Former Secretary Bilked District by Circumventing Approval Process, Officials Say

Former Shorewood secretary Donna Sternke created convincing, bogus invoices and found a way to circumvent the approval process, avoiding suspicion over the 13 years she allegedly embezzled more than $300,000 from the district, officials say. 

“The district worked with three independent auditing companies from 1998 through 2011,” Lexmond said, in a prepared statement Tuesday. “During this time, each company performed an annual audit of the district’s financial accounts, including the funds Ms. Sternke embezzled from, but did not find anything suspicious as it appears Ms. Sternke created false invoices and receipts that were very convincing.”

Sternke was charged last week in federal court with issuing unauthorized checks totaling $310,263. In October 2012, she admitted to federal investigators that she stole the money, and has reached a plea agreement. She is expected to plead guilty at a future court date. If convicted, Sternke could face a maximum sentence of 10 years imprisonment. Under the plea agreement, Sternke is to pay $310,263 in restitution to the school district.

In June 2011, the district discovered the unexplained purchase of gift cards for Kalahari Resort in Wisconsin Dells, and Sternke was allowed to resign from her position after some 30 years with the district, according to district Business Manager Mark Boehlke. He added Special Education Director and Shorewood Intermediate School Principal Anthony Strancke opened Sternke's mail on a day when she was not at work, and found the gift cards. 

At that time, Sternke only confessed to the stealing money for the gift cards, but after officials further examined Sternke's purchase order history, they realized there might be more fraudulent invoices and notified Shorewood police and federal investigators. 

Sternke worked in the district's Instructional Services and Special Education Department, handling purchasing duties from a fund that included federal Individual with Disabilities Education Act grants. 

Boehlke said Sternke was able to manipulate and circumvent the approval process in the district's computer system, so the special education director, who was responsible for approving purchases, never saw the bogus invoices, and when it reached the business office, it appeared it had approval from the director. She was creating purchase orders for items no one was requesting, Boehlke said. 

"...Because it went around him (Strancke), he didn't expect it (the equipment) to be there, and it never raised any red flags," Boehlke said.

Under the system, special education teachers would provide Sternke with purchase orders, which she would enter into the district's computer system for review and approval, according to a plea agreement. 

After preparing and submitting a bogus invoice, the plea agreement read, Sternke would pick up a check from the business office — not a normal payment process — and typically mailed the check to the vendor, but would occasionally use the check to make purchases at various stores including Menards, Pennys, Target, Wal-Mart, Best Buy and Kohl's. 

In one case, she used the district's computer system to create a bogus $1,564.49 purchase order for American TV. She falsely wrote in the invoice that the purchase was for a HP laptop, when officials say Sternke actually purchased a 50-inch TV console and 37-inch Sony TV for herself, according to the plea agreement. 

After discovering the believed misappropriation of the funds, Boehlke said, the district made changes to close holes in the payment process. Now, purchase requests for the Special Education Department will be entered into the computer system, but also written out by hand and require a signature from the special education director. Additionally, passwords will be required to be changed more often in the district. 

Embezzlement didn't affect special education program

Because the district maintains a surplus in its special education fund, Lexmond said no services to students were limited, changed or compromised as a result of the embezzlement. 

“While we are all disappointed by what took place, students receiving special education services were not impacted," he said. 

“The false invoices created did not replace invoices for items teachers needed or requested. Teacher requests for supplies and materials were fulfilled during this time period.”

Boehlke said school officials will give an update during the School Board's next meeting on April 23.