Athol’s former city clerk will serve four years in prison for embezzling nearly $418,000 from the small North Idaho city’s budget over five years.
Sally R. Hansen, who served as the clerk from 2009 to 2014, was sentenced to federal prison Tuesday and ordered to pay nearly half a million dollars in restitution and fines.
Athol Mayor Darla Kuhman said Hansen was respected and liked by City Council members, which made it easier for Hansen to embezzle the money.
“It will take a long time for that trust to be developed again,” Kuhman said.
According to court documents, shortly after she started as Athol’s city clerk in 2009, Hansen began making fraudulent wire transfers between various city accounts, and then depositing funds into her own personal bank account by writing fraudulent city checks to herself and her husband. Hansen admitted to embezzling nearly $418,000 from the city through the scheme.
In a plea agreement that Hansen, 39, signed in January, she admitted the charges and agreed to serve prison time and pay restitution and fines. U.S. District Judge Lynn Winmill ordered Hansen Tuesday to pay $434,112 in restitution to the city of Athol plus a $15,000 special assessment; he also ordered her to serve three years of supervised release after her 48-month prison term.
Hansen maintained the charade by ignoring or blocking council members’ requests to see the budget, saying she was too busy, Kuhman said. She would also cancel City Council meetings, claiming there was nothing on the agenda.
Hansen was Athol’s city clerk from May 2009 until she was fired June 18, 2014. Her duties included coordinating payroll and money transfers, paying vendors, and receiving money for water, sewer and tax payments. During that time, according to court documents, she wrote 227 fraudulent checks from the city to herself or her husband, in some cases forging the signatures of two mayors during her tenure. She was initially charged with 15 counts of wire fraud.
Hansen’s actions came under scrutiny when former Athol Mayor Lanny Spurlock died in January 2014. At that time, Kuhman became mayor and started to put more pressure on Hansen, for among other things claiming overtime pay while only working three days per week and forging bank statements, Kuhman said.
Kuhman said some City Council members resisted her efforts to investigate Hansen.
“They were angry with me for interfering with her work,” Kuhman said. “One City Council member said, ‘I don’t know what kind of vendetta you have against her but I don’t want any part of it.’ ”
Kuhman claims that as she prepared to report Hansen to the Kootenai County Sheriff’s Office, she talked to council member Shane McDaniel. Immediately after, McDaniel called and warned Hansen.
“I really don’t fault the City Council as much because she was so good at fabricating those documents,” the mayor said.
McDaniel denies that he gave Hansen any warning.
“She’s just trying to make headlines for herself,” he said.
McDaniel said the only thing Kuhman did was notice a check written to the wrong person.
Kuhman and McDaniel agree that no one else likely was involved besides Hansen.
McDaniel said Hansen’s status in the community didn’t affect the council’s judgment.
“Obviously there were mistakes,” he said. “But the biggest mistake is you trust people.”
The case was investigated by the Kootenai County Sheriff’s Office and the U.S. Secret Service.
“The crime Ms. Hansen committed greatly affected the citizens and taxpayers of Athol,” said Wendy Olson, U.S. attorney for Idaho, in a news release. “Her repeated violations of her oath of office and responsibilities to be a good steward of the public trust have appropriately ended with a prison sentence.”
Attempts made to reach Hansen’s attorney, Douglas Pierce, were unsuccessful.
Lori Yarbrough, who has served as the Athol city clerk for nine months, said the city’s finances remain in disarray. Currently, the city reports spending about $500,000 a year based, in part, on Hansen’s work. But Yarbrough believes the actual spending is closer to $300,000.
“The records are just not there,” she said. “It’s a very challenging position.”
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