from the Delaware Circuit Court The Honorable Marianne L.
Vorhees, Judge Trial Court Cause No. 18C01-1707-IF-15
ATTORNEYS FOR APPELLANT Curtis T. Hill, Jr. Attorney General
of Indiana Patricia C. McMath Civil Appeals Section Chief
Larry D. Allen Deputy Attorney General Indianapolis, Indiana
ATTORNEY FOR APPELLEE Jeffrey M. Heinzmann Heinzmann Law
Office, LLC Fishers, Indiana
On July 12, 2017, the State filed a complaint for removal
from office against Yorktown clerk-treasurer Beth A. Neff
("Neff") for neglecting to perform several of her
official statutory duties. Neff filed a motion to dismiss the
complaint, which the Delaware Circuit Court denied. After a
summary evidentiary proceeding, the trial court entered
findings of fact and conclusions of law and entered judgment
in Neff's favor and against removal from office.
The State appeals the entry of judgment on the merits in
favor of Neff. We reverse and remand. Neff also cross-appeals
the trial court's decision to deny her motion to dismiss,
and on this issue, we affirm.
and Procedural History
Neff was elected to serve as the clerk-treasurer for the town
of Yorktown (the "Town"), Indiana in 2007, and she
has served in that capacity ever since. In 2013, the State
Board of Accounts ("SBA") performed an examination
and audit of Yorktown's 2012 financial records kept by
Neff. On December 5, 2013, SBA Field Examiner Mike Wade
("Wade") compiled a report of his findings
following the examination. Wade discovered several errors
with the Town's records including that: (1) Neff had
failed to reconcile Yorktown's accounts for all of 2012;
and (2) Yorktown's Park One Wastewater Utility account
was overdrawn by $140, 943. As a result, Yorktown's 2012
annual report submitted to the State did not properly reflect
the actual financial activity of the Town.
On November 14, 2013, prior to issuing the financial report,
Wade and his supervisor Bill Vinson ("Vinson") met
with Neff, town council president Robert Ratchford, and town
manager Pete Olson to explain the issues. Wade and Vinson
discussed the errors with Neff and also directed her to the
applicable sections of the Indiana Code and the State Board
of Accounts Manual-the Accounting Uniform Compliance
Guidelines Manual for Cities and Towns (the
"Manual")-in order to rectify the errors and avoid
making them again in the future. Vinson and Wade also
explained audit adjustments totaling $57, 752.92 that Neff
needed to correct to come into compliance with SBA standards.
In 2016, Wade returned to the Town to perform an audit of the
financial records kept by Neff from 2013-2015. On November 10,
2016, Wade compiled and filed a report of his findings
following the examination. The report states in part:
The Town's accounting records have not been reconciled to
depository balances since December 31, 2012. The accounting
records contained numerous posting errors, such as
transactions not being posted, receipts posted to incorrect
funds, and transfer between funds' errors. In addition,
as incorrect transactions were discovered, correcting
transactions were recorded incorrectly.
Ex. Vol., State's Ex. 2 Financial Statements Examination
Report, p. 3. Specific examples of errors that Wade's
examination uncovered included: (1) the
books had still not been properly reconciled; (2) during
2014, two transfers totaling $124, 826 were posted as
transfers out without a corresponding transfer in; (3) during
2015, six state distributions to the Town totaling $73, 955
were not receipted to the Town's records; (4) the
Town's ledger and annual financial reports for 2013,
2014, and 2015 did not include the financial activity of
several Town funds; (5) five of the Town's accounts had
overdrawn balances; and (6) there were over twenty accounts
affected by incorrect posting errors. See Ex. Vol,
State's Ex. 2 Supplemental Compliance Report, p. 4-5; Tr.
Vol. 2, pp. 62-68; 124-25. Vinson testified that the
examination uncovered so many errors that the SBA was unable
to identify all of them. Tr. Vol. 2, p. 120.
On October 13, 2016, prior to issuing the report, Wade and
Vinson met with Neff, town council president Richard Lee
("Lee"), and town manager Pete Olson. Wade and
Vinson again discussed the errors with Neff and directed her
to the applicable sections in both the Indiana Code and the
Manual addressing the issues. It was during this meeting that
Lee first learned that the Town's books had not been
properly reconciled for forty-eight consecutive months. Lee
then advised Neff to get outside help in order to fix the
problems. Neff suggested hiring the accounting firm Hartman
Williams a couple of weeks before the November 2016 town
council meeting, and the town council approved the proposal.
Hartman Williams's goal was to come in and rectify the
Town's books for 2011-2015 with an initial cost of $20,
000 approved by the Town. Hartman Williams's employee
Donna Vinson ("Donna") began working with
Neff on the Town's books in November 2016. After Donna
began working on the Town's books, the Town council was
notified that "the problem was somewhat more substantial
and significant than they thought, " Tr. Vol. 2, p. 178,
and the cost to remedy the problems increased.
After several months, Donna was able to get the Town's
2011-2015 books reconciled to within $232 at a cost to the
Town of over $67, 000. As part of her work, Donna had to
conduct a bank reconciliation for every month from January
2012 through December 2015 because they had not been
performed. Moreover, Donna discovered when reviewing the
Town's books that: (1) $16, 190.55 of the $57, 752.92 in
adjustments Wade and Vinson provided to Neff in 2013 had not
been corrected on the Town's records; (2) over
one-hundred and fifty posting errors; (3) thirty-four of the
Town's funds required adjustment; and (4) net errors
totaling $346, 340.82. See generally Ex. Vol.,
State's Ex. 10; Tr. Vol. 2, pp. 218-234. Donna's
report filed on June 16, 2017, discussed eighteen separate
findings of errors with the Town's financial
On July 12, 2017, the State filed a complaint for Neff's
removal from office based on her alleged negligent failure to
perform her statutory duties as the Town's
clerk-treasurer. The three-count complaint alleged in
[. . .] For the last 24 months the Defendant herein has on
more than one occasion refused or neglected to perform the
official duties of the Clerk-Treasurer of Yorktown in that
she has failed to reconcile at least monthly the balance of
public funds, as disclosed by the records of the local
officers with balance statements provided by the respective
depositories, all pursuant to the requirements of Indiana
Code §§ 5-8-1-35(2) and 5-13-6-1(e).
[. . .] The Defendant herein, being a public officer, i.e.
Yorktown Clerk-Treasurer during the last 24 months has failed
to follow the direction of the state examiner (Indiana State
Board of Accounts) in keeping the accounts of the Yorktown
Clerk-Treasurer all pursuant to I.C. § 5-11-1-10, a
class B infraction; [. . .]
[. . .] The Defendant herein being a public officer, i.e.
Yorktown Clerk-Treasurer during the following 24 months, has
failed to adopt and use the systems of accounting and
reporting adopted by the State Board of Accounts (SBOA) all
pursuant to the Accounting and Uniform Compliance Guideline
Manual for Cities and Towns (SBOA Manual) as directed by the
SBOA, and as such commits a class C infraction which shall
result in a forfeiture of office all pursuant to I.C.
5-11-1-21. [ . . .]
Appellant's App. pp. 25-28 (emphasis in original).
On July 17, 2017, Neff filed a motion to dismiss the
complaint, which the trial court denied on July 27. On July
28, the trial court held a summary evidentiary proceeding on
the complaint. And on August 1, the court issued an order
finding that "[t]he State proved beyond a reasonable
doubt that Neff failed to reconcile the Town's books for
forty-eight consecutive months."
Appellant's App. p. 13 (footnote omitted) (emphasis in
original). But the court entered a judgment on the merits in
favor of Neff and found that removal was not warranted
because "Neff is making mistakes and not performing up
to the standards expected by the State Board of Accounts for
Town Clerks. This is misfeasance and not nonfeasance."
Id. at 16. The State now appeals the trial
court's decision, and Neff cross-appeals the trial
court's decision denying her motion to dismiss.
Here, the trial court issued both findings of fact and
conclusions of law, and very importantly, the factual
findings are not in dispute. We will review the court's
conclusions of law de novo. Citizens Action
Coalition of Ind. v. Koch, 51 N.E.3d 236, 240 (Ind.
Article VI Sections 7 and 8 of the Indiana Constitution
provide the mechanism and standards by which an officer of
the State can be impeached. Section 7 states:
All State officers shall, for crime, incapacity, or
negligence, be liable to be removed from office, either ...