Insurer must pay almost $225K to state for clerk-treasurer fraud

A Dearborn County judge has entered a nearly $225,000 judgment in favor of the state and against an insurance company after a Dearborn County clerk-treasurer was convicted of wire fraud.

Dearborn Superior Judge Sally A. McLaughlin ordered Ohio Casualty Insurance Company to pay the state $224,690.08 for the fraud of former Lawrenceburg clerk-treasurer Theresa L. Bruening, Indiana Attorney General Cutis Hill announced Thursday. Bruening pleaded guilty in August 2014 to wire fraud stemming from the misappropriation of public funds to herself between 2009 and 2013.

The Office of the Attorney General filed a complaint for recovery in June 2017, but Ohio Casualty argued Bruening’s actions were not covered under the policies. Specifically, the insurer argued its policy did not cover “indirect costs” including:

• $138,737.58 in contractual liquidated damages and interest paid to IAM National Pension Fund per a collective bargaining agreement by the city

• $72,742.79 in late penalites and interest paid to the state and federal taxing authorities

• $22,651.25 in State Board of Accounts audit costs

Even if those costs were included, Ohio Casualty said the OAG’s complaint was time-barred by a two-year statute of limitations that began running in April 2013, when Bruening was placed on administrative leave.

But relying on Robertson v. State ex. Rel. Hill, 121 N.E.3d 588 (Ind. Ct. App. 2019), McLaughlin said the two-year timeframe did not begin until the SBOA filed its official investigation on Dec. 29, 2016.

Further, the trial judge said the costs of late or nonpayment of pension and tax obligations were “directly related to late or non-payments made in malfeasance, misfeasance or omission of the duties of the Deputy Clerk-Treasurer.” Thus, those costs were not “indirect costs” not covered under the policy.

However, the costs of the SBOA are not covered by the policy, the judge ruled.

As part of her criminal case, Bruening was ordered to pay the city in $40,551 in restitution. So far she’s paid $27,441 that serves as an offset to the final judgment against Ohio Casualty, bringing the total amount the insurer was ordered to pay to $224,690.08, plus costs and 8 percent interest.

“We must always hold accountable those who illegally siphon money for themselves for the public treasury,” Hill said in a statement. “Our office will continue seeking to recoup taxpayer dollars when public funds have been misappropriated.”

The case is State of Indiana ex rel. Curtis T. Hill, Jr., Attorney General of Indiana v. Ohio Casualty Insurance Company and Theresa L. Bruening, 15D02-1706-PL-031.