City of Hilliard: Settlement reached with former accounting firm for $35,000

A. Kevin Corvo
ThisWeek group

The city of Hilliard and its former accounting firm, Clark, Schaefer, Hackett & Co., finalized an out-of-court settlement April 12, ending a lawsuit the city had filed in 2019 against the accounting firm.

The settlement for $35,000 is one of several lawsuits that stemmed from the theft of money by the city’s former deputy director of recreation and parks, Heather Ernst, who in October 2018, in a plea bargain, 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.

Hilliard City Hall is at 3800 Municipal Way.

On Oct. 2, 2019, Hilliard filed a lawsuit against the accounting firm, alleging negligence and breach of contract related to its audits, according to a memo from City Manager Michelle Crandall to City Council members, advising them of the city’s intent to settle the lawsuit.

Council voted to approve a resolution to accept the settlement April 12 with no further discussion.

The settlement stipulates that for fiscal years 2007 to 2016, the accounting firm was an independent firm approved by the state auditor’s office to perform audits of local public offices, namely Hilliard.

The settlement agreement states “(Hilliard) has taken issue with how the audits were planned and performed, particularly insofar as embezzlement ... by Heather Ernst was not identified.”

It continues: “CSH denies the allegations (and) has asserted ... that all professional due care was utilized in performing the audits.”

The settlement agreement states the parties “have determined that it is their respective interest to amicably resolve, settle and compromise” all claims and causes of action.

The parties agree, according to the settlement agreement, that CSH within 14 days will pay the sum of $35,000 to the city and mutually “forever discharge” each other from all claims and includes a covenant not to re-litigate.

The settlement agreement stipulates each party is responsible for its own legal expenses and that there is no admission of liability by either party and includes a nondisparagement agreement.

“Given the extended litigation delays due in large part to COVID-19 and an expected long litigation timeline, the parties have mutually decided it was in their best interest to settle the matter,” according to a joint statement from attorneys from both parties, provided by David Ball, director of communications for Hilliard.

The settlement includes provisions that the accounting firm denies any wrongdoing, Istvan Gajary, an attorney representing the city, told council members April 12.

With the settlement, the city has closed all the criminal and civil litigation in which it was involved related to Ernst, Ball said.

The theft for which Ernst was convicted was uncovered in late 2017.

In addition to the criminal case against Ernst related to the theft, in March 2018, Hilliard filed a civil lawsuit against her – amended a few months later to include Ernst’s husband, Moses, as a codefendant – alleging that during the course of Ernst’s employment with the city, the “defendants retained at least $541,000, depositing at least $270,000 into accounts owned or controlled by the defendants.”

Court proceedings determined $271,898 had been stolen for “lifestyle spending,” as Jeff Blake, an assistant prosecutor for the Franklin County Prosecutor’s Office, said during an Oct. 3, 2018, hearing.

Ernst was accused by Hilliard investigators of stealing more than $500,000 in daily admission fees from the city’s two pool facilities from May 2013 to fall 2017.

Ernst, then 49, was released Dec. 20, 2019, from the Ohio Reformatory for Women in Marysville, according to the Ohio Department of Rehabilitation and Correction.

In addition to a criminal and civil case against Heather Ernst, City Council conducted an internal investigation into how the Hilliard Division of Police had conducted the criminal investigation into Ernst, debated whether to employ a cashless system at the poolscommissioned a forensic audit of the city’s finances, and settled a lawsuit against another firm after Ernst sold her property while the city's lawsuit against her was pendingall of which added to the city’s related expenses in the Ernst matter.

At the time the city filed the lawsuit, Clark, Schaefer, Hackett & Co. CPA and president Kerry W. Roe said it was “a misguided waste of taxpayer dollars (that) represents an effort by the city to deflect responsibility for its failure to oversee and monitor the activities of one of its own employees.”

kcorvo@thisweeknews.com

@ThisWeekCorvo