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Red Rocks Ranch Homeowners’ Association, June 13: Prosecutor discusses Unger embezzlement case

By John Heiser

The prosecutor for the criminal case against Patricia Unger met with residents at the Red Rocks Ranch Homeowners’ Association (RRRHOA) meeting June 13. Unger is accused of embezzling $315,000 from the Forest View Acres Water District (FVAWD).

Robyn Cafasso, Senior Deputy District Attorney for the State Fourth Judicial District, said Unger is charged with one count of theft, which is a felony, and 16 counts of forgery. Cafasso said conviction on the theft charge would automatically include conviction on the forgery charges. She added that there were more instances of alledged forgery, but the 16 specific documents were chosen based on the "egregiousness of the forgery and the amount."

Cafasso said that if convicted of a felony, Unger would have a permanent criminal record and could receive a sentence of up to 12 years in prison. Cafasso said, "It is my position that she should go to prison."

Cafasso noted that alternative sentences include probation or community correction and that residents of the FVAWD can address the judge prior to sentencing, which would come 6-8 weeks after a guilty verdict or plea.

Cafasso cited a recent first-time conviction in an $350,000 embezzlement case in which the defendant received six months in county jail with work release and 15 years probation. In another case, she said a convicted embezzler of $1.5 million received a 10-year prison sentence.

She said that under the community correction program, inmates are released to work during the day and return to the facility at night. She said there are two private facilities in El Paso County offering community correction. The inmates must pay about $25 per day. Cafasso said she is not a fan of community correction because the $25 per day is not going to victims as restitution.

Cafasso said that in this case, as in virtually every case, some attempt at plea-bargaining occurs. She said, "The purpose is to ensure that justice is met and avoid a trial." She added, "We are lucky to get two trials per year."

In this case, all the parties have agreed to enter into mediation. Cafasso said mediation is like plea-bargaining except that a third party, the mediator, is involved. The mediator in this case is Senior Retired Judge Richard Toff.

The parties to the mediation are Cafasso, Unger, the attorneys in the civil case, and the attorneys in the criminal case. Each of the parties will be in a separate room, and the mediator will shuttle from room to room.

In response to questions, Cafasso said that up to three residents of the district could be present as spectators. Later in the meeting, RRRHOA board member John Sharp was appointed as a spectator. FVAWD board member Brian Cross reported that the FVAWD attorneys in the civil case told him they do not want anyone present except the board’s representatives.

Regarding who accepts or rejects the result of the mediation, Cafasso said, "I represent the people of Colorado and the ultimate decision will be up to me." She said she would consider the wishes of the victims, that is, the wishes of the residents of the FVAWD. She noted that the judge could decline a mediated agreement.

The preliminary district court hearing on the Unger case was continued to July 12, 10 a.m. Mediation is scheduled for July 8, 8:30 a.m.

District resident Ketch Nowacki requested that as a part of any settlement, Cafasso require documentation of what Unger did, when she did it, and who else was involved. He said the residents were interested in whether there was any "deliberate indifference" on the part of the FVAWD board.

Cafasso said that if Unger enters a guilty plea, then she must give a recitation of what she is guilty of. Cafasso said an exit interview of Unger by a detective could be required. She added that an accounting of Unger’s assets could also be a requirement of any mediation agreement.

Forest View Acres Water District, June 15: Recall initiated against two board members

Below: FVAWD resident Susan Gates reads the recall petitions into the record. Seated at the table (L to R) are board members Barbara Reed-Polatty, Kevin Lonergan, Brian Cross, and John Anderson and contract water operations manager Dan LaFontaine. Photo by John Heiser

Zoom in

By John Heiser

More than 20 people attended the June 15 special meeting of the Forest View Acres Water District (FVAWD) board of directors. The meeting was rescheduled from June 8.

Four of the five directors—Kevin Lonergan, John Anderson, Brian Cross, and Barbara Reed-Polatty—were present. Tom Guenther, president of the district, was out of town on business. Vice president Lonergan presided.

During the meeting, petitions were read into the record calling for the recall of Guenther and Lonergan.

Background

The late Hugh Nevins established the FVAWD in 1957 to provide water to 27 homes. Currently, FVAWD provides water service to 280 residences in the Red Rocks Ranch, Clovenhoof, Villas, Sundance Estates, and Shiloh Pines neighborhoods in unincorporated El Paso County. A five-member board of directors governs the FVAWD. The district has a contract water operations manager, Dan LaFontaine, who is responsible for maintaining the equipment and infrastructure and for managing all aspects of water delivery.

In February, a warrant was issued for the arrest of former contract office manager Patricia Unger on charges of embezzling more than $212,000 in district funds. That amount was subsequently increased to $315,000. Unger surrendered to authorities Feb. 16 and was released on bail awaiting a preliminary hearing, which was initially scheduled for April 18 and then postponed to May 19.

The May 19 hearing was continued to allow time for mediation and completion of the audit by Sheri Betzer, a forensic auditor, hired by the district. Subsequently, the District Attorney’s office consulted with Unger’s lawyers and the facilitator for the mediation, and scheduled mediation for July 8 and continued the preliminary hearing to July 12.

The district has filed a civil suit against Unger to recover the missing funds. The nonbinding mediation is intended to address the civil and criminal aspects of the case.

Public comments

District resident Ketch Nowacki asked the board to name someone other than Guenther and Lonergan as primary representative for the district during the mediation.

Reed-Polatty replied that Cross has volunteered to serve in that role. She added that she has also asked to attend the mediation sessions as an assistant to Cross.

District resident Craig Ketels asked if $315,000 is the actual amount of missing funds. Reed-Polatty replied that the sheriff’s office has evidence to support the $315,000 but that the forensic audit could determine that the total is higher. She added that the audit was to be completed by June 9 and the auditor has submitted an invoice indicating that the work has been completed.

Referring to a recent letter sent to district residents proposing the recall of board members, former board member Jeff Walker suggested that the parties "sit down in a room and discuss the situation." Resident Susan Gates suggested that Walker join the recall committee. She said, "We have open discussions." Former board member Pat Berkart said the letter misstates the situation and the condition of the district.

Resident Ed Taylor asked for an estimate of the attorneys’ costs associated with the Unger case. Lonergan replied, "Tens of thousands of dollars."

Taylor asked if the district would be imposing water restrictions this year. Lonergan replied that water restrictions have been imposed only when there were mechanical failures in the system and those lasted at most one or two weeks.

Former board member Jeff Dull asked for the status of the chlorine problem. Lonergan replied that the water system, like many designed in the late 1960s has one pipe running to the tank. He said, "When the inflow and outflow are balanced, the water in the tank doesn’t move."

Lonergan added that the district currently accumulates water in the tank during the week and then uses the water from the tank during weekends. He said a modern design would include another pipe to the tank so the water continuously flows through the tank, giving more time for the chlorine to act. Adding the second pipe is one of the projects affected by the district’s financial situation.

Lonergan noted that the Colorado Department of Local Affairs (DOLA) is holding grant money that could be used for some additional work.

Operations manager report

Some highlights of LaFontaine’s report:

Billing report

Some highlights of the billing report for May:

Financial report

Lonergan reported that the operating account balance stands at $18,929, the debt service account stands at $3,601, and the contingency account stands at $1,500.

Invoices paid

The board unanimously approved checks totaling $18,832 for a variety of bills including $4,406 for LaFontaine’s services, $2,800 toward the $23,321 owed to Henkle Drilling, $2,518 to forensic auditor Sheri Betzer, $2,000 toward the $32,843 owed to law firm Petrock & Fendel, $1,280 for part-time contract bookkeeper Anne Bevis’ services, and $588 for electricity.

Bookkeeper’s report

Bevis reported that she is continuing to set up QuickBooks with a basic chart of accounts and has started a master customer list including owners of vacant lots. She recommended the district purchase information from the El Paso County Assessor’s office to help with that.

Recall initiated

Gates announced that a recall committee has been formed and has decided to initiate the recall of Guenther, who has served on the board for over nine years, and Lonergan. She read into the record, the following text duplicated in both draft recall petitions:

(The two board members) "…should be recalled for gross negligence in carrying out his fiduciary responsibilities and for failing to apply a degree of attention or care expected of a person in his position as member of the Board. The current deteriorated condition of the District’s assets, lack of comprehensive plan for repair and replacement of fixed assets, and the crime of opportunity allegedly perpetrated by a member of the District’s Staff resulting in the verified loss of more than $300,000 of District funds can be attributed directly or indirectly to (the two members’) failures and negligence while on the Board."

Gates then asked Lonergan if he wished to resign. He said, "No."

Schmidt inclusion

Leroy Schmidt said he has a house on 40 acres with a formerly low-producing well that has gone dry. He said he has no intention of subdividing the property. He said he would pay a tap fee, legal fees, and the cost of running pipe to his property and would transfer the water rights associated with his property. He asked for a waiver from the district’s inclusion fee, which Lonergan said would be about $120,000 for the property.

Reed-Polatty said the district should research the history of waivers from the inclusion fee.

LaFontaine suggested the district could enter into a temporary service agreement to provide water to the property using a temporary line until the details of the inclusion can be resolved.

The board unanimously voted to enter into the temporary service agreement with Schmidt and to accept the inclusion petition for review.

Posting requirements

Reed-Polatty reported that she attended a recent training session for board members presented by the Special District Association. The session included information on the statutory requirements for posting notices of meetings. She highlighted the following points:

Cross elected treasurer

The board unanimously voted to elect Cross to be the district’s treasurer. Cross abstained from the vote.

Arapahoe well servicing

Lonergan reported that AmWest removed and replaced the pump, scrubbed the screens, and videoed the well. He reported that after the work was completed, production increased from 97 gallons per minute to about 115 gallons per minute. He said the work took nine or 10 days, and the well is now back in full operation.

Taylor said, "You need to have a schedule for preventative maintenance."

The board passed a motion to add creation of a preventative maintenance schedule to the responsibilities of the technical committee.

More on the recall

Cross said, "Four or five people have commented that items in the letter [regarding recall of Guenther and Lonergan] are misleading or inaccurate."

Walker said, "You can’t do justice to the issues with a written response. You need to get everybody in a room."

Resident Pete Pettigrew said, "I set the whole [district] up in the 1990s and got the $880,000 grant. You better get a letter out. "

Jeff Dull, Walker, and Birkart volunteered to help prepare a response to the allegations.

The board unanimously approved writing a letter regarding the condition of the district.

Reed-Polatty noted that no district funds may be used in responding to the recall.

Nowacki added, "It is okay to address the condition of the district but not the recall of the two individuals."

He added that the petition is being submitted to the court for approval, and an informational meeting on the recall will be held in July.

Executive Session

The board unanimously voted to go into executive session to discuss confidential matters regarding individual billing issues.

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The Forest View Acres Water District normally meets the second Wednesday each month at 7 p.m. The next regular board meeting would normally be held July 13. Those wishing to attend are encouraged to confirm the date, time, and location by calling the district at 488-2110.