By Sam Wilson
Daily Inter Lake
OLNEY, Mont. — Residents of the small community of Olney north of Whitefish are calling for an investigation into possible embezzlement within the local fire department, alleging that tens of thousands of tax dollars were misappropriated within the past year.
On Wednesday night, the Olney Rural Fire District Board of Trustees accepted the resignation of Fire Chief Ken Morehead, and several residents signed a written request for the Flathead County Sheriff’s Office to investigate a pattern of questionable spending.
During the fiscal year that ended June 30, the Olney Fire Department spent more than $167,000, according to the board’s annual expense report. Expenses were almost $25,000 over budget and more than $100,000 more than the newest annual budget passed by the board of trustees Wednesday. The new budget includes $27,000 in loan payments.
After guiding the district’s board through the passage of its next annual budget, County Commissioner Phil Mitchell addressed a visibly frustrated crowd of about 50 people packed into the fire hall’s meeting room.
“I think there has been a major, major, major misuse of funds here,” Mitchell said. “I would like to see prosecution take place.”
Rumors of alleged embezzlement have circulated for some time in Olney, according to multiple residents in the community of roughly 200 people. Mitchell said he began digging into the issue over the last few months after receiving multiple phone calls from concerned residents.
Fire districts in Montana are relatively autonomous, governed by boards of elected trustees but not subject to county oversight. The board is responsible for managing the district’s tax revenue and its fire department staff, and Mitchell called Morehead’s temporary position on the board a clear conflict of interest.
Morehead, who resigned as a trustee last month, did not attend Wednesday night’s meeting. In a Thursday phone interview, he said he only took the position last year following the death of a trustee on the vacancy-plagued board.
“I didn’t want to be in that position,” he said. “I never voted for anything on the trustees, I was just sitting in.”
Morehead acknowledged that he has used “bad judgment” in the past, but said many of the past year’s expenses being scrutinized by taxpayers were part of an effort to retain the 10 or so volunteer firefighters and emergency medical responders in his department.
“It’s hard to get firefighters, and when we do, the ones we have, you’ve got to appreciate them for what they do,” Morehead said. “I think it’s important to show them that we do care.”
During Wednesday night’s meeting, however, Olney residents questioned several items in last year’s expense report: $4,272 spent at Lowe’s for a fire-hall freezer, table and chairs; more than $1,200 from Costco and Walmart for a wedding reception and a Christmas party; $2,000 donated to a firefighter to pay for his wife’s funeral; over $4,000 in gift cards from Safeway; and tens of thousands of dollars spent at local auto parts businesses with little or no documentation.
Sandy Carlson, the county’s chief financial officer, said she worked with the trustees over the past couple of months to piece together the expense report, with few of the items justified by invoices.
“You never pay for anything unless you see a detailed invoice, and 80 percent of the things they paid were either from a statement, which has no detail on it, or a check stub, which is just the opposite side of the check,” Carlson said Thursday.
Over $15,000 paid out to Morehead and two other people was listed as building maintenance and supplies, but the only documentation came in the form of check stubs. Tens of thousands of dollars in other expenses had similarly scant documentation for maintenance, supplies or not explained at all.
Carlson said she modeled the 2016-17 budget on that of the Badrock Fire Department, which has a similar size and coverage area. She said Olney residents will see a more than 50 percent drop in their fire taxes as a result, and they could see further reductions as the district rebuilds its cash reserves.
Many of the new budget items are significantly scaled back, such as the nearly $14,000 spent on fuel last year dropping to $2,500. The budget includes a note, “fuel for response only,” and no money has been budgeted for building maintenance.
Morehead defended the district’s large budget and the resulting high taxes, calling it a systemic problem predating his approximately four-year tenure as chief. Previous boards would annually increase the budget after the prior year’s supply of money had been exhausted, he said.
“Every year the trustees, not the ones we have now, when they made out the budget they would add extra money, maybe $500, and submit it and every year that would bump up taxes,” he said. “I was told not to let the budget go down because if we did, we’d lose it.”
While Morehead declined to name those who provided that guidance, he said he accepts the responsibility for the district’s finances and added that the three current board members had been “blindsided” by the situation.
“It lies with me,” he said. “I signed off and I knew that was going on.”
While Mitchell, the trustees and other residents said they believe the former fire chief had a hand in the department’s questionable spending practices, Olney resident and former trustee Jeff Mielke told the board members that they also could be implicated for neglecting their elected duties.
“That’s my stinking money,” Mielke told the board. “Nobody gives me that, yet I give it to this outfit here.”
Mielke said about a third of his taxes go to the local fire district — taxes that he calculates have soared more than 300 percent increase in recent years.
District trustee Doty Therrien responded, “I can tell you for a fact that us three trustees are more pissed than anyone here.”
By their own admission, board members said that Morehead called the shots for much of his tenure as chief, despite the board’s supervisory role over department employees.
“He said, ‘I’m your boss, I can tell you what to do,” Therrien said after the meeting. “All of us, we’re very disappointed.”
Mitchell said that the district’s financial situation underscores the importance of public attendance at government meetings, and stressed the need for governing bodies to fully understand their responsibilities.
“Any time you’re ever put on a board, the trustee has power,” Mitchell said. “They have responsibilities and if you don’t do them, don’t get on the board — because this is what happens.”
Sheriff Chuck Curry said he hadn’t received the residents’ allegations as of late Thursday afternoon, but his office would follow up with an investigation when the complaint is officially filed.
Copyright 2016 the Daily Inter Lake