Report details 10 years of credit card use by Jim Thorpe district
An aerial view shows the Jim Thorpe administrative building. BOB FORD/TIMES NEWS
In the summer of 2018, during a meeting of the Jim Thorpe Area School District board of directors, a resident told the board he believed the district’s business manager was misusing a district credit card. The credit card, which the district paid for 10 years, was in the name of business manager Lauren Kovac.
While the district’s attorney first denied such a card existed, board members came out a month later and agreed to investigate the resident’s claims. They hired an auditor who reviewed 10 years of credit card statements, and also looked into whether Kovac had acted improperly in her role overseeing a booster club account.
In July, the board received the results of the audit, which cost the district $15,000.
After going to court to block the report’s release, the district agreed to provide a copy to the Times News in December.
The report was completed by the accounting firm Brown Schultz Sheridan and Fritz, based in Camp Hill.
It appears to verify some of the resident’s claims, like that the card was used to purchase numerous meals at area restaurants. It found that Kovac had received $951.65 in credit card rewards over the 10 years.
Kovac, who oversaw the district’s $46 million budget, resigned in November, two months after being placed on administrative leave. She said her resignation was due to the mental and physical toll of facing the allegations for more than a year.
Kovac had a contract with the district running through 2023. Under the terms of the release, the district paid Kovac $36,000.
She says that she feels vindicated by the report. She said it proves that she did not act improperly. She said that she was following the past practice of previous administrators when she obtained the card and paid for meals where school board members discussed board business with the superintendent.
“There were never any attempts to hide any transactions. I’m grateful above all else to see the truth come out. The last year and a half was extraordinarily difficult for me,” Kovac said.
The board approved a second investigation shortly after receiving the audit results, which cost an additional $15,000 and is still ongoing. Manhattan-based accounting firm EisnerAmper and Levin Legal Group, of Montgomery County, are assisting with the investigation.
Board President Jerry Strubinger said that when he received the report from Brown Schultz Sheridan and Fritz, he found it to be incomplete, so they sought a second investigation. It also was not officially a “forensic audit,” which is what the board had initially voted to obtain.
“They floated over a lot of things. That’s why we discontinued having them, and got another audit company to finish it up,” Strubinger said.
The report included five recommendations.
The resident who originally brought up the concerns, Paul Montemuro, won a four-year seat on the board in November.
Brown Schultz Sheridan and Fritz reviewed 10 years of credit card statements from a Capital One Spark credit card which the district paid. The card was in the name of “Lauren Kovac, Jim Thorpe School District.”
They found that between 2009-2018, the card was used for travel by board members and administrators, books and supplies, various meals, organization dues, purchases for the girls’ basketball team and other miscellaneous expenses.
The report said that BSSF was not in a position to determine whether any of the expenses were approved or appropriate.
The report found that $1,176.03 in expenses lacked supporting documents. For all other expenses, they found invoices or receipts.
The report says that the only benefits they could establish that Kovac received were $951.65 in credit card rewards, obtained over the 10-year period.
Employees other than Kovac used the card. There were Amazon purchases made by the district’s technology director and teachers.
Kovac said that the report shows there were never any attempts to hide transactions. She said that some of the transactions lacking supporting documents occurred more than seven years ago, and the district doesn’t retain records that old.
“The credit card was never used for anything that was not school related. It was never anything, any transactions that would be immoral or questionable,” Kovac said.
Kovac said that school board members and administrators were well aware of her credit card going back to when she applied for it. She said it was former Superintendent Barbara Conway who advised her to get one, because Conway’s predecessor Jake Boyer had the same card. She said it was discussed with board members at the time.
“The board knew about it. They gave us their blessing. For anyone to say they didn’t know about it, it was hidden, that’s an outright lie,” she said.
The rewards which Kovac totaled $951.65 — roughly $95 per year.
Kovac said she received the rewards because the card was in her name. But she said that she used that money to pay for Christmas parties and perks for her office staff — like magazine subscriptions and flavored coffee creamer. She said she has receipts to prove that she spent more than $1,500 on such expenses.
Kovac said the amount she received in rewards is much less than the amount she would have received if she used her own credit card and submitted the expenses for reimbursement. She said that is not uncommon not only among district employees but in any business where employees are reimbursed for expenses.
“If I would have been looking to profit from it, I would have used my own credit card and gotten a check for reimbursement,” she said.
In all, the report found that 58 meals were purchased with the card, totaling $7,942. The meals took place at restaurants including Macaluso’s in Nesquehoning; Trattoria 903 and Dom N Ali in Penn Forest Township; Terra Cottage in Kidder Township; Bear Appetit, Broadway Grill, and Molly Maguires in Jim Thorpe; and Beacon 443 in Lehighton.
Fifty-one of the meals occurred under the tenure of Superintendent Brian Gasper, who started in 2014. The board decided to not renew Gasper’s contract when it expired in June.
Kovac said that the lunches continued a past practice of meetings between administrators and board members — who are not paid for their positions. She said she attended lunches, and paid the bill with the card, but she never called one.
She said under past superintendents, the board would meet beforehand and buy hoagies, or hold breakfast meetings. She compared them to a business lunch in the private sector.
Gasper held lunches as opposed to meeting at the district office before a meeting because the board members who were in office at the time happened to be available at lunch, she said.
“This is volunteerism for them. If we can help them out with their schedule, and have a working lunch, I don’t think it’s something that’s unusual,” Kovac said. The report recommended that in the future, the district should not only require itemized receipts for meals, but also who attended, and the school district purpose.
The report did not detail what travel expenses were covered on the credit card. Kovac said she bought tickets for board members to attend multiple conferences over the years.
Kovac said that there were some cases where first class tickets were cheaper than coach. She said because of board members’ schedules, she didn’t have a large window to book the flights.
“There was an instance where the first class tickets were legitimately cheaper than coach,” she said.
In November, board member Michael Principe said he learned that he was upgraded to first class on a flight where he was scheduled to fly coach. Kovac said she had no recollection of upgrading a ticket for him.
The report also looked into a bank account the school district opened for the girls’ basketball program. Kovac served as the club’s adult adviser from 2014-2018.
The report found no evidence that booster club money was misspent. But they did note that Kovac was writing checks to the Little Olympians to reimburse them for expenses they made on behalf of the booster club. Kovac told the auditors that she used the Little Olympians account for some booster club expenses the process of getting a check from the booster club’s account opened by the school.
The report determined that alcohol was purchased for three events — two golf tournaments and a picnic. The report said that the district’s booster club policy prohibits alcohol sales at events where students are present, but noted that there may be a conflicting policy.
Kovac said that no students were involved with serving the alcohol.
Kovac said she was surprised that the report looked into the booster club because it’s a separate entity from the district, and the school basically acts like a bank so the individual booster clubs can save money on audits.
Shortly after Montemuro questioned the board about the credit card, the district said they had stopped using it, opting for a debit card with a $500 spending limit.
New Superintendent John Rushefski said the district has also looked into “EasyProcure” which is designed to give school districts the flexibility of a credit card while following regulations for purchasing.
Rushefski took his position as superintendent in June, just a few weeks before the district received the report. Rushefski said the Brown Schultz Sheridan Fritz report was not the sole factor which led to Kovac’s administrative leave.
“I wouldn’t say that triggered the leave, because if that was the case, it would have been Aug. 10,” he said.
Strubinger said the final report from the district’s second investigation has yet to be completed.
Kovac said that while she knew it was time to leave her position with the district, it still holds a special place for her.
“I love the Jim Thorpe school district,” she said. “I worked with some great superintendents, Dr. Boyer, Dr. Conway and Dr. Gasper, great people, and some great boards. It was bittersweet, but I’m looking forward.”