The Paonia Town Council and staff are facing the issue of how much of what was stolen by the town's former finance officer, Kristin Chesnik, is recoverable. Chesnik was sentenced to four years for theft of town funds.
On Aug. 27, town attorney Jim Briscoe advised the trustees of what he had learned. The town's insurance carrier, CIRSA, will only cover $150,000 of the loss. Briscoe consulted with an insurance attorney who said the town could claim a $150,000 loss per year of theft, but the attorney was not optimistic about a favorable outcome should the town pursue it.
"Since the town has already incurred over $80,000 in assisting with the investigation and prosecution of this matter, it's my personal opinion that we probably don't want to spend much more money without some better opportunity to receive some benefit from it," Briscoe said. "Normally the insurance company is first in line for receiving what we call restitution ... CIRSA has agreed that they will defer to the town's right of restitution and the town would be entitled to all of the first dollars of restitution up to the maximum collection. That would be a long shot that the town would collect all the money the town has lost."
The town's CIRSA policy has a $1,000 deductible, so the town would receive only $149,000.
CIRSA has provided a sworn statement and proof of the town's loss. "They are willing to agree that the town will be entitled to all the dollars that are paid up to the maximum loss before CIRSA receives any part of that restitution. In return for that agreement, they wish the town to accept the $149,000 payment in full satisfaction of our insurance claim," Briscoe said.
Answering a question from trustee Eric Goold, Briscoe explained that the Internal Revenue Service will "have to stand in line for their money" owed by Chesnik. What she stole was considered income by the IRS.
Briscoe stated that under the judge's order of restitution the collection of restitution will be handled by the court.
Briscoe discussed the situation with the court clerk about the town possibly filing a civil action for the remainder of the funds. The court clerk told Briscoe that if that was the town's decision they would then turn the collection process over to the town and the court would no longer be involved in the collection.
Briscoe further advised the town to not bother with the expense of a civil suit. "We already have an order of restitution for $383,000 through the criminal court and the chances of collecting that are limited. If we go to a civil action, we will be filing an action against a defendant who is incarcerated which complicates the lawsuit, increases the expense [and] we end up with a paper judgment which will not produce a single dollar more than what we'll get through the restitution order that currently exists in the criminal court."
Briscoe asked the trustees to consider approving CIRSA's sworn statement and proof of loss so it can be submitted and the town paid $149,000. He said he did not need any direction about the civil suit that night.
The trustees did approve his recommendation.
Cindy Jones, the current finance officer for the town, will speak with the town's auditor, Pete Blair, about whether there are any restrictions in the way the $149,000 can be used by the town. The money was stolen from various town funds.
Possible civil action will be discussed and perhaps acted upon at the Sept. 10 council meeting.blog comments powered by Disqus