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April 6, 2013

Sellersburg Housing Authority Board discovers ‘bombshell’ of missing funds

Former housing authority director being investigated for fraud

SELLERSBURG — The executive director of the Sellersburg Housing Authority has been removed from her position and is being investigated for theft, forgery and official misconduct.

Sellersburg Police Department through an investigation believe Kathy Downes. the former executive director of the housing authority, wrote checks from the authority to a nonexistent landlord from 2008-12 and kept the money. A total of 47 checks were cited in a police report totaling $48,092. The alleged theft was discovered when Downes’ son received a letter from the IRS about unreported income from rental property.

According to the police report her son, who is 23, has never been a landlord and knew nothing of the checks with his name on them. At the time the first checks were written, he would have been 19.

As a result of the letter from the IRS, Sellersburg Police Detective Mark Levesque said the son contacted the state’s Housing and Urban Development office. The state then contacted the Sellersburg Housing Authority’s Board of Directors, which brought the matter to police.

BOARD REACTION

Mary Jo Trester, president of the Sellersburg Housing Authority Board of Directors, said the board members became aware of the allegations in late January.

“Our program, being so small, we thought it was under control,” she said.

The only program the Sellersburg Housing Authority administers is Section 8 housing assistance. The funding for the housing assistance comes from HUD and Trester said the checks are cut to the landlords for those who have applied, and qualified, for assistance. She added that all payments were still being made to the landlords of the tenants receiving the aid through the authority.

“That’s why we didn’t catch her,” said authority Board Member Bradley Walker.

According to the police report and several board members, Downes was writing additional assistance checks to herself, or her son, and keeping the money. Levesque said the board discovered there were a number of checks made payable to Downes, or two other names she used, Kathy Ellenbrand and Kathy Perkins.

“They found these checks are made payable to her,” he said. “These were in addition to her payroll checks.”

Board members also say they found some of their names forged on checks, as the checks require a co-signer.

“She forged our names; she wrote extra checks that we knew nothing about,” Walker said. “She put their name down as receiving money but she was taking the checks.”

“We never saw the checks until the investigation,” Trester added.

She added that HUD had not notified the board of any wrongdoing before January.

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