The city of Hilliard on Oct. 2 filed a civil lawsuit against Dayton-based accounting and advisory firm Clark Schaefer Hackett, according to Franklin County common-pleas court records.

The civil lawsuit is in connection with the theft of money from Hilliard’s two public swimming pools by former recreation and parks director Heather H. Ernst, who in October 2018 pleaded guilty to one count of theft in office, a third-degree felony, and one count of attempted tampering with records, a fourth-degree felony.

The suit alleges that during the 10 years of audits of city finances and practices, the firm of Clark Schaefer Hackett failed to identify material weaknesses in the city’s cash-handling policies that could have prevented the theft of significant funds by Ernst over a period of several years, said David Ball, Hilliard’s director of communications.

The attorney for City Council, Christopher Burch of Lane Alton, filed the complaint, Ball said.

City Council President Kelly McGivern said the action is meant to recoup taxpayer dollars.

“When we first learned of the theft of taxpayer dollars, we pledged to our residents that we would hold (accountable) those responsible,” McGivern said. “This is the latest action to accomplishing that pledge.”

Clark Schaefer Hackett CPA and president Kerry W. Roe called the lawsuit “misguided.”

“We believe this legal action is a misguided waste of taxpayer dollars and represents merely an effort by the city to deflect responsibility for its failure to oversee and monitor the activities of one of its employees,” Roe said. “Our audit was performed in accordance with professional auditing standards. Thus, we will defend our work accordingly and are confident we will prevail.”

On Nov. 16, 2018, Ernst was sentenced to one year in prison.

The civil complaint names as defendants Clark Schaefer Hackett, “an Ohio corporation with a principal place of business in Franklin County,” in addition to defendants “John Does 1-99,” according to court records.

The “John Does” are the persons “who conducted professional auditing work as agents, employees or representatives of Clark Schaefer and were assigned to perform the auditing work for the City of Hilliard between 2007 and 2016,” according to the complaint.

The complaint includes “facts common to all counts” and outlines the criminal case against Ernst.

Count 1 of the complaint alleges negligence, and count 2 alleges breach of contract, alleging that the “defendants failed to obtain an understanding of Hilliard and its internal controls sufficient to assess the risks of material misstatement of the financial statements, leading to a failure to detect the fraud committed by Heather Ernst.”

On Nov. 16, 2018, Ernst was given a 12-month prison term and three years of community service, and she was ordered to pay restitution in the amount of $271, 166.

To date, the city has recovered about $162,000 via Ernst’s state pension, McGivern said.

According to an early 2018 civil complaint the city had filed against Ernst -- the complaint also names Ernst’s husband, Moses -- the “defendants retained at least $541,000, depositing $270,000 into accounts owned or controlled by the defendants.”

The complaint seeks compensatory and punitive damages in excess of $1 million “in an amount to be proven at trial.”

According to the common-pleas court records, the complaint will be heard by common-pleas Judge Jenifer French, and trial assignment is scheduled for Oct. 19, 2020.

Addressing the concern for the city’s legal fees in pursuing the matter, council member Omar Tarazi said the city’s law firm agreed to a cap.

“There is a legitimate concern in the community regarding spiraling legal fees,” Tarazi said Oct. 3.

According to council member Nathan Painter, the city’s legal cost related to Ernst -- including criminal, civil and forensic audits -- through Sept. 23 is $456,135.

“As a trial attorney, I know how much things should cost, so I insisted the law firm cap its fees for this litigation, and (Lane Alton) agreed to a reasonable cap,” Tarazi said. “With the cap, I believe the cost benefit of pursuing this lawsuit is worth it to the city.”

The cap is $20,000, Tarazi said.

In addition to seeking damages from Clark Schaefer Hackett, the city is calling for stricter standards for audits.

“We are shocked at the lack of accountability auditing firms have to taxpayers with respect to identifying material weaknesses,” McGivern said. “We are calling on our state auditor and state lawmakers to tighten up the auditing standards in Ohio that have allowed unscrupulous individuals to steal public dollars.”

Check ThisWeekNEWS.com/Hilliard for updates.

kcorvo@thisweeknews.com

@ThisWeekCorvo