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$375K L’burg Mistake Check Cashed By Company; Criminal Investigation Underway

Posted On June 16, 2016

By Mike Perleberg

promaxima-check-lawrenceburg-06152016

An errant City of Lawrenceburg check for more than $375,000 has led to a criminal investigation into the company that cashed it. Photo by Mike Perleberg, Eagle Country 99.3.

(Lawrenceburg, Ind.) – Typos or accounting errors can usually be fixed with a tap of the “delete” key or some whiteout, but a mistake can be much harder to correct when it costs hundreds of thousands of dollars.

A seemingly minor slip-up in the City of Lawrenceburg Clerk-Treasurer’s Office back in 2012 has turned out to be a very pricey one costing more than $375,000 in taxpayer funds. Now, there is a criminal investigation into the Texas company which, city officials claim, essentially stole the city’s money.

“We’re going after it. We want it paid back in full,” says Lawrenceburg Mayor Kelly Mollaun.

Here’s where the story begins. In December of 2012, Lawrenceburg City Council approved a series of grants as part of the city’s now-defunct 10-County Regional Grant Program. One of those grants was for $850,000 to Proximo Distillers, a local employer which sought the grant to help with making upgrades at its operation bottling and packaging spirits from the nearby Lawrenceburg Distillery.

FLASHBACK: 2012 – Lawrenceburg Grants Keep, Create 1,128 Jobs

Like most other city funds, the checks for the grants were written and mailed out from the Lawrenceburg Clerk-Treasurer’s Office later that month. A check was written to Proximo for $375,547.97 of the approved funding.

Then the mistake happened. A second check for $375,547.97 was mistakenly written to ProMaxima Manufacturing Ltd. on December 11 and mailed to the company headquarters in Houston, Texas. Six days later on December 17, that check was cashed by ProMaxima.

Notice the similarities in the companies’ names – Proximo and ProMaxima – which may have allowed for the human error to occur using the clerk-treasurer’s accounting system. Lawrenceburg city attorney Del Weldon says it may have been a simple wrong keystroke or click of a button that caused the mistake check to be printed and mailed out.

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Photo by Mike Perleberg, Eagle Country 99.3.

ProMaxima is a privately-owned fitness equipment manufacturing company. The city purchased equipment from the company for the Lawrenceburg Police Department several years ago. ProMaxima never applied or was approved for a city grant, but it got one when the check showed up in its mailbox.

“It’s very unfortunate,” says Mollaun, who only took office this past January. “I’m sure it was an honest mistake for us to send it out, but not an honest mistake for the gentleman to cash the check.”

The city would eventually catch the error when an accounting firm was hired to assist the clerk-treasurer’s office – Jackie Stutz was the elected clerk-treasurer at the time – in closing out accounts. City records obtained by Eagle Country 99.3 indicate that the clerk-treasurer’s office reached an agreement on a reimbursement plan with ProMaxima in early 2015. ProMaxima made it’s first $2,500 payment to the city on March 9, 2015, then a second payment on May 20, 2015. However, city records show no additional repayment installments have been made at any time since.

Mollaun’s term in office began January 1. The new mayor says city coordinator Bryan Messmore was tasked with reviewing grants that may have been overpaid. That’s when the administration first learned about the $375,000 kept by ProMaxima Manufacturing

Weldon and Mollaun say the city requested the Dearborn County Prosecutor’s Office investigate the matter.

“It’s theft. It’s fraud. It’s a criminal offense,” says Weldon.

It is unclear if the criminal investigation is focused on the entire company or a specific individual.  The Dearborn-Ohio County Prosecutor’s Office has not been willing to comment because, as Prosecutor Aaron Negangard says, the investigation is ongoing.

At least some members of Lawrenceburg City Council at the time the check was written and cashed were oblivious to the accounting flub. Former Lawrenceburg city councilman Mike Lawrence says he didn’t learn of the $375,000 mistake until after his council term expired at the end of 2015. Eagle Country 99.3 only discovered it after uncovering a March 7, 2016 subpoena for a criminal investigation by the Dearborn County Special Crimes Unit.

Former Lawrenceburg city attorney Leslie Votaw says that former mayor Dennis Carr was aware of the ProMaxima situation, but she could not recall if it was ever brought to the attention of city council in a public meeting or otherwise.

“We didn’t necessarily want to charge them criminally, but they admitted that they owed it and started paying on it,” Votaw says.

When the payments stopped and it became clear ProMaxima would not be repaying the city’s money, the Carr administration asked the Lawrenceburg Police Department to investigate the matter late last year.

“When they stopped paying, there wasn’t any more contact from them. We would try to get ahold of them and they wouldn’t return any emails or calls or anything,” Votaw recalls.

Votaw adds that no money was owed to ProMaxima at the time that the errant check was cashed by the company.

Eagle Country 99.3 attempted to contact ProMaxima Manufacturing’s CEO, Rafael Carrasco, on June 14 and again on June 15 to seek comment. Calls to his office were not returned.