Auditor uncovers alleged financial improprieties in 5 Nebraska communities

Nebraska State Auditor Mike Foley announced Tuesday that recent audits uncovered alleged misuse of funds in five Nebraska communities.

Around 2,500 political subdivisions and other local governing bodies in Nebraska are required to file annual audits with the Auditor of Public Accounts. State statute allows that requirement to be waived upon a request approved by the APA. When determining whether to grant a waiver, Foley’s staff examines financial records submitted by the requesting entity to ensure that its financial affairs appear to be in order. Those examinations have led to alleged misuse of funds in Nebraska communities.

“This series of audit findings is both disheartening and instructive,” Foley said in a press release. “On the one hand, it is deeply troubling to know that in a state like Nebraska, where core values of honesty, decency, and integrity serve as the very bedrock of society, such apparent misconduct remains so widespread. At the same time, though, these findings serve as a stark reminder that threats of fraud and theft of public funds are pervasive, and constant vigilance is required to detect or, better yet, prevent them.”

Foley has issued audit letters to five government offices in the last six months documenting alleged financial improprieties.

Village of Merriman (Cherry County)

The village of Merriman requested a waiver audit, and during an investigation of the village’s 2025 fiscal year as part of the request, Foley’s team identified $10,225.96 in recorded utility customer payments that were not deposited into the village’s bank account.

Foley’s audit letter said the village clerk, who was also employed at a local bank and the community post office, may have either pocketed the cash payments or deposited the funds into personal bank accounts. Included in this amount was a $204 credit to the clerk’s own utility account.

The press release stated that the clerk claimed there were no cash deposits because the village did not accept cash utility payments, but several utility customers informed Foley’s staff that they had paid their monthly utility bills in cash.

The clerk claimed subsequently to have found a number of missing checks from utility customers and to have deposited them into the village’s general checking bank account. When asked to provide Foley’s office with copies of both the deposit slip and the accompanying checks, the clerk sent the deposit slip image but declined to send images of the checks, arguing that it would violate the bank’s privacy policies, even though she was an authorized signer on the village’s bank account.

Upon contacting a different bank representative, the auditors learned that, contrary to the clerk’s claims, the deposit at issue consisted entirely of cash, and no customer checks were included.

The office believes the clerk provided false information to Foley’s auditors in an attempt to hinder the investigation.

The information was forwarded to the Nebraska Attorney General, the Nebraska State Patrol and the Nebraska Accountability and Disclosure Commission for further review. An investigation by the State Patrol is currently ongoing, Foley said.

Village of Herman (Washington County)

While reviewing the village of Herman’s fiscal year 2025 audit waiver request, Foley’s staff noted That between Oct. 1, 2024 and Feb. 26, 2026 the village clerk appeared to have used a municipal credit card to make 39 personal purchases totaling $2,029.76.

The purchases included an electric toothbrush, medications, toiletries, shampoo, and dozens of other items.

The clerk allegedly claimed that the purchases occurred accidentally because the municipal credit card was saved to her own personal accounts at both Walmart and Amazon, which she used periodically to buy things for the village. But it was noted that several of the Walmart purchases were over-the-counter transactions, which would have required her to use the physical card.

The clerk reimbursed the village $784.32 prior to the inquiry by Foley’s office but failed to reveal that until after the auditors requested the village’s credit card statements.

For the remaining $1,245.44 of personal purchases, the clerk claimed originally that she had planned not to cash her outstanding village paycheck from September 2025. The auditors found, however, that the paycheck was cashed shortly after being issued. The clerk then stated that she had been referring to her December 2025 paycheck – which Foley’s team discovered had also been cashed soon after issuance.

The information was forwarded to the Nebraska Attorney General, the Washington County Attorney, and the Nebraska Accountability and Disclosure Commission for further review.

Village of Alvo (Cass County)

Prior to reviewing the village of Alvo’s fiscal year 2025 audit waiver request, Foley’s office had received an anonymous tip regarding potentially fraudulent charges within the municipality’s Road Fund bank account. The press release stated that while examining the village’s bank statements, which were among the financial records required to accompany the audit waiver request, the audit team identified four questionable electronic debits, totaling $30,273.06, that cleared the Road Fund bank account in August and September 2025.

Foley’s staff was informed that the transactions were not authorized by the village board. Despite being made aware of the first two evidently fraudulent charges on Sept. 2, 2025, the village failed to report the issue to law enforcement for another two weeks. The village also neglected to close the compromised account, allowing the two other suspect electronic debits to occur. None of the funds had been recovered as of January.

Because the road fund dollars were transferred to banks across the United States, the press release stated they are likely unassociated with the village board or municipal workers.

David City (Butler County)

The former city clerk/treasurer for David City, whose duties included issuing payments for municipal expenses and processing employee payroll, allegedly misappropriated over $5,800 through personal use of the political subdivision’s credit cards and unapproved salary increases paid to herself.

Foley’s audit team identified 15 presumably personal purchases totaling $914.63 made by the former clerk/treasurer with municipal credit cards. The purchases included bacon, laundry detergent, allergy relief medication, leggings and other items. In addition, the release stated she allegedly paid herself $4,983.01 in excess of her authorized wages between January 2021 and October 2025. The findings were referred to the Nebraska State Patrol and are currently under investigation.

Plains Historical Society (Kimball County)

A former board member and secretary of the Plains Historical Society used the organization's debit card to make 54 personal purchases, totaling $1,386.43, during the fiscal year ending 2025.

The individual was responsible for convincing the society to issue the debit card – which was used at vendors including a smoke shop in Aurora, Colorado, that had “little, if any,” clear relation to the society’s functions.

After discovering the alleged misuse, the society’s treasurer canceled the debit card. Afterward, the board chairperson, who the press release stated is the father of the former board member and secretary, reimbursed the society in full for the expenditures. The matter was referred to local law enforcement, resulting in criminal charges being filed. On March 11, the woman pleaded guilty to misdemeanor theft by deception and was ordered to pay a fine of $100.

Foley encouraged anyone who suspects public funds are being misused to contact his office by calling the hotline at 1-800-842-8348 or filling out the online “Fraud, Waste, and Abuse” form.

“My auditors and staff are second to none when it comes to pursuing the mishandling of public funds – which, as I have said repeatedly over the years, come out of the pockets of hardworking taxpayers,” he said in the release. “Working together, we can protect those valuable resources, ensuring that they are used properly for the benefit of all our citizens.”