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April 25, 2013

Prosecutor: Ex-Sellersburg housing director wrote $58,000 in bad checks

Former housing head charged with 62 counts in Clark County

JEFFERSONVILLE — The former executive director of the Sellersburg Housing Authority was charged with 60 counts of forgery and one count each of theft and official misconduct in Clark County Circuit Court No. 4 on Thursday.

Katherine G. Downes, 44, was removed from her position earlier this year when the Sellersburg Housing Authority discovered that she had allegedly been writing checks to herself and in her son’s name, and forging the board members’ signatures.

According to the probable-cause affidavit, the total amount of the checks Downes illegally wrote from 2008-12 totaled $57,768 while she was serving as the executive director of the Sellersburg Housing Authority.

“It was a betrayal of the public trust, she was working with public funds and she did steal those funds,” said Clark County Chief Deputy Prosecutor Jeremy Mull. “So at this point, the process will be to go forward and try to do whatever we can to try and recoup those funds and return that money to the taxpayers where it belongs.”

Mull said the prosecutor’s office charged Downes for each count of forgery and then the theft and official misconduct charges were rolled into single charges. He added since the charges were filed in state court, it is unlikely that federal charges will be filed.

The money that was allegedly stolen came from federal Housing and Urban Development Funds Section 8. Section 8 housing assistance comes from HUD, and Mary Jo Trester, president of the Sellersburg Housing Authority Board of Directors, said previously the checks are cut to the landlords for those who have applied, and qualified, for assistance.

The alleged theft was discovered when Downes’ son received a letter from the Internal Revenue Service about unreported income from rental property.

According to the probable-cause affidavit, 35 checks were written to Downes’ son Dustin Kuhn, 23. He told police he 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 Kuhn 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.

The federal 1099 form listed Kuhn’s address as Atkins Court, but he told police he never lived on that street, but that Rick Ellenbrand, Downes’ ex-husband, did have rental property there, according to the probable-cause affidavit.

Another 32 checks were provided to police as having forged signatures, 30 of which were made payable to Downes, Kathy Ellenbrand, Katherine Ellenbrand, Katherine Perkins and Kathy Perkins — other known names.

After the arraignment hearing, where a not guilty plea was entered, Downes’ attorney Larry Wilder said a divorce, the loss of one of her sons, the loss of a grandchild and medical problems caused the financial difficulties in her life.

“Kathy ... doesn’t have the ability to post bond. She understood today that she was going to go to jail ... she knew what was going to happen, she knew the consequences of what has occurred,” he said. “She knew this day was going to come; she didn’t go anywhere, but here through this door, to accept responsibility of what occurred.”

When asked what Downes was spending the money she was collecting on, Wilder answered, “living.”

Wilder added that while a not guilty plea was entered Wednesday, he said he hopes to get in the system of negotiating with the prosecutor’s office to determine a reasonable way to address the charges.

“Hopefully, what we’re going to be able to do is figure out a way for her to be able to stand up and get in a position where she can pay back ... the money that was taken and she will accept whatever the punishment is,” Wilder said.

The charges filed Wednesday included forgery, a class C felony, and theft and official misconduct, both class D felonies.

Bond was set by Clark County Circuit Court No. 4 Judge Vicki Carmichael at $30,000 cash-only. Downes’ next scheduled appearance in court is June 24 and an initial trial date was set for Sept. 17.

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