State auditor proposes bill to jail public employees who embezzle

By: - February 27, 2020 1:35 pm

An Iowa attorney is facing a possible revocation of his law license for allegedly misappropriating client funds and neglecting clients’ legal matters. (Photo by Getty Images)

A bill pushed by Iowa State Auditor Rob Sand, a former prosecutor, would require jail terms for most public employees convicted of taking large amounts of money from taxpayers.

Sand said he wants to stop public employees — including, for example, state lawmakers and people working for schools, cities and counties — from treating their employers like banks offering no-interest loans. To Sand, that’s what happens when public employees embezzle money from taxpayers and are merely required to repay their employer without serving time in prison.  

In an interview, Sand aide Andrew Turner said the impetus for House Study Bill 617 grew out of Sand’s time as an assistant attorney general in Iowa before he was elected auditor and took office in January 2019. The bill awaits action after passing the House State Government Committee.

“We see all the time in Iowa people will steal huge sums of money and then their defense lawyer argues, ‘Well, how are they ever going to pay back the money if you send them to jail or whatever? So just give them probation, let them pay back the money,'” Turner said.

“What happens a lot of times is that because these financial-crime cases are very taxing on the county attorneys, they end up just cutting a plea deal right away and they don’t even take it to court because they know no judge is going to sentence this person,” Turner said.

“Rob would say it becomes an interest-free loan if you’re just letting these people just pay back the money that they stole and there’s no accountability,” Turner said. “And then, as taxpayers, people get really disillusioned because they constantly see people stealing $100,000, $50,000 or whatever and there is no real punishment for it.”

The bill as passed by the committee would ban deferred judgments and deferred or suspended sentences if the public employee took more than $1,500. Turner said that because the ACLU of Iowa and the Iowa Association of Justice has suggested that measure would be too punitive, Sand’s office plans to amend the bill so it would apply to cases involving more than $10,000. At either level, the crime would be a felony.

To address other concerns, language also will be added to give judges additional discretion in cases with “mitigating circumstances,” such as, say, a person who steals money to pay for chemotherapy, Turner added.

Many cases, though, involve premeditated theft over time, Turner noted. Sand wants those people to know that ripping off taxpayers has consequences.

“A judge can decide what that sentence looks like,” Turner said. “It might make sense to do a shock sentence, which is, like, three weeks. In some cases, it might make sense for the sentence to be six months or a year.”

Embezzlement can have a wide effect. Turner said one central Iowa county had to lay off an employee who had been specially trained for a new position the county created. Someone stole an amount of money equal to the budget for that new position and so the job was eliminated. 

Turner said these crimes typically are far from a convenience-store robbery or other spur-of-the-moment offenses. “It is a very sober, conscious action to continuously steal large sums of money from taxpayers over time. These people are in positions of power, positions of trust. They take advantage of their positions.” 

The bill would apply both to public employees and vendors who are being paid with taxpayers’ money, Turner said. “I bet 99% of the time it is going to be a public employee,” he added. “Our hope is we will see less embezzlement cases.” 

The ACLU of Iowa and the Iowa Association of Justice registered as opposed to the bill. The justice association plans to shift to “undecided” once the planned amendments to the bill were added, said lawyer Robert Rehkemper of the Criminal Defense Core Group in the association.

Rehkemper said he found it “refreshing” that Sand’s office would respond to concerns. Still, his group doesn’t like any bill that appears to favor or require prison sentences up front and at least partially limits what a judge can do, he said.

“I understand where the bill is coming from and what it is trying to achieve, I really do,” Rehkemper said. “But one of the important functions of the judiciary is to exercise discretion. We have difficulty with anything that mandates prison.” 

ACLU of Iowa spokeswoman Veronica Fowler said her organization still opposes the bill. She hadn’t seen any proposed amendments. 

“Let’s do things that actually solve problems,” Fowler said. “One-size-fits-all sentencing just doesn’t work. And there are no studies suggesting these penalties would be a deterrent.” 

“We have a problem with tying judges’ hands so they don’t have the discretion to allow for individual circumstances,” Fowler said. 

Regarding Sand’s contention that embezzlers are in effect borrowing money interest-free from taxpayers, Fowler noted that many judgments require repayment with interest. 


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