PAYNE, Ohio - Wayne Trace school officials said yesterday that the district likely lost nearly $1 million of taxpayers' money that was placed in board member Mark Steven Miller's now defunct Oakwood Deposit Bank Co.
After investigating the matter for weeks, Superintendent Ken Doseck said, “There is a strong possibility that [the money] cannot be located.”
He said school officials were told that paperwork Mr. Miller provided - indicating the money was federally secured - was bogus. Mr. Doseck added that district officials did nothing wrong to contribute to the loss.
“This is a catastrophe. This is a total system failure,” Mr. Doseck said. “There's only one main statement in that if our monies were not safe, no one's money is safe in all of America, because our paperwork was in order.”
The loss could affect the district's $19 million Ohio School Facilities Commission project that calls for renovations and additions at three school buildings. About half of the missing money was allocated for a related $2 million expansion project, while the remainder was general fund money.
Voters two years ago approved a total of 5.53-mills to help support that project. The district has a budget of $17.5 million.
The Paulding County bank was closed by federal and state regulators Feb. 1, after Mr. Miller, the former executive vice president and chief executive officer, admitted embezzling $40 million. Mr. Miller, out on $1 million bail pending trial, diverted much of the money to invest in Stardancer Casino Cruises, a gambling-boat operation in South Carolina and Florida.
Mr. Miller has not submitted a letter of resignation to the Wayne Trace school board. State law indicates that he cannot be removed from his post until he's absent from meetings for 90 days, Mr. Doseck said yesterday.
District Treasurer Lori Davis said Mr. Miller's position on the board did not affect its decision to bank at Oakwood. And she said money deposited there faced the same federal guidelines as money placed elsewhere.
“My plea to you is we did do everything right. We didn't do anything wrong,” she said. “A lot of people are forgetting a crime has been committed.”
The school district released a Nov. 14 letter from Mr. Miller that indicated Wayne Trace had securities totaling $1.8 million, along with FDIC insurance of $100,000. Mr. Miller said the securities were held in safekeeping at National City and Federal Reserve banks.
After checking, FDIC authorities told the school district the two Cleveland banks had no record of the securities ever being held at the federal level.
School leaders said that they are contacting state and federal offices, as well as area legislators, for help in locating the missing money.
But Mr. Doseck said the district plans to move ahead as if the money cannot be recovered. He said the matter will be discussed Wednesday at a school board retreat, but no decisions have been made on how they'll handle the loss.
The news occurs at a bad time for the 1,150-student district, which planned to trim $230,000 from its budget for next school year. “We were working on those cuts when we got the bad news,” Mr. Doseck said.
Now, Ms. Davis said the district will face a budget deficit much earlier, on June 30.
Although a major blow, this is not the only financial hardship the district has faced.
In May, 1997, voters approved a 25-year, 2-mill levy to help settle a lawsuit from a 1989 car-bus accident that left a Paulding man paralyzed. The levy passed 934-671.
Under a plan assembled by state legislators, the district received an interest-free loan to pay the $3.5 million judgment. The $125,000 generated annually through the property tax is sent to the state as payment on the debt.