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New stipulation approved in Chesnik case

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At the Oct. 27 public meeting, the Paonia board of trustees voted unanimously to approve a stipulation for entry of judgment related to the civil suit filed in October 2014 against former town finance officer Kristin Chesnik, who has admitted to embezzling hundreds of thousands of dollars from the town treasury between 2007 and 2011.

While the town was originally seeking restitution in the amount of $647,582, the stipulation in the civil case asks that Chesnik repay $481,833, which represents the $393,110 and change she admitted to stealing in the criminal suit, plus the $88,723 in costs the town incurred since 2011 as a result of the theft, according to town attorney David Marek. The town is also entitled to judgment for $724 in filing and other fees.

In October 2012, Chesnik was found guilty in the criminal case of class 3 felony theft and sentenced in 2013 to four years in prison and a mandatory five years of parole. According to a letter from the Victim Services Unit of the Colorado Department of Corrections, dated Aug. 3, 2015, and addressed to the Town of Paonia, she was considered at the time an inmate under intensive supervision and scheduled for a parole hearing in October.

While the town could attempt through the courts to connect Chesnik to the full $647,582, Marek recommended that the board accept the stipulation and restitution amount, citing two reasons: the fact that it would be difficult to prove the larger amount lost is a direct result of Chesnik's actions; and that "trying the case would be expensive and an increased judgment would most likely not be collected in full."

Because the town is unlikely to collect even the $481,833, accepting the stipulation makes sense, said mayor pro tem Charles Stewart.

Marek stated that over the past several months, through the legal process known as "discovery," he sought to determine Chesnik's assets, how she took the money, and if she still possessed any of that money. He relied on deposition testimony from Chesnik and examination of tax returns and bank records. The town also hired an investigator.

Reading from a prepared statement, Stewart said that in both the criminal and civil cases, Chesnik claims she didn't steal all the money alleged. Rather, the balance was used to pay the town's expenses with cash, a policy the town no longer allows.

According to the statement, Chesnik was originally hired by the town to answer phones and perform clerical work. In 2006, when town manager John Norris and finance director Karen Peterson resigned, she was appointed town finance officer, "despite no financial training, only a high school diploma, and a prior misdemeanor of theft conviction." She was given no training, was incapable of using town financial software, and was left unsupervised, said Stewart.

Stewart stated that her methods were neither sophisticated nor deceptive, and that a review of bank statements and two wastewater accounts would have revealed the thefts.

More recent examination of town records revealed that Chesnik withdrew cash from the general operating account using town ATM cards, cashed checks written to herself, and used town debit cards to pay personal expenses. In 2005, she stole $20. In 2006, she took $730.82. "Her thefts began in earnest in 2006 and hit a peak in 2010 and 2011," said Stewart. During criminal proceedings, she admitted to stealing $20,076.95 in 2007, $37,400.50 in 2008, and $47,185.33 in 2009. Between 2010 and 2011, she took $288,447.48.

In the criminal case, the amounts "could be traced directly to Chesnik," Stewart read. In the civil case, it was the town's position that an additional $165,225.94 was unaccounted for, as it could not be traced directly to Chesnik's actions.

During the investigation, town employees admitted to paying cash to contractors as part of the sewer plant decommissioning project, but the receipts are missing. "The fact that cash was used makes it impossible to determine the exact amount of cash stolen by Chesnik," read Stewart.

In examining how the money was spent, investigations concluded that Chesnik used money to gamble, albeit on a limited basis. Other money went to remodeling of two homes, one of which was foreclosed on, and the other house, as well as the vehicles she uses, all of which are all fully encumbered.

Approving the stipulation "... doesn't mean the case is over, that doesn't mean that we're going to cease pursuing collection," Marek told trustees prior to the vote. To date it has received $149,000 in insurance money and tax refunds it intercepted. Her final paycheck of $921.47 will be retained by the town and applied to judgment. Any payments for restitution regarding the case will also be applied to the judgment.

The town has done the best it could in pursuing Chesnik's assets, said trustee Dave Bradford. " I think we have reached the point of diminishing returns."

"I applaud the work of our trustees and auditors to secure a criminal conviction, jail time, and a civil judgment," said mayor Neal Schwieterman after the meeting. "The town will also continue to pursue other remedies as they avail themselves and move forward, putting this regrettable incident behind us, but not forgetting the lessons."

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North Fork
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