school district investments and all mutual funds must also include acceptable investments under the statute.
Of the 10 mutual funds within GCSD’s portfolios, nine contained securities that do not fall within the guidelines of securities accepted by Wisconsin statute 66.0603, according to the Intellex report.
The statement the school district issued on Friday regarding the release of the audit report indicates that “liquidation of inappropriate investment funds” is among the steps the school district has taken “to ensure that the types of actions taken by former employees will not happen again.”
Summary
In the section of the Intellex report titled “Summary of Stipends and Payments,” the report states, “It is our conclusion that Tim Johnson, as a result of his fraudulent misrepresentations and false claims, submitted for graduate courses not taken, GCSD has been damaged in the amount of $290,792 as is summarized below …”
The summary table includes $125,000 for educational stipends; $38,462 for the special education stipend; $51,815 for alternative benefits; and $75,515 in reimbursements.
The report goes on to say, “Further, it is also our conclusion that actions by Ron Johnson, as outlined above, have damaged GCSD in the amount of $17,500.”
Under the section “Additional Analysis,” the report states, “We reserve the right to amend this report based on information received after the issuance of the same. If called to testify, I expect to use certain exhibits at trial, and understand that I may be asked to express opinions in rebuttal of matters that are raised at trial.”
The report is signed by Eric Stephens, CPA, CFE.
At the beginning of the audit report, Stephens notes that he has 35 years of experience as a forensic accountant and that he co-founded Intellex Forensics in 2013.
